AccountingEvermaster issued 20 corporate bonds with a facevalue of $100,000 on May 1, 2022, each with amaturity of 5 years. The corporate bonds willaccrue interest from January 1, 2022, with acoupon rate of 6%, and the interest will be paidonce a year. The market rate applicable toEvermaster at the time of issuance is 8%. On July 1,2024, Evermaster Company redeemed 10corporate bonds at 100 plus accrued interest.1. Calculate the issue price of the corporatebonds of Evermaster on May 1, 20222. Prepare a 5-year discount, premium, andamortization table for the corporate bond3. Make the interest adjustment entry onDecember 31, 2022 and the redemptioncorporate bond entry on July 1, 2024.

20 Corporate Bond Face Value of Each Bond $ 1,00,000 Maturity 5 years Coupon Rate…

1. ate the Issue price of the corpora bonds of Evermaster on May 1, 2022 2. Prepare a 5-year discount, premium, a amortization table for the corporate bone 3. Make the interest adjustment entry on December 31, 2022 and the redemption corporate bond entry on July 1, 2024.

1. ate the Issue price of the corpora bonds of Evermaster on May 1, 2022 2. Prepare a 5-year discount, premium, a amortization table for the corporate bone 3. Make the interest adjustment entry on December 31, 2022 and the redemption corporate bond entry on July 1, 2024.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Debenture Valuation

A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.

Note Valuation

It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:

Question

Accounting
Evermaster issued 20 corporate bonds with a face
value of $100,000 on May 1, 2022, each with a
maturity of 5 years. The corporate bonds will
accrue interest from January 1, 2022, with a
coupon rate of 6%, and the interest will be paid
once a year. The market rate applicable to
Evermaster at the time of issuance is 8%. On July 1,
2024, Evermaster Company redeemed 10
corporate bonds at 100 plus accrued interest.
1. Calculate the issue price of the corporate
bonds of Evermaster on May 1, 2022
2. Prepare a 5-year discount, premium, and
amortization table for the corporate bond
3. Make the interest adjustment entry on
December 31, 2022 and the redemption
corporate bond entry on July 1, 2024.

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