1. On January 1, 2024, Lansing Group issued $1,000,000 of 6% bonds, dated January 1. Interest is payablesemiannually on June 30 and December 31. The bonds mature in five years. The market yield for bondsof similar risk and maturity is 8%.INSTRUCTIONS:1.Determine the price of these bonds that are issued to yield the 8% market rate using the TimeValue of Money Tables. Include the table and relevant components for each factor used.2. Record the issuance of these bonds by Lansing Group.3.Prepare an amortization schedule that determines interest at the effective rate through thematurity date of the bonds.4.Prepare the entries to record the interest on June 30, 2024, and December 31, 2024.5. Assume that Lansing Group retires the bonds on January 1, 2026, paying $1,027,544. Prepare theentry to record the retirement.

The objective of the question is to determine the price of the bonds, record the issuance, prepare…

Answered: 1. On January 1, 2024, Lansing Group…

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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On July 1 2021, espresso industries issued $700000 of 12 % bonds, dated July 1. Interest is payable semiannually on June 30 and December 31. The bonds mature in three years. the market yield for bonds of similar risk and maturity is 14% . the proceeds to the bond issuer was 666633. bond issue cost was $40000. What is the effective interest rate of this bond? 12%, 14% 16.6%, 7%
On January 1, 2022, Eleanor Co. issued ten-year bonds with a face value of $5,000,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31. Required: Calculate the issue price of the bonds if the market interest rate is 4%. Calculate the issue price of the bonds if the market interest rate is 8%.
For each of the following three examples, provide the journal entry that the company would make on the date the bonds are issued. Note that you will need to do a present value calculation to determine the cash proceeds from each bond issue. You can round your answer to the nearest dollar. 1. Andersson Inc. issues 8-year bonds with a face value of $50,000,000 and a stated annual interest rate of 6%. The bonds pay interest semiannually on June 30 and December 31. The annual market rate of interest on the date of issue is 8%.
On 1 July 2022 Bombo Ltd issues $2 million in six-year bonds that pay interest every six months at a coupon rate of 8 per cent. At the time of issuing the securities, the market requires a rate of return of 6 per cent. Interest expense is determined using the effective-interest method. (PV tables are available at the end of this exam). Required Determine the issue price. Provide the journal entries at the dates below by showing relevant calculations in a table form. (i) 1 July 2022
please step by step answer.
The Bradford Company issued 12% bonds, dated January 1, with a face amount of $92 million on January 1, 2024. The bonds mature on December 31, 2033 (10 years). For bonds of similar risk and maturity, the market yield is 14%. Interest is paid semiannually on June 30 and December 31. Required: 1. Determine the price of the bonds at January 1, 2024. 2. to 4. Prepare the journal entries to record their issuance by The Bradford Company on January 1, 2024, interest on June 30, 2024 (at the effective rate) and interest on December 31, 2024 (at the effective rate). Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
On January 1, 2024, Blossom issued $6,300,000, 10% bonds. Interest is payable semi-annually on June 30 and December 31. The bonds mature on January 1, 2034. The bonds are sold to yield 12%. Click here to view factor table. (a) Calculate the issue price of the bonds. (Round factor values calculations to 5 decimal places, e.g. 2.55555 and finel answer to 0 decimal places, e.g. 25,000.) Issue price of bond Save for Later Attempts: 0 of 1 used Submit Answer (b) The parts of this question must be completed in order. This part will be available when you complete the part above.
A bond was issued at the beginning of the accounting year (01/02/2018) for $6,000. The bond has a par value of $10,000 and coupon rate of 7% paid semiannually. The yield to maturity on the bond is 14.78% per year compounded semiannually. Make the journal entries on 07/01 (end of first accounting period) to record bond amortization and interest expense based on effective interest method in the appropriate spaces below. Enter answers to the nearest whole number -- no decimal places or "$" signs. Journal entries at the end of the second accounting period. Date Description Description Debit Interest Expense 12/31 UABD Cash Credit
Assume that a bond is issued with the following characteristics: Date of bonds: January 1, 2023; maturity date: Dec. 31, 2027; face value: $200,000; Coupon interest rate: 10 percent paid semiannually; market interest rate: 12 percent; issue price: $185,280; bond discount is amortized using the effective interest method of amortization. What is the amount of bond discount amortization for the June 30, 2023, adjusting entry? A) $559 B) $1,117 C) $10,000 D) $11,117
When Patey Pontoons issued 8% bonds on January 1, 2024, with a face amount of $700,000, the market yield for bonds of similar risk and maturity was 9% The bonds mature December 31, 2027 (4 years). Interest is paid semiannually on June 30 and December 31. Required: 1. Determine the price of the bonds at January 1, 2024. 2. Prepare the journal entry to record their issuance by Patey on January 1, 2024. 3. Prepare an amortization schedule that determines interest at the effective rate each period. 4. Prepare the journal entry to record interest on June 30, 2024. 5. What is the amount related to the bonds that Patey will report in its balance sheet at December 31, 2024? 6. What is the amount related to the bonds that Patey will report in its income statement for the year ended December 31, 2024? (Ignore income taxes.) 7. Prepare the appropriate journal entries at maturity on December 31, 2027. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1. FVA of $1. PVA of $1.…
Brin Company issues bonds with a par value of $590,000. The bonds mature in 5 years and pay 9% annual Interest in semiannual payments. The annual market rate for the bonds is 12%. (Table B.1, Table B.2, Table B.3, and Table B.4) Note: Use appropriate factor(s) from the tables provided. 1. Compute the price of the bonds as of their Issue date. 2. Prepare the journal entry to record the bonds' issuance. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the price of the bonds as of their issue date. Note: Round all table values to 4 decimal places, and use the rounded table values in calculations. Round intermediate calculations to the nearest dollar amount. Table Values are Based on: Cash Flow Par (maturity) value Interest (annuity) Price of bonds n= Table Value Amount Present Value $ 0 Required 1 Prepare the journal entry to record the bonds' issuance. Note: Round intermediate calculations to the nearest dollar amount. Required 2 View…
Questions # 9-13 are based on the following: Jolly Old Co. issued 8% bonds with a face amount of $900,000 on January 1, 2021. The bonds mature on December 31, 2024 (4 years). For bonds of similar risk and maturity the market yield was 10%. Interest is paid semiannually on June 30 and December 31. Date 1/1/2021 6/30/2021 12/31/2021 6/30/2022 12/31/2022 6/30/2023 12/31/2023 6/30/2024 12/31/2024 Payment 36,000 36,000 36,000 36,000 36,000 36,000 36,000 36,000 Effective Interest 42,092 42,396 42,716 43,052 43,404 43,775 44,163 44,570 12. What is the bond price of this issue? A. $847,924 B. $841,832 Increase in Balance 6,092 6,396 6,716 7,052 7,404 7,775 8,163 8,570 10. What is the interest expense for the first year of the bonds? A. $72,000 B. $12,488 C. $84,488 D. $42,396 11. How much of the discount is amortized in the first year? A. $72,000 B. $42,396 C. $84,488 D. $12,488 9. What amount is debited to the Discount on Bonds Payable account on January 1, 2021? A. $58,168 B. $36,000 C.…

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