Accounting for commonwealth edison bond issue

Reference no: EM13148681

Slow-selling new 91/4% bonds were tossed onto the resale market at a reduced price with about $70 million still available from the $200 million offered Thursday, dealers said.

The Chicago utility's bonds, rated double-A by Moody's and double-A-minus by Standard & Poor's, originally had been priced at 99.803, to yield 9.3% in 5 years. They were marked down yesterday the equivalent of about $5.50 for each $1,000 face amount, to about 99.25, where their yield jumped to 9.45%.

Instructions:

(a) How will the development above affect the accounting for Commonwealth Edison's bond issue?

(b) Provide several possible explanations for the markdown and the slow sale of Commonwealth Edison's bonds.

Reference no: EM13148681

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