Question

E-tech initiatives limited plans to issue $500,000, 10-year, 4 percent bonds. Interest is payable annually on december 31. All of the bonds will be issued on january 1, 2022. Show how the bonds would be reported on the january 2, 2022, balance sheet if they are issued at 97. (deductions should be indicated by a minus sign. ).

Answer 1

The preparation of the bond that should be reported on the balance sheet is presented below:

E-tech initiatives limited plans to issue $500,000, 10-year, 4 percent bonds. Interest is payable annually on december 31. All of the bonds will be issued on january 1, 2022.

We need to present it on balance sheet balance sheet if they are issued at 97.

E-Tech Initiatives Limited

Partial balance sheet

As on January 2, 2019

Liabilities

Long term Liabilities

Bond Payable $500,000

Add: Premium on Bond $10,000  ($510,000 - $500,000)

Carrying value $510,000 ($500,000 * 97%)

Therefore, The preparation of the bond that should be reported on the balance sheet is presented above.

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