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单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,单击此处编辑母版标题样式,*,Chapter 9,Bonds and Long-Term Notes,Bonds,Medium-and large-sized company often choose to borrow cash by issuing bonds.,A bond issue divides a large liability into many smaller liabilities,Bonds obligate the issuing company to repay a stated amount at a specified maturity date and periodic interest between the issue date and maturity.,Issue date,Maturity date,face amount+interest,Face amount stated rate,The bond indenture,A bond indenturedescribes the specific promises made to bondholders,The bond indenture is held by a,trustee,(commercial bank、other financial institution),Two participants:issuing company(issuer)/bondholder(investor),Debenture bond(无担保债券),Subordinated debenture(次级无担保债券),Mortgage bond（抵押债券）,Callable bond（可赎回债券）,Convertible bonds(可转换债券),Issuing the bond,Bonds can be issued in three ways:,Issued at face value(price=face amount),Stated rate=Market rate,Issued at a discount(priceface amount),Stated rateface amount),Stated rateMarket rate,Other things being equal,the lower the perceived riskiness of the bonds,the higher the price those bonds will command,Recording bonds issuance,Bonds issued at,face amount,Illustration 9-1 P373,On Jan.1,2011,issued the bond:,Issuer:,Dr.Cash 700,000,Cr.Bonds payable 700,000,Investor:,Dr.Investment in bonds 700,000,Cr.Cash 700,000,Liability,Asset,Recording bonds issuance,Illustration 9-1 P373,On June 30,2011,paid the interest:,First interest payment,=700,00012%(6/12)=$42,000,Issuer:,Dr.Interest expense 42,000,Cr.Cash 42,000,Investor:,Dr.Cash 42,000,Cr.Investment revenue 42,000,Recording bonds issuance,Illustration 9-1 P373,On Dec 31 2011,June 30 2012,Dec 31 2012,June 30 2013,make the same journal entry to record the interest payment.,On,Dec.31,2013,bonds were mature:,Issuer:,Dr.Interest expense 42,000,Cr.Cash 42,000,Dr.Bonds payable 700,000,Cr.Cash 700,000,Recording bonds issuance,Bonds issued at a,discount,The issuing price?,Price=PV of interest+PV of face amount,Illustration 9-2 P375,PV of interest:,Interest payment=$700,00012%(6/12)=$42,000,n=23=6 semiannual periods,i=14%(6/12)=7%,PV of interest=$42,0004.76654=$200,195,Recording bonds issuance,Illustration 9-2 P375,PV of face amount:,Face amount=$700,000,n=23=6 semiannual periods,i=14%(6/12)=7%,PV=$700,0000.66634=$466,438,Price,=$200,195+$466,438=$666,633,Recording bonds issuance,Illustration 9-2 P375,On Jan.1,2011,issued the bonds:,Issuer:,Dr.Cash 666,633,Discount on bonds payable 33,367,Cr.Bonds payable 700,000,The difference between the effective interest and the interest paid increases the existing liability,Effective interest=market rate,outstanding balance,Recording bonds issuance,Illustration 9-2 P375,On June 30,2011,paid the,interest:,Interest expense,=$666,63314%(6/12)=$46,664,Interest actually paid=Face amount Stated rate,=$700,00012%(6/12)=$42,000,Dr.Interest expense 46,664,Cr.Cash 42,000,Discount on bonds payable 4,664,On Dec.31,2011the outstanding balance,=$666,633+$4,664=671297,Recording bonds issuance,Illustration 9-2 P375,On Dec.31,2011,paid the interest:,Interest expense,=$671,29714%(6/12)=$46,991,Interest actually paid,=$700,00012%(6/12)=$42,000,Dr.Interest expense 46,991,Cr.Cash 42,000,Discount on bonds payable 4,991,Recording bonds issuance,Illustration 9-2 P375,On June 30 2012,Dec.31 2012,June 30 2013,make the same journal entry to record the interest payments:,On Dec.31,2013,bonds were mature:,Interest expense,=$693,45614%(6/12)=$48,544,Dr.Interest expense 48,544,Cr.Cash 42,000,Discount on bonds payable 6,544,Dr.Bonds payable 700,000,Cr.Cash 700,000,Recording bonds issuance,Bonds issued at a,premium,Issuing price:,Price=PV of interest+PV of face amount,Illustration 9-3 P378,PV of interest:,Interest payment,=$700,00012%(6/12)=$42,000,n=23=6 semiannual periods,i=10%(6/12)=5%,PV of interest=$42,0005.07569=$213,179,Recording bonds issuance,Illustration 9-3 P378,PV of face amount:,Face amount=$700,000,n=23=6 semiannual periods,i=10%(6/12)=5%,PV of face amount,=$700,0000.74622=$522,354,Recording bonds issuance,Illustration 9-3 P378,Price of the bonds,=PV of interest+PV of face amount,=$213,179+$522,354=$735,533,On Jan.1,2011,issued the bonds:,Dr.Cash 735,533,Cr.Bonds payable 700,000,Premium on bonds payable 35,533,Recording bonds issuance,Illustration 9-3 P378,On,June 30,2011,paid the interest:,Interest expense,=$735,53310%(6/12)=$36,777,Interest actually paid,=$700,00012%(6/12)=$42,000,Dr.Interest expense 36,777,Premium on bonds payable 5,223,Cr.Cash 42,000,Recording bonds issuance,Illustration 9-3 P378,On June 30 2012,Dec.312012,June 30 2013,make the same journal entry to record the interest payments:,On,Dec.31,2013,bonds were mature:,Interest expense,=$70667110%(6/12)=$35,329,Interest actually paid,=$700,00012%(6/12)=$42,000,Dr.Interest expense 35,329,Premium on bonds payable 6,671,Cr.Cash 42,000,Dr.Bonds payable 700,000,Cr.Cash 700,000,A zero-coupon bonds pay no interest.It offers a return in the form of a“deep discount”from the face amount,The prese
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