Question - Below is the detailed liabilities section of Bruns Company, along with a summary of stockholders' equity and current assets. Please answer the following questions.
Accounts payable $1,200,000
Unearned revenue 800,000
Taxes payable 600,000
Current portion of long-term debt 500,000
*8% Bonds payable, $1,000 par 10,000,000
Less: Unamortized discount on bonds 400,000
Long-term note payable 200,000
Total Stockholders' Equity 35,000,000
Current Assets 6,400,000
*Bonds pay interest semiannually and are secured by undeveloped property located beside the company headquarters. The approximate market value of that property is $12,000,000. The maturity date of the bonds is January 1, 2008. The company has the right to pay the bondholder the principal and any interest accrued at any time after January 1, 2003.
1. What is the amount of total current liabilities?
2. How much working capital does the company have?
3. What is the current ratio?
4. Assume the bonds pay interest semiannually. What is the amount of the check that the holder of one bond receives each six months.
5. If the bondholder has to send in a slip of paper to get interest, what kind of bond is it?
6. When the bonds were sold, was the market rate higher or lower than the stated rate?
7. Over the life of the bonds, will there be more or less interest expense than if the bonds were issued at par.
8. How many bonds were issued?
9. What is the net amount of bond liability presented on the balance sheet at this time?
10. Calculate the debt-to-equity ratio.
11. Are these bonds debentures?
12. Are these bonds callable or redeemable?