Thank you so much for making this video. I spent 3 hours trying to figure out how to solve a problem, and then I found your video. After watching your video, I was able to solve the problem in about a minute! You are awesome!
I’m confused at 2:40 you mention the interest rates are decreasing below 4.5 than say the company doesn’t want to pay 4.5% so they decide to recall or pay the bonds off. My question is if they are decreasing below 4.5% aren’t lower interest rates better, so why is this a negative if interest rates decrease? Thank you!
Good video! One question though: 5:00, why would the company be able to buy them back for cheaper? You did not specify the reason for this but it is quite confusing for me as the investor would be making a loss, so they would not have agreed to buying this bond in the first place
So if the interest rate is lower than the market, then the demand for your bond is very weak and in the open market, that bond will sell for less than face value. If it sells for less than face value, usually you'll be able to buy it back cheaper. This only occurs with bonds. It doesn't work with a loan from the bank. Patrick
Why does my textbook and Accounting instuctor have a four-part journal entry to eartly retirement of premium and discount bonds? I'm supposed to enter Discount on Bonds Payable, or Gain on Bonds Payable, and I keep getting those amounts and the Loss or Gain on Bonds Payable mixed up.
Good morning, Sir. In the books of the investor, what must be credited if it is retired before maturity at 110%? Is it a “Gain on Sale of Bonds” or “Gain on Early Retirement of Bonds”?
Thank you so much for making this video. I spent 3 hours trying to figure out how to solve a problem, and then I found your video. After watching your video, I was able to solve the problem in about a minute! You are awesome!
Patrick Lee you are an angel
That's not what my students say. But thanks for watching!
Thank you! Accounting exam tmm and this helped a lot!
I hope you got an A++++++. Thanks for watching! - Patrick
I’m confused at 2:40 you mention the interest rates are decreasing below 4.5 than say the company doesn’t want to pay 4.5% so they decide to recall or pay the bonds off. My question is if they are decreasing below 4.5% aren’t lower interest rates better, so why is this a negative if interest rates decrease? Thank you!
Good video! One question though: 5:00, why would the company be able to buy them back for cheaper? You did not specify the reason for this but it is quite confusing for me as the investor would be making a loss, so they would not have agreed to buying this bond in the first place
So if the interest rate is lower than the market, then the demand for your bond is very weak and in the open market, that bond will sell for less than face value. If it sells for less than face value, usually you'll be able to buy it back cheaper. This only occurs with bonds. It doesn't work with a loan from the bank. Patrick
Much more helpful than my textbook! Thank you so much :)
Thank you! Thank you! Thank you!!!
Thank you for saving me more hours of ripping my hair out lol. this was so helpful
Why does my textbook and Accounting instuctor have a four-part journal entry to eartly retirement of premium and discount bonds? I'm supposed to enter Discount on Bonds Payable, or Gain on Bonds Payable, and I keep getting those amounts and the Loss or Gain on Bonds Payable mixed up.
Good morning, Sir. In the books of the investor, what must be credited if it is retired before maturity at 110%? Is it a “Gain on Sale of Bonds” or “Gain on Early Retirement of Bonds”?
It would be gain on sale of bonds or you can use gain on early retirement of bonds, either account would technically work.
Thank you so much, Sir Patrick.
If the carrying value of the bonds is $101,000, do you multiply 1.03 * $101,000? or do you multiply 1.03 by the face value of $100,000?