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Ebook Accouting (22th edition): Part 2

(BQ) Part 2 "Accouting" has contents: Bonds payable and investments in bonds, statement of cash flows, financial statement analysis, managerial accounting concepts and principles, job order costing, process cost systems, differential analysis and product pricing, capital investment analysis,.and other contents. | CH15_Warren22e.qxd 6/22/06 8:12 AM FINAL Page 649 chapter 15 © UNDER ARMOUR®/PRNEWSFOTO (AP TOPIC GALLERY) Bonds Payable and Investments in Bonds objectives After studying this chapter, you should be able to: 1 Compute the potential impact of long-term borrowing on earnings per share. 4 Describe and illustrate the payment and redemption of bonds payable. 2 Describe the characteristics, terminology, and pricing of bonds payable. 5 3 Journalize entries for bonds payable. Journalize entries for the purchase, interest, discount and premium amortization, and sale of bond investments. 6 Prepare a corporation balance sheet. CH15_Warren22e.qxd 6/22/06 8:12 AM FINAL Page 650 Under Armour® M ost of us don’t have enough money in our bank accounts to buy a house or a car by simply writing a check. Just imagine if you had to save the complete purchase price of a house before you could buy it! To help us make these types of purchases, banks will typically lend us the money, as long as we agree to repay the loan along with interest in smaller payments in the future. Loans such as this, or long-term debt, allow us to purchase assets such as houses and cars today, which benefit us over the long term. The use of debt can also help a business reach its objectives. Most businesses have to borrow money in order to acquire assets that they will use to generate income. For example, Under Armour®, a maker of performance athletic clothing, uses debt to acquire assets that it needs to manufacture and sell its prod- ucts. Since it began in 1995, the company has used long-term debt to transform itself from a small business to a leading athletic wear company. The company now sells products in over 8,000 retail stores across the world. In addition, Under Armour® products are used by a number of teams in the National Football League, Major League Baseball, the National Hockey League, and in Olympic sports. While debt can help companies like Under Armour® grow to .