14. On Jan. 1, 20x1, Joe Satriani Co. purchased P6,000,000 face amount, 10% bonds at 96. Joe incurred transaction costs of P40,610 on the acquisition. The bonds mature in three equal annual installments every Dec. 31. Interest on the outstanding principal balance of the bonds is also due annually at each year-end. What is the effective interest rate and how much is the current portion of the bonds on Dec. 31, 20x1? c. 11%; 1,002,249 d. 12%; 1,932,398 a. 6%; 863,247 b. 9%; 932,341

14. On Jan. 1, 20x1, Joe Satriani Co. purchased P6,000,000 face amount, 10% bonds at 96. Joe incurred transaction costs of P40,610 on the acquisition. The bonds mature in three equal annual installments every Dec. 31. Interest on the outstanding principal balance of the bonds is also due annually at each year-end. What is the effective interest rate and how much is the current portion of the bonds on Dec. 31, 20x1? c. 11%; 1,002,249 d. 12%; 1,932,398 a. 6%; 863,247 b. 9%; 932,341

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

3. Conor Corporation has $10,500,000 of 5 percent, 10-year bonds dated January 1, with interest payment dates of June 30 and December 31. The company’s fiscal year ends December 31. A. Assume the bonds are issued for $9,720,000 on January 1 to yield an effective interest rate of 6 percent. Prepare journal entries for January 1, June 30, and December 31, assuming that Conor Corporation uses the effective interest method to amortize bond premiums or discounts. B. Calculate the net book value of the bonds after the interest payments have been made on June 30 and December 31.
A company issued 9.2%, 10-year bonds with a par value of $100,000. Interest is paid semiannually. The market interest rate on the issue date was 10%, and the issuer received $95,016 cash for the bonds. On the first semiannual interest date, what amount of cash should be paid to the holders of these bonds for interest?
Diana Inc. issued $150,000 of its 9%, 5-year bonds for $144,218 when the market rate was 10%. The bonds pay interest semi-annually. Prepare an amortization table for the first three payments. Round intermediate and final answers to whole dollar amount. Cash InterestPayment Interest onCarrying Value Amortization ofDiscount Carrying Value
BMT Company issued P5,000,000, 12%, 20-year bonds at 102 plus accrued interest on February 1, 2021. The bonds are dated January 1, 2021 and pay interest semi-annually every June 30 and December 31, Transaction costs totaled P50,000. How much accrued interest on the bonds shall BMT Company collect from the investor on February 1, 2021?
On 1 January 20X5, Franco Ltd. purchased $440,000 of Gentron Company 7.00% bonds. The bonds pay semi-annual interest each 30 June and 31 December. The market interest rate was 8% on the date of purchase. The bonds mature on 31 December 20X10. The company has a 31 December year-end. Required: 1. Calculate the price paid by Franco Ltd. (Do not round Intermediate calculations. Round your final answer to the nearest dollar amount.) Price paid Period 2. Assume that the bond is classified as an AC investment. Construct a table that shows interest revenue reported by Franco, and the carrying value of the investment, for four interest periods. Use the effective-interest method. (Do not round Intermediate calculations. Round your final answers to the nearest dollar amount.) 0 $ 1 2 3 4 Cash Payment 361,607 View transaction list Interest Revenue Amortization Bond Carrying Value 3. Prepare the entries for the first four interest periods based on your calculations in requirement 2. (If no entry is…
On January 1, Shanghai Fashions issued $325,000 of 6%, 3-year bonds when the market rate of interest was 10%. The bonds pay interest semiannually on June 30 and December 31. A. How much are the proceeds that Shanghai Fashions Company will receive on the issue date of the bonds? B. Prepare an amortization table for the bond issue. C. If the bonds are retired at the end of Year 2 at 104.5% of the maturity value, how much gain or loss on retirement will be reported?
Diana Inc. issued $100,000 of its 9%, 5-year bonds for $96,149 when the market rate was 10%. The bonds pay interest semi-annually. Prepare an amortization table for the first three payments. PLEASE NOTE: All whole dollar amounts will be with "$" and commas as needed (i.e. $12,345). Semiannual Interest Period Semiannual Interest Expense Semiannual Interest Payment Amortization of Discount Ending Carrying Value 1 2 3
On January 1, a company issued 3%, 20-year bonds with a face amount of $80 million for $69,057,808 to yield 4%. Interest is paid semiannually. What was the interest expense at the effective interest rate on the December 31 annual income statement? (Enter your answer in whole dollars. Round your intermediate calculations to the nearest dollar amount.)
On April 1, 2021, Marigold Corporation issued $352.000, 5-year bonds. On this date, Shoreline Corporation puurchased the bonds from Marigold to earn interest. Interest is received semi-annually on April 1 and October 1 and Shoreline's year end is March 31 Below is a partial amortization schedule for the first three interest periods of the bond issue Semi-Annual Interest Received Interest Interest Period Revenue Amortization Bond Amortized Cost April 1. 2021 $368.231 October 1, 2021 $7.040 $5.523 $1.517 366.714 April 1.2022 7.040 5.501 1.539 365,175 October 1, 2022 7.040 5,478 1,562 363,613 Were the bonds purchased at a discount or at a premium? Bonds purchased at a What is the face value of the bonds? Face value of the bonds s eTextbook and Media What will the bonds' amortized cost be at the maturity date? Bonds' amortized cost at the maturity date eTextbook and Media /1 E What is the bonds' contractual interest rate? The market interest rate? (Round answers to 2 decimal places, eg…
7. Bower Company sold $100,000 of 20-year bonds for $95,000. The stated rate on the bonds was 7%, and interest is paid annually on December 31. What entry would be made on December 31 when the interest is paid? (Numbers are omitted.) a.Dr. Interest ExpenseCr. Bonds PayableCr. Cash b.Dr. Interest ExpenseCr. Cash c.Dr. Interest ExpenseCr. Discount on Bonds PayableCr. Cash d.Dr. Interest ExpenseDr. Discount on Bonds PayableCr. Cash
1. On January 1, 20X2, Tanangonan Company acquired all the assets and assumed all the liabilities of Ong Company. In exchange for the net assets of Ong, Tanangonan gave its bond payable with a maturity value of P600,000 with a stated rate of 10% interest payable semiannually on June 30 and December 31. The said bond will mature after 10 years and has a yield rate of 12%. The Statement of Financial Position (SFP) of both companies as of January 1, 20X2 were as follows: Tanangonan Book Value Ong Book Value Fair Value P250,000 352,700 Cash P114,000 150,000 232,000 100,000 410,000 (170,500) 136,450 (90,450) P881,500 P114,000 135,000 310,000 315,000 54,900 Receivables Inventories 848,300 700,000 950,000 (325,000) 262,750 (70,050) P2,968,700 Land Buildings Accumulated Depreciation – Buildings Equipment Accumulated Depreciation – Equipment Total Assets 39,450 P968,350 Current Liabilities Bond Payable Common Stock, P15 par value Common Stock, P5 par value Other Contributed Capital Retained…
On January 1, Elias Corporation issued 10% bonds with a face value of $68,000. The bonds are sold for $65,960. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 10 years from now. Elias records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 of the first year is a. $567 b. $2,040 c. $7,004 d. $6,800

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS