怀尔德《会计学原理》Chapter-12.pptVIP

* There are several advantages for issuing bonds instead of stock. Companies issue bonds because it is a way to raise needed capital without sacrificing ownership in the company. The interest on bonds is tax deductible, thereby reducing the actual taxes paid by the company. Issuing bonds can increase the return on equity if the company earns a higher return on the borrowed funds than it pays in interest. On the other side of the issue, there are some disadvantages to issuing bonds. Bonds require regular payment of interest and repayment of the principal borrowed. These required cash payments may be difficult if a company faces tight cash flows. Bonds can also decrease the return on equity if the company pays more in interest than it earns on the borrowed funds. * Bonds are securities that can be readily bought and sold. A large number of bonds are traded on the New York Exchange and the American Exchange. Since bonds are bought and sold in the market, they have a market value, or price. For convenience, bond market values are expressed as a percent of their par value. Here is a typical bond quote. The IBM bond has a stated interest rate of 7%, matures in 2025, has a market yield to maturity of 5.9%, 130 bonds were sold yesterday for a total trade at par of $130,000, each bond is selling for 119.25% of par or $1,192.50 per bond, since the close yesterday the bond price increased by $1.25. * A company issues bonds at par value of $800,000, the bonds have a stated interest rate of 9% with interest payable on June 30th and December 31st. The bonds are dated January 1, 2009 and mature 20 years later on December 31, 2028. On the issue date, we will debit Cash and credit Bonds Payable for $800,000. The Bonds Payable account is always credited for the par value, or maturity value, of the bonds. * On the first interest payment date, the company would debit Bond Interest Expense and credit Cash for $36,000. The interest was calculated as Par value times stat