15. On January 1, 20x1, Washing Co. contemplates on acquiringP3.000,000, 10% bonds to be classified as investment measuredat amortized cost. Principal orn the bonds will mature in foursemi-annual installments as follows:July 1, 20x1December 31, 20x11,200,000800,000600,000July 1, 20x2December 31, 20x2400,000Total3,000,000Interest on the outstanding principal balance is also due semi-annually. The effective rate on January 1, 20x1 is 12%. How muchIs the estimated purchase price of the bonds on January 1, 20xl?a. 2,449,112b. 2,494,112c. 2,782,667d. 2,944,112

Bond is a fixed income-based instrument, which contains low amount of risk. Organization issues…

15. On January 1, 20x1, P3.000,000, 10% bonds to be classified as investment measured at amortized cost. Principal on the bonds will mature in four shing Có. côntemplates on acquiring semi-annual installments as follows: July 1, 20x1 December 31, 20x1 1,200,000 800,000 July 1, 20x2 December 31, 20x2 600,000 400,000 3,000,000 Total

15. On January 1, 20x1, P3.000,000, 10% bonds to be classified as investment measured at amortized cost. Principal on the bonds will mature in four shing Có. côntemplates on acquiring semi-annual installments as follows: July 1, 20x1 December 31, 20x1 1,200,000 800,000 July 1, 20x2 December 31, 20x2 600,000 400,000 3,000,000 Total

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

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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

15. On January 1, 20x1, Washing Co. contemplates on acquiring
P3.000,000, 10% bonds to be classified as investment measured
at amortized cost. Principal orn the bonds will mature in four
semi-annual installments as follows:
July 1, 20x1
December 31, 20x1
1,200,000
800,000
600,000
July 1, 20x2
December 31, 20x2
400,000
Total
3,000,000
Interest on the outstanding principal balance is also due semi-
annually. The effective rate on January 1, 20x1 is 12%. How much
Is the estimated purchase price of the bonds on January 1, 20xl?
a. 2,449,112
b. 2,494,112
c. 2,782,667
d. 2,944,112

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3
9. Sean Corp. issued a $40,000, 10-year bond, with a stated rate of 8%, paid semiannually. How much cash will the bond investors receive at the end of the first interest period? a.$1,600 b.$4,000 c.$3,200 d.$800
Presented below is an amortization schedule related to Flint Company's 5-year, $150,000 bond with a 7% interest rate and a 4% yield, purchased on December 31, 2023, for $170,034. Date Cash Received Interest Revenue Bond Premium Carrying Amount Amortization of Bonds 12/31/23 $170,034 12/31/24 $10,500 $6,801 $3,699 166,335 12/31/25 10,500 6,653 3,847 162,488 12/31/26 10,500 6,500 4,000 158,488 12/31/27 10,500 6,340 4,160 154,328 12/31/28 10,500 6,172 4,328 150,000 The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end. 12/31/24 12/31/25 12/31/26 12/31/27 12/31/28 Amortized cost $166,335 $162,488 $158,488 $154,328 $150,000 Fair value 165,800 164,700 160,400 155,400 150,000 (a) Prepare the journal entry to record the purchase of these bonds on December 31, 2023, assuming the bonds are classified as held-to-maturity securities. (b) Prepare the journal entry related to the held-to-maturity bonds for 2024. (c) Prepare the journal entry…
Do not give answer in image formate
Requirement 1. Determine the present value of 10-year bonds payable with face value of $93,000 and stated interest rate of 12%, paid semiannually. The market rate of interest is 12% at issuance. (Round intermediary calculations and final answer to the nearest whole dollar.) 1. Determine the present value of 10-year bonds payable with face value of $93,000 and stated interest rate of 12%,paid semiannually. The market rate of interest is 12%at issuance. 2. Same bonds payable as in Requirement 1, but the market interest rate is 16%. 3. Same bonds payable as in Requirement 1, but the market interest rate is 8%.
5
14.On July 1, 2020, Chikadora Company issued P4M of 16% bonds to yield 14%. Interest is payable semi-annually on January 1 and July 1. The bonds mature in five years. The company uses the calendar year and the effective interest method of amortization.PV of 1 at 7% for 10 periods is P0.50835PV of 1 at 14% for 5 periods is P0.51937PV of an ordinary annuity of 1 at 7% for 10 periods is 7.02359PV of an ordinary annuity of 1 at 14% for 5 periods is 3.43308What is the issue price of the bond? a.)n P3,719,051 b.) P4,000,000 c.) P4,280,949 d.) P4,274,651
vj subject-Accounting
H1.
(J) Hambelton Ltd. issued $4,550,000 of 5% bonds payable on 1 September 20X9 to yield 4%. Interest on the bonds is paid semi-annually and is payable each 28 February and 31 August. The bonds were dated 1 March 20X8, and had an original term of five years. The accounting period ends on 31 December. The effective-interest method is used. (PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required:1. Determine the price at which the bonds were issued. (Round time value factor to 5 decimal places. Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.) 2. Prepare a bond amortization table for the life of the bond. (Round time value factor to 5 decimal places. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. Leave no cells blank - be certain to enter "0" wherever required.) 3.Prepare journal entries to record the issuance of the bonds, payment of…
24.AAA had the following information (PV Factor round off to four decimal places, other amounts round off always to whole number) Face Amount -P3,000,000 Date of Bonds – January 1, 2023 Date of Maturity – P1,000,000 annually starting December 31, 2023 Acquisition Date – January 1, 2023 Nominal Rate – 10% Effective Rate – 12% Interest Payment – December 31 Compute the Carrying Amount of the Investment in Bond on January 1, 2023

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