Question

When companies offer new debt security issues, they publicize the offerings in the financial press and on Internet sites. Assume the following were among the debt offerings reported in December 2021: New Securities Issues Corporate National Equipment Transfer Corporation—$205 million bonds via lead managers Second Tennessee Bank N.A. and Morgan, Dunavant & Co., according to a syndicate official. Terms: maturity, Dec. 15, 2030; coupon 7.51%; issue price, par; yield, 7.51%; noncallable; debt ratings: Ba-1 (Moody's Investors Service, Inc.), BBB+ (Standard & Poor's). IgWig Inc.—$355 million of notes via lead manager Stanley Brothers, Inc., according to a syndicate official. Terms: maturity, Dec. 1, 2032; coupon, 6.26%; Issue price, 99; yield, 6.36%; call date, NC; debt ratings: Baa-1 (Moody's Investors Service, Inc.), A (Standard & Poor's). Required: 1. Prepare the appropriate journal entries to record the sale of both issues to underwriters. Ignore share issue costs and assume no accrued interest. 2. Prepare the appropriate journal entries to record the first semiannual interest payment for both issues.

2. Prepare the appropriate journal entries to record the first semiannual interest payment for both issues. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the appropriate journal entries to record the sale of both issues to underwriters. Ignore share issue costs and assume no accrued interest. (Do not round your intermediate calculations. Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No General Journal Debit Credit Event 1 Cash Bonds payable 2 Cash Discount on notes payable Notes payable < Required 1 Required 2 >

Answer 1

Anrwer In bevesti A Organisation has various sources of funds to borrow from Houtrite. I urugace of Bands Acceptance of Nokes Payable, Leque Agreement Bank Loan etc. are the sources of funds. An organisation will bear some cit's on the of such funto which is well known as interest interest helps to take advantage of fax shield by providing charge against polito

Jownal Entries Amt. ($) Amica 111 ryoticellars Toyingl Enny to record the sale of both issues to underwriters کردم و or| 20.5000000 | 205000 000 To Boods Payable Ala | (Being to record bond issue of cosipos_7.51% at pm) ✓ C355 million X 99)=1002 Di Leiscount on Notes Plpable Al o v - To Notes Payable Ale (Being to record issuance of note payqbile ot_discount of #1 3514,52000 3550000 | 355000000 Joyrnel_Egby to record the first semi- annual intest payment for both issues 7697,750 9. Interest Expense Ala Dr. 9697,750 To Cash Ale # Being to record seminggual mlevest of Ibony for 6 months) Interest Expenje Ale Dr H14276,110 To Discount on Notes Payable 13.) - To cash Ale being to record intwest expense of Noter payable and discount amortized) - Total 578873860 64610 W11.500 S789 73860

working Note 0 Loiscount on Nolf Puyable - Company bas_issues notes payable qt_$99. _Il_m0103. that par value is greater than the issue prise when palvelee of security is greater_than_issue_price_of_searly then seunity is issued at discount. : 355 million X : D11049L_09_Nobe Payable $100 $ 3550000 © | Interest Experieo Bom! compagy_pays_interest on bond semiannually always calculated_on_the_face voluer Interealis In lempit on _ : $ 205 million x 7.51% X6 months Bon! - 12 months = $ 76,97,750 Interest Expense on Note Payable . Company, will have ay interest on noter payable ant also amortize the discount on noles payqbler - Jo tevest Expane 95 -per held $ 351450000 X 6.36% X6 months 12 months = $ 111,7610

= $$ 355 milljon x 6.26% X6 month )1 month Inbeveat Expense qs per pqr uglue - Coupon Rafe - هوكرريلا : Company will $ 114 115oo and only bequ interest difference between expense of interest in yield qoJ neye+جدولك اللهم فتلندع بطول ليوه t و By1991ng figure م ته مه )ov ده - اهورا ۱۱۱ - 120 1176 ) *: وروى 4 :