ABC Corporation acquired a call option for 5,000 pieces of P1,000-face value bonds of XYZ Corp. at a strike of 99 on a later date. ABC paid a premium of P47,000. On the exercise day of the option, the bonds were selling fast 98. How much is net gain/(loss) from the above transactions?
Q: Chang Industries has bonds outstanding with a par value of $200,000 and a carrying value of…
A: Calculation of gain or loss on retirement:
Q: Fuzzy Monkey Technologies, Incorporated purchased as a long-term investment $210 million of 6%…
A: Bond investment can be defined as the investment to generate interest revenue and the value of the…
Q: Firm ZYX paid $94,111 on 1/1/y1 to purchase a bond with the following terms: • Par value - $100,000…
A: The objective of the question is to determine the reported value of the bond on 12/31/y1, given that…
Q: On January 1, 20x1, ABC Co. purchased 1 000 000 bonds at a price that reflects a yield rate of 14%.…
A: A bond is a promise made by the borrower, which is usually government or companies, to pay off the…
Q: On January 1, 2021, Panama Company purchased P3,000,000 face amount, 9% bonds. The bonds were…
A: A bond is a debt security that produces fixed income at a pre-determined rate. The bond issuer is…
Q: McWherter Instruments sold $400 million of 8% bonds, dated January 1, on January 1, 2021. The bonds…
A: Hey, since there are multiple sub-parts posted, we will answer the three sub-parts. If you want any…
Q: Acme Entertainment had $1,300,000 of 6%, $1,000 par callable bonds outstanding on December 31, 2023,…
A: The objective of this question is to calculate the gain or loss on early extinguishment of debt for…
Q: 1. Provide the journal entry for the initial investment. 2. Provide the journal entry at December…
A: 1. Initial investment Date Particulars Debit Credit Jan 1, 2019 Available for sale investment…
Q: The face value of Ace Hardware Company's outstanding bonds is $400,000 and unamortized premium is…
A: Face value of bond is $400,000, Hence 50% of these bonds will be valued at $200,000. These bonds…
Q: HaddockCorp. purchased fifteen $1,000 7% bonds of Galvan Corporation when the market rate ofinterest…
A: Determining the price of a bond: Bond prices fluctuate on the open market in response to supply and…
Q: 3. On January 1, 20x1, Allan Co. purchased P400,000 bonds for P392,000. The bonds mature on January…
A: We will calculate the gain by comparing present value of bond and interest with the cost of purchase…
Q: On January 1, 2022, Tony Orlando Industries had outstanding $1,000,000 of 12% bonds with a book…
A: Bonds refer to the instrument considered as fixed income that is representing the loan to a borrower…
Q: Eros Corp. decided to go into the market to repurchase bonds before their due date. The bonds had a…
A: The bonds are long-term debt securities that are generally issued by the corporation to raise money.…
Q: ation bought a put option on XYZ Corp. P5,000,000-face value bonds for a premium of P25,000. The…
A: A put option is an instrument which provides its holder an option to sell an underlying asset on a…
Q: Identify: Investment in Bonds as of acquisition Interest income for the year Unrealized Holding…
A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…
Q: Cross Country Railroad Co. is about to issue $100,000 of 10-year bonds that pay a 5.5% annual…
A: Present value (PV) is a financial concept used to determine the current worth of a future sum of…
Q: On February 18, 2021, Union Corporation purchased 1,056 IBM bonds as a long-term investment at their…
A: Adjusting Entry:- The adjusting entry are prepared at the end of the particular period when…
Q: 2. What is the gain or loss from extinguishment of bonds? a. 700,000 gain b. 700,000 loss c. 300,000…
A: Bonds are a form of loan or debt that is being issued by the company for raising funds, on which…
Q: On March 1, Wayne Michaels bought 10 bonds from a particular company with a coupon rate of 9.925%.…
A: Yield refers to the expected return on the underlying security. Investors periodically calculate the…
Q: A company has bonds outstanding with a parvalue of $100,000. The unamortized premium on these bonds…
A: Unamortized premium on bonds is calculating by deducting the bond's price at actual face value at…
Q: On January 1, 2020, the company issued $2,500,000 6% bonds with a 10-year maturity. The bonds were…
A: Solution:- We know, Present Value of a bond = Present value of benefits receivable from bond…
Q: Shriver Corp. purchased ten $1,000 5% bonds of Simplex Corporation when the market rate of interest…
A: Bonds represent a form of debt financing. The PV function, which calculates the present value, can…
Q: On January 1, 2021, Blue company purchased P1,000,000, 12% bonds for P1,065,000, a price that yields…
A: In a table known as a bond amortisation schedule, the sum of interest paid, interest accrued, and…
Q: If a company issues $100,000 Face Value, 10 year bonds with a contractural interest rate of 6%,…
A: >Bonds Payable are the source of finance for the companies. >The bondholders are…
Q: On Jan. 1, 2021, ABC bought serial bonds with a face value of P2,400,000 for P2,160,000 cash. The…
A: Given: The value includes face value of P2,400,000 for P2,160,000 cash. It will be paid in…
Q: On January 1 of this year, Clearwater Corporation sold bonds with a face value of $780,000 and a…
A: Bond issuance involves a company selling bonds to raise capital. Amortization, particularly in…
Q: On Jan. 1, 2021, ABC bought serial bonds with a face value of P2,400,000 for P2,160,000 cash. The…
A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…
Q: 1. Determine the price of the bonds issued on January 1, 2021. 2. Prepare the journal entries to…
A: Hey, since there are multiple sub-parts posted, we will answer the three sub-parts. If you want any…
Q: On 1 July 2021, Jill Ltd acquired some corporate bonds issued by Soy Ltd • These bonds…
A: The premium on bond arises when the invested price is higher than its face value. A fall in market…
Q: Choose the correct answer 1.)Maroa Corporation entered into two derivatives contracts. The first is…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: A company has bonds outstanding with a par value of $130,000. The unamortized premium on these bonds…
A: When bond market costs higher than its face value then bonds is called at premium. The difference…
Q: Fuzzy Monkey Technologies Inc purchased as a long-term investmetn S60 million of 6% bonds, dated Jan…
A: A bond is a fixed-income security issued by a borrower, typically a corporation or government, to…
Q: On 1 June 20X8, Ghana Company purchased $7,400,000 of Monaco Corp. 5.70% bonds, classified as a…
A: The securities in which money is invested to get fixed periodic payment and a specific amount of…
Q: Fuzzy Monkey Technologies, Incorporated purchased as a long-term investment $240 million of 6%…
A: The Investment Available for Sale (AFS) under the fair value option is recorded at the fair value of…
Q: AI Tool and Dye issued 8% bonds with a face amount of $160 million on January 1, 2021. The bonds…
A: Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money…
Q: Zhang Company, an IFRS company, sold $7,000,000 of 6%, 3-year bonds on January 1, 2022. The bonds…
A: The objective of the question is to calculate the effective interest rate for the bonds issued by…
ABC Corporation acquired a call option for 5,000 pieces of P1,000-face
![](/static/compass_v2/shared-icons/check-mark.png)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
- ABC Corporation bought a put option on XYZ Corp. P5,000,000-face value bonds for a premium of P25,000. The strike price is P5,100,000. 1. If on the exercise date of the option, the bonds were selling at P5,060,000, how much is the net gain/(loss) based on the information above? 2. If on the exercise date of the option, the bonds were selling at P5,200,000, how much is the net gain/(loss) based on the information above?A company has bonds outstanding with a par value of $130,000. The unamortized premium on these bonds is $3,185. If the company retired these bonds at a call price of $128,700, the gain or loss on this retirement is: Multiple Choice O O $1,300 gain. $3,185 loss. $4,485 gain.3. On January 1, 20x1, Allan Co. purchased P400,000 bonds for P392,000. The bonds mature on January 1, 20x5 and pay 12% annual interest beginning January 1, 20x2. Transaction costs are negligible. The bonds were classified as held for trading securities. On December 31, 20x1, the bonds are selling at a yield rate of 10%. How much is the unrealized gain (loss) recognized on December 31, 20x1?
- The face value of Ace Hardware Company's outstanding bonds is S400,000 and unamortized premium is $20,000. The company calls 50% of the outstanding bonds at a price of $205,000. What is the gain or loss on retirement of bonds?OShea Inc. issued bonds at a face value of $100,000, a rate of 6%, and a 5-year term for $98,000. From this information, we know that the market rate of interest was ________. A. more than 6% B. less than 6% C. equal to 6% D. cannot be determined from the information given.Starmount Inc. sold bonds with a $50,000 face value, 12% interest, and 10-year term at $48,000. What is the total amount of interest expense over the life of the bonds?
- 3. On January 1, 2022, Tony Orlando Industries had outstanding $1,000,000 of 12% bonds with a bookamount of $966,130. The indenture specified a call price of $981,000. The bonds were issued previouslyat a price to yield 14%. Tony Orlando called the bonds (retired them) on July 1, 2022. What is theamount of the loss on early extinguishment?a. $0.b. $6,932.c. $7,241.d. $7,629AshvinEros Corp. decided to go into the market to repurchase bonds before their due date. The bonds had a maturity value of $3,500,000. On the date of retirement, the balance on the Discount on Bonds Payable account was $54,700. If Eros purchased the bonds on the open market at a price of 99 to retire the bond, what is the gain or loss on the early extinguishment of the debt?
- On 1 July 2021, Jill Ltd acquired some corporate bonds issued by Soy Ltd • These bonds cost $1 038 870. They had a ‘face value’ of $1 million and offered a coupon rate of 10 per cent paid annually ($100 000 per year, paid on 30 June). The bonds would repay the principal of $1 million on 30 June 2026 • At the time the market only required a rate of return on 9 per cent on such bonds • Jill Ltd operates within a business model where government bonds are held in order to collect contractual cash flows and there is no intention to trade them • Assume that there were no direct costs associated with acquiring the bonds Based on the above information, calculate the amortised cost of the bonds as at30 June 2022, 2023, 2024, 2025 and 2026Fuzzy Monkey Technologies Inc purchased as a long-term investmetn $60 million of 6% bonds, dated Jan 1, on Jan 1 2021. Management has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity the market yield was 8%. The price paid for the bonds was $46 million. Interest is received semianually on June 30 and Dec 31. Due to changing market conditions the fair value of the bonds at Dec 31 2021 was $50 million. 1 to 3. Prepare the relevant journal entries on the respective dates. 4. At what amount will Fuzzy Monkey report its investment in Dec 31, 2021 balance sheet? 5. How would Fuzzy Monkey's 2021 statement of cash flows be affected by this investment?McWherter Instruments sold $400 million of 8% bonds, dated January 1, on January 1, 2021. The bonds mature on December 31, 2040 (20 years). For bonds of similar risk and maturity, the market yield was 10%. Interest is paid semiannually on June 30 and December 31. Blanton Technologies, Inc., purchased $400,000 of the bonds as a long-term investment.Required:1. Determine the price of the bonds issued on January 1, 2021.2. Prepare the journal entries to record (a) their issuance by McWherter and (b) Blanton’s investment on January 1, 2021.3. Prepare the journal entries by (a) McWherter and (b) Blanton to record interest on June 30, 2021 (at the effective rate).4. Prepare the journal entries by (a) McWherter and (b) Blanton to record interest on December 31, 2021 (at the effective rate).
![Cornerstones of Financial Accounting](https://www.bartleby.com/isbn_cover_images/9781337690881/9781337690881_smallCoverImage.gif)
![Cornerstones of Financial Accounting](https://www.bartleby.com/isbn_cover_images/9781337690881/9781337690881_smallCoverImage.gif)