ACC210 - Chapter 9 - Bonds and Bond Pricing

Bonds

Characteristics of Bonds (Secured & Unsecured)

Characteristics of Bonds (Term & Serial)

Characteristics of Bonds (Callable & Convertible)

Capital Structure (Debt & Equity Financing)

Timeline of a Bond Issue

Pricing Bonds (Face Value)

Coupon rate must = market rate to sell at face value

Pricing Bonds (Discount)

Pricing Bonds (Premium)

Pricing Bonds Using Present Value Tables

Pricing Bonds (ex)

Pricing Bonds (ex 2)

Pricing Bonds (ex 3)

How the Coupon Rate and Market Rate affect the Bond Issue Price (Discount, Face, Premium)

Changes in Carrying Value over Time

Discount = increases until maturity

Premium = decreases until maturity

Accounting for Discount Bonds (Journal Entry) (ex)

A Visual (of Discount on Bonds Payable)

Ultimately on the maturity date, the balance in the “Discount on Bonds Payable” account will be 0

Changes in Carrying Value over Time (Discount)

Bond issues at a discount → carrying value will increase over time

Accounting for Discount Bonds (Journal Entry) (ex 2)

Accounting for Premium Bonds (Journal Entry) (ex)

A Visual (of Premium on Bonds Payable)

Changes in Carrying Value over Time (Premium)

Accounting for Bond Retirement - At Maturity

Accounting for Bond Retirements - Prior to Maturity (Early Retirement)

Accounting for Bond Retirements - Prior to Maturity (Early Retirement) (Journal Entry)

Amortization Schedule for an Installment Note Payable

Recording Installment Payments on Note

Debt Analysis

Debt to Equity Ratio

Gain/Loss Formula

GL = Price Paid - Carrying Value