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5. Compute the price of $79,664,768 received for the bonds by using Table 1, Table 2, Table 3 and Table 4. Round to the nearest dollar. Your total may vary slightly from the price given due to rounding differences. Present value of the face amount Present value of the semiannual interest payments Price received for the bonds

5. Compute the price of $79,664,768 received for the bonds by using Table 1, Table 2, Table 3 and Table 4. Round to the nearest dollar. Your total may vary slightly from the price given due to rounding differences. Present value of the face amount Present value of the semiannual interest payments Price received for the bonds

Essentials Of Investments
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
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Bond Premium, Entries for Bonds Payable Transactions Rodgers Corporation produces and sells football equipment. On July 1, Year 1, Rodgers Corporation issued $74,800,000 of 10-year, 10% bonds at a market (effective) interest rate of 9%, receiving cash of $79,664,768. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: For all journal entries with a compound transaction, if an amount box does not require an entry, leave it blank. 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1. Cash 79,664,768 Premium on Bonds Payable 4,864,768 Bonds Payable 74,800,000 Feedback V Check My Work Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. The straight-line method of amortization provides equal amounts of amortization over the life of the bond. 2. Journalize the entries to record the following: а. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. Interest Expense 3,496,762 Premium on Bonds Payable v 243,238 Cash 3,740,000
Transcribed Image Text:Bond Premium, Entries for Bonds Payable Transactions Rodgers Corporation produces and sells football equipment. On July 1, Year 1, Rodgers Corporation issued $74,800,000 of 10-year, 10% bonds at a market (effective) interest rate of 9%, receiving cash of $79,664,768. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: For all journal entries with a compound transaction, if an amount box does not require an entry, leave it blank. 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1. Cash 79,664,768 Premium on Bonds Payable 4,864,768 Bonds Payable 74,800,000 Feedback V Check My Work Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. The straight-line method of amortization provides equal amounts of amortization over the life of the bond. 2. Journalize the entries to record the following: а. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. Interest Expense 3,496,762 Premium on Bonds Payable v 243,238 Cash 3,740,000
Correct b. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. Interest Expense 3,496,762 V Premium on Bonds Payable 243,238 V Cash v 3,740,000 Feedback V Check My Work Correct 3. Determine the total interest expense for Year 1. Round to the nearest dollar. 2$ 3,496,762 4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest? Yes 5. Compute the price of $79,664,768 received for the bonds by using Table 1, Table 2, Table 3 and Table 4. Round to the nearest dollar. Your total may vary slightly from the price given due to rounding differences. Present value of the face amount Present value of the semiannual interest payments Price received for the bonds $ Check My Work Previous Screenshot
Transcribed Image Text:Correct b. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. Interest Expense 3,496,762 V Premium on Bonds Payable 243,238 V Cash v 3,740,000 Feedback V Check My Work Correct 3. Determine the total interest expense for Year 1. Round to the nearest dollar. 2$ 3,496,762 4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest? Yes 5. Compute the price of $79,664,768 received for the bonds by using Table 1, Table 2, Table 3 and Table 4. Round to the nearest dollar. Your total may vary slightly from the price given due to rounding differences. Present value of the face amount Present value of the semiannual interest payments Price received for the bonds $ Check My Work Previous Screenshot
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