Analyzing and Reporting Financial Statement Effects of BondTransactions On January 1, 2012, Trueman Corporation...

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Analyzing and Reporting Financial Statement Effects of BondTransactions On January 1, 2012, Trueman Corporation issued$400,000 of 20-year, 11% bonds for $369,908, yielding a market(yield) rate of 12%. Interest is payable semiannually on June 30and December 31. (a) Confirm the bond issue price. Use Excel or afinancial calculator to computer your answers. Round your answersto the nearest whole number. Present value of principal repayment $Answer Present value of interest payments $ Answer Selling price ofbonds $ 369,908 (b) Indicate the financial statement effects usingthe template for (1) bond issuance, (2) semiannual interest paymentand discount amortization on June 30, 2012, and (3) semiannualinterest payment and discount amortization on December 31, 2012.Round answers to nearest whole number. Use negative signs withanswers, when appropriate. Balance Sheet Transaction Cash Asset +Noncash Assets = Liabilities + Contributed Capital + Earned Capital(1) Answer Answer Answer Answer Answer (2) Answer Answer AnswerAnswer Answer (3) Answer Answer Answer Answer Answer IncomeStatement Revenue - Expenses = Net Income Answer Answer AnswerAnswer Answer Answer Answer Answer Answer

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4.1 Ratings (733 Votes)

Rate = 12%/2 = 6%

nper = 20 year * 2 = 40 periods

pmt = ($400000*11%)/2 = 22000

Particulars	Formula in Excel	Computation in Financial Excel	Result
PV of Principal Repayment	PV(rate,nper,pmt,fv,type)	PV(6%,40,0,400000,0)	$38889
PV of Interest Payments	PV(rate,nper,pmt,fv,type)	PV(6%,40,22000,0,0)	$331018
Selling Price of Bonds		Total Issue Price	$369907

b) Balance Sheet:-

Transaction	Cash asste	Noncash Assets	=	Liabilities	Contributed Capital	Earned Capital
1	369907	0		369907	0	0
2	(22000)	(194.42)		0	0	(22194.42)
3	(22000)	(206.09)		0	0	(22206.09)

Transaction :-

2). Interest Expenses = $369907*6% = $22194.42

Discount Amortization = Interest Expense - Interest Payament

= $22194.42 - $22000

= $194.42

3) Interest Expenses = ($369907+$194.42)*6% = $22206.09

Discount Amortization = Interest Expense - Interest Payament

= $22206.09 - $22000

= 206.09

Income Statement :-

Transaction	Revenue	-	Expenses	=	Net Income
1	0		0		0
2	0		22194.42		(22194.42)
3	0		22206.09		(22206.09)

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In: AccountingAnalyzing and Reporting Financial Statement Effects of BondTransactions On January 1, 2012, Trueman Corporation issued...Analyzing and Reporting Financial Statement Effects of BondTransactions On January 1, 2012, Trueman Corporation issued$400,000 of 20-year, 11% bonds for $369,908, yielding a market(yield) rate of 12%. Interest is payable semiannually on June 30and December 31. (a) Confirm the bond issue price. Use Excel or afinancial calculator to computer your answers. Round your answersto the nearest whole number. Present value of principal repayment $Answer Present value of interest payments $ Answer Selling price ofbonds $ 369,908 (b) Indicate the financial statement effects usingthe template for (1) bond issuance, (2) semiannual interest paymentand discount amortization on June 30, 2012, and (3) semiannualinterest payment and discount amortization on December 31, 2012.Round answers to nearest whole number. Use negative signs withanswers, when appropriate. Balance Sheet Transaction Cash Asset +Noncash Assets = Liabilities + Contributed Capital + Earned Capital(1) Answer Answer Answer Answer Answer (2) Answer Answer AnswerAnswer Answer (3) Answer Answer Answer Answer Answer IncomeStatement Revenue - Expenses = Net Income Answer Answer AnswerAnswer Answer Answer Answer Answer Answer