I need question 3 answered! Please and thanks. Golden Corporation has $20,000,00
ID: 2452563 • Letter: I
Question
I need question 3 answered! Please and thanks.
Golden Corporation has $20,000,000 of 10.5 percent, 20-year bonds dated June 1, 2010, with interest payment dates of May 31 and November 30, after ten years the bonds are callable at 104, and each $1, 000 bond is convertible into 25 shares of 420 par value common stock. The company's fiscal year ends on December 31, It uses the straight line method to amortize bond premium or discounts. Assume the bonds are issued at 103 on June 1,2010. How much cash is received? How much is Bonds Payable? What is the difference between a and b called and how much is it. With regard to the bond Interest payment on November 30, 2010: How much cash is paid in interest? How much is the amortization? How much is interest expense? Assume the bonds are issued at 97 on June 1, 2010. How much cash is received? How much is Bonds Payable? What is the difference between a and b called and how much is it. With regard to the bond interest payment on November 30, 2010: How much cash is paid in interest? How much is the amortization? How much is interest expense? Assume the issue price in requirement 1 and that the bonds are called and retired ten years later. How much cash will have to be paid to retire the bonds?: Is there a gain or loss on the retirement, and if so, how much is it? Assume the issue price in requirement 2 and that the bonds are converted to common stock ten years later Is there a gain or loss on the conversion, and if so, how much is it? How many shares of common stock are issued in exchange for the bonds? In dollar amounts, how does this transaction affect the total liabilities and the total stockholders' equity of the company? In your answer, show the effects on four accounts. Assume that after ten years, market interest rates have dropped significantly and that the price of the company's common sunk has risen significantly. Also assume that management wants to improve its credit rating by reducing ' debt to equity ratio and that it needs what cash it has for expansion. Which approach would management prefer-the approach and result in requirement 3 or 4? Explain your answer. What would be a disadvantage of the approach you chose?Explanation / Answer
Semiannual Interest Period Carrying Value at beginning of Period Semiannual Interest expense Interest Payment Amortization of bond premium Unamortiszed premium Carrying value at end 1 21000000 1075000 1050000 25000 975000 20975000 2 20975000 1075000 1050000 25000 950000 20950000 3 20950000 1075000 1050000 25000 925000 20925000 4 20925000 1075000 1050000 25000 900000 20900000 5 20900000 1075000 1050000 25000 875000 20875000 6 20875000 1075000 1050000 25000 850000 20850000 7 20850000 1075000 1050000 25000 825000 20825000 8 20825000 1075000 1050000 25000 800000 20800000 9 20800000 1075000 1050000 25000 775000 20775000 10 20775000 1075000 1050000 25000 750000 20750000 11 20750000 1075000 1050000 25000 725000 20725000 12 20725000 1075000 1050000 25000 700000 20700000 13 20700000 1075000 1050000 25000 675000 20675000 14 20675000 1075000 1050000 25000 650000 20650000 15 20650000 1075000 1050000 25000 625000 20625000 16 20625000 1075000 1050000 25000 600000 20600000 17 20600000 1075000 1050000 25000 575000 20575000 18 20575000 1075000 1050000 25000 550000 20550000 19 20550000 1075000 1050000 25000 525000 20525000 20 20525000 1075000 1050000 25000 500000 20500000 21 20500000 1075000 1050000 25000 475000 20475000 22 20475000 1075000 1050000 25000 450000 20450000 23 20450000 1075000 1050000 25000 425000 20425000 24 20425000 1075000 1050000 25000 400000 20400000 25 20400000 1075000 1050000 25000 375000 20375000 26 20375000 1075000 1050000 25000 350000 20350000 27 20350000 1075000 1050000 25000 325000 20325000 28 20325000 1075000 1050000 25000 300000 20300000 29 20300000 1075000 1050000 25000 275000 20275000 30 20275000 1075000 1050000 25000 250000 20250000 31 20250000 1075000 1050000 25000 225000 20225000 32 20225000 1075000 1050000 25000 200000 20200000 33 20200000 1075000 1050000 25000 175000 20175000 34 20175000 1075000 1050000 25000 150000 20150000 35 20150000 1075000 1050000 25000 125000 20125000 36 20125000 1075000 1050000 25000 100000 20100000 37 20100000 1075000 1050000 25000 75000 20075000 38 20075000 1075000 1050000 25000 50000 20050000 39 20050000 1075000 1050000 25000 25000 20025000 40 20025000 1075000 1050000 25000 0 20000000 DR CR Bond payable 20000000 Unamortiszed premium 500000 Loss on Retirement of Bond 300000 Cash1.04 20800000 20800000 20800000 Cash Payable 20800000 Loss on Retirement of Bond 300000