Sikes Corporation, whose annual accounting period ends on December 31, issued the following bonds:
Date of bonds: January 1, 2015
Maturity amount and date: $ 200,000 due in 10 years (December 31, 2024)
Interest: 10 percent per year payable each December 31
Date issued: January 1, 2015
Required:
1. For each of the three independent cases that follow, provide the amounts to be reported on the January 1, 2015, financial statements immediately after the bonds are issued:
2. Assume that a retired person has written to you (an investment adviser) asking, Why should I buy a bond at a premium when I can find one at a discount? Isn't that stupid? It's like paying list price for a car instead of negotiating a discount. Write a brief message in response to the question.