Blockbuster Co is building a new state of the art cineplex at a cost of $3,500,000.They received a capital investment of $1,500,000. The remainder of funds will haveto be borrowed so they decided to issue bonds. They have issued 10.5%, 5-yearbonds. These bonds were issued on January 1st, 2020, and pay semi-annual intereston July 1st and January 1st. The bonds yield 10%. The year end is December 31st Calculate the proceeds from the sale of the bond. Clearly show theamount of the premium or discount and state two reasons which supportthe premium or discount calculated
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Blockbuster Co is building a new state of the art cineplex at a cost of $3,500,000.
They received a capital investment of $1,500,000. The remainder of funds will have
to be borrowed so they decided to issue bonds. They have issued 10.5%, 5-year
bonds. These bonds were issued on January 1st, 2020, and pay semi-annual interest
on July 1st and January 1st. The bonds yield 10%. The year end is December 31st
Calculate the proceeds from the sale of the bond. Clearly show the
amount of the premium or discount and state two reasons which support
the premium or discount calculated
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Solved in 2 steps
- Blockbuster Co is building a new state of the art Cineplex at a cost of $3,500,000. They received a capital investment of $1,500,000. The remainder of funds will have to be borrowed so they decided to issue bonds. They have issued 10.5%, 5-year bonds. These bonds were issued on January 1st, 2020, and pay semi-annual interest on July 1st and January 1st. The bonds yield 10%. The year-end is December 31st. Requirements: (Show all workings) I. Calculate the proceeds from the sale of the bond. Clearly, show the II. III. IV. amount of the premium or discount and state two reasons, which support the premium or discount calculated. Prepare a bond amortization schedule for the bond's life. Prepare all the journal entries for 2020, 2023 & 2025. Assume that on July 1 2023, Blockbuster Co. retires the bond at a cost of 1,065,000 plus accrued interest, if applicable. Prepare the journal entry to record this retirement.MHB Corporation wished to raise money for a series of upcoming projects. On July 1, 2023, the company issued bonds with a face value of $5,485,000 due in 5 years, paying interest at a face rate of 8% on January 1 and July 1 each year. The bonds were issued to yield 6%. MHB used the effective interest method of amortization for bond discounts or premiums. The company's year-end was September 30. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. (a) Using 1. factor Tables 2. a financial calculator, or 3. Excel function PV, calculate the premium or discount on the bonds. (Round present value factor calculations to 5 decimal places, eg. 1.25124 and final answer to O decimal places e.g. 58,971.) Discount on bonds payable $ eTextbook and Media List of Accounts Save for Later Last saved 17 hours ago. Saved work will be auto-submitted on the due date. Auto- submission can take up to 10 minutes. Attempts: 0 of 3 used…Alpesh
- Jian Kang Co. is building a new hockey arena at a cost of $6,000,000. It received a down payment of $2,000,000 from local businesses to support the project and now needs to borrow $4,000,000 to complete the project. It therefore decides to issue $4,000,000 of 10.5%, 10-year bonds. These bonds were issued on January 1, 2018, and pay interest annually on each January 1. The bonds yield 10%. Instructions:a. Prepare a bond amortization schedule.b. Prepare the journal entries needed in 2018 and 2019. Assume that on July 1, 2021, Jian Kang Co. retires half of the bonds at a cost of $1,065,000 and the accrued interest. Prepare the journal entry to record this retirement.Sunland Water Company Ltd. needed to raise $69 million of additional capital to finance the expansion of its bottled water facility. After consulting an investment banker, it decided to issue bonds. The bonds had a face value of $69 million and an annual interest rate of 4.5%, paid semi-annually on June 30 and December 31, and will reach maturity on December 31, 2034. The bonds were issued at 96.1 on January 1, 2025, for $66,309,000, which represented a yield of 5%. (b) Show the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Account Titles and Explanation Debit CreditCheyenne Co. is building a new hockey arena at a cost of $2,460,000. It received a downpayment of $500,000 from local businesses to support the project and now needs to borrow $1,960,000 to complete the project. It therefore decides to issue $1,960,000 of 10%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 9%. Collapse question part(a) Correct answer. Your answer is correct.Prepare the journal entry to record the issuance of the bonds on January 1, 2019. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) DateAccount Titles and ExplanationDebitCreditJanuary 1, 2019Entry field with correct answerCashEntry field with correct answer2,085,786Entry…
- Thompson Distributors sold $50,000 worth of bonds to raise money for a new warehouse. The bonds pay interest annually at 4% for 10 years. The market rate of interest for a similar instrument was 3%; therefore, the bonds sold for a premium at $54,265. a. Record the sale of the bonds. b. Record the first interest payment and the amortization of the bond premium. Round the interest to the nearest dollar. c. Determine the carrying value (book value) of the bonds after the first year. General Journal Date Account Debit Credit a. b.Please put all of the necessary data and computations for better understanding. Thanks ?Ardvark plans to raise the capital by issuing $210,000 of 7.5%, six-year bonds on January 2, 2020. The bonds pay interest semiannually on June 30 and December 31. The market rate is 8%. The company receives $208,476 when the bonds are issued.The company also issues a mortgage payable for $450,000 on January 2, 2020. The proceeds from the mortgage will be used to construct the new building. The mortgage requires annual payments of $45,000 plus interest for ten years, payable on December 31. The mortgage interest rate is 8%. 1) Will the bonds issue at face value, a premium, or a discoutn? 2) Record teh following transactions. Include dates and round to the nearest dollar. Omit explainations. 2a) Cash recevied from the bond issue. 2b) Cash received from the mortgage payable. 2c) Semiannual bond interest payments for 2020. Amortize the premium or discount using the straight-line amortization method. 2d) Payment on the mortgage payable for 2020. 2e) Retirement of bond at maturity on…
- Venzuela Co. is building a new hockey arena at a cost of $2,500,000. It received a down payment of $500,000 from localbusinesses to support the project and now needs to borrow $2,000,000 to complete the project. It therefore decides to issue$2,000,000 of 10.5%, 10-year bonds. These bonds were issued on January 1, 2014, and pay interest annually on each January1. The bonds yield 10%.Question :(a) Prepare the journal entry to record the issuance of the bonds on January 1, 2014.(b) Prepare a bond amortization schedule up to and including January 1, 2018.(c) Assume that on July 1, 2017, Venzuela Co. retires half of the bonds at a cost of $1,065,000 plus accrued interest. Preparethe journal entry to record this retirement.SOAL 3In each of the following independent cases, the company closes its books on December 31.1. Sanford Co. sells $500,000 of 10% bonds on March 1, 2015. The bonds pay interest on September 1 and March 1. The duedate of the bonds is September 1, 2018. The bonds yield 12%.…On January 1, 2024, Splash City issues $320,000 of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. The market interest rate on the issue date is 9% and the bonds issued at $293,938. If the market interest rate drops to 7% on December 31, 2025, it will cost $347,025 to retire the bonds. Record the retirement of the bonds on December 31, 2025.On January 1, 2024, Splash City issues $500,000 of 9% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. The market interest rate on the issue date is 10% and the bonds issued at $457,102. Required: 1. Using an amortization schedule, show that the bonds have a carrying value of $458,633 on December 31, 2025. (Round your final answers to nearest whole dollar.)