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
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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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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This is the whole page, my question is how to solve question 5
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 $79,664,768. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the
calendar year.
Required:
For all journal entries with a compound transaction, if an amount box does not require an entry, leave it blank.
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.
Cash
79,664,768
Premium on Bonds Payable
4,864,768
Bonds Payable
74,800,000
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Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account.
The straight-line method of amortization provides equal amounts of amortization over the life of the bond.
2. Journalize the entries to record the following:
а.
The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the straight-line method. Round to the nearest
dollar.
Interest Expense
3,496,762
Premium on Bonds Payable v
243,238
Cash
3,740,000
Transcribed Image Text:Correct
b. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar.
Interest Expense
3,496,762 V
Premium on Bonds Payable
243,238 V
Cash v
3,740,000
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Correct
3. Determine the total interest expense for Year 1. Round to the nearest dollar.
2$
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
$
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