Spent the class on bonds. Gave a quiz and went over the answer. The question is similiar to a question on the test. Didn't have much time to go over all the homework. Think we completed 2 questions and the quiz. Had a hard time getting through on the comparing to market rate question. It always is confusing to see the spreadsheet listed as it is.
If you want a set formula for discount versus premium it's this: If market rate is higher than our bond we sell at a discount. If market rate is lower we sell at a premium. Discount means lower than par, premium higher than par.
I sent out the homework answers to everyone I had an email for. If you didn't receive it email me and I'll send it again.
Went over the test so everyone know what to study for. Hopefully that helps in your preparation time. Remember, you can bring in a regular size paper as a cheat sheet. Hopefully that helps your study preparation as well.
Here is the quiz question so you can work it again if you like. This was at a premium. Should also know if it's listed at a discount.
On March 1, 2008, a corporation issued $60,000, 5%, 15-year bonds at 115. The bonds pay interest each September 1 and March 1 and the corporation uses the straight-line method to amortize premium or discount. Prepare entries for the issue of the bonds, for the first interest payment and for the adjusting entry on December 31. (10 Points). (Anyone remember what page the book goes over something like this? 7xx something a ruther.)
Test on Thursday.
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