100. Pembrooke Corporation issued 15-year $500,000 6% semi-annual bonds five years ago at an effective interest rate of 8%. Coupon payment dates are April 1, and October 1. Interest rates have fallen,...

100. Pembrooke Corporation issued 15-year $500,000 6% semi-annual bonds five years ago at an effective interest rate of 8%. Coupon payment dates are April 1, and October 1. Interest rates have fallen, so Pembrooke can retire the bonds on October 1, 2015, for $500,000. The last coupon was paid on April 1, 2015, and after that the balance in the bond discount account was $67,952.



Required:


A) Calculate the gain or loss on retirement for Pembrooke.
B) Prepare the journal entry to record the retirement.
C) What is the current market rate on the bonds as at October 1, 2015?

101. Discuss whether debt or equity is riskier from the point of view of:


A) The investor
B) The issuing corporation

102. A) Briefly explain what the term "off-balance-sheet financing" means.
B) Give an example of an off-balance-sheet financing arrangement.
C) From the user's perspective, what is wrong with off-balance-sheet financing?