Question

Analyzing and Reporting Financial Statement Effects of Bond Transactions Winston Inc. reports financial statements each December 31 and issues $400,000 of 9%, 15-year bonds dated May 1, 2017, with interest payments on October 31 and April 30. Assuming the bonds are sold at par on May 1, 2017, complete the financial statement effects template to reflect the following events: (a) bond issuance, (b) the first semiannual interest payment, and (c) retirement of $150,000 of the bonds at 102 on November 1, 2017. Use negative signs with answers, when appropriate.

Answer 1

Balance Sheet:

A) 400,000 + 0 = 400,000 + 0 + 0

B) -18,000 + 0 = 0 + 0 + -18,000

C) -153,000 + 0 = -150,000 + 0 + -3,000

Income Statement

A) 0 - 0 = 0

B) 0 - 18,000 = -18,000

C) 0 - 3,000 = -3,000

Step-by-step explanation:

Answer 2

Answer and Explanation:

The financial statement effects template to reflect the following events is shown below:-

Balance Sheet

Transaction Cash assets + Non Cash = Liabilities+Contributed assets capital Earned Capital

a. $400,000 $400,000

b. -$18,000

-$18,000

c. -$202,000 -$202,000

Income statement

Transaction Revenue - Expense = Net income

b. $18,000 -$18,000

c. $2,000 -$2,000