Determining Bond Selling PriceCalculate the bond selling price for the following three separate scenarios.a. 33M Corp. authorized and issued $100,000, 6%, 20-year bonds payable on January 1. Calculate the selling price of the bonds if the bonds pay cashinterest semiannually on July 1 and January 1, and the market rate on similar bonds is 8%.b. 33M Corp. authorized and issued $250,000, 7%, 10-year bonds payable on January 1. Calculate the selling price of the bonds if the bonds pay cashinterest semiannually on July 1 and January 1, and the market rate on similar bonds is 6%.c. 33M Corp. issued $75,000, 5%, 10-year bonds payable on March 31 of Year 1. The bonds were authorized on January 1 of Year 1. Calculate the sellingprice of the bonds (including interest) if the bonds pay cash interest annually on January 1, and the market rate on similar bonds is 6%.Note: Round answers to the nearest whole dollar.a. $80,207b. $268,597C. $ 69,479 *

In part c the bonds were issued on March 31, but the authorized date of the same was Jan 01.Hence,…

Answered: Calculate the bond selling price for…

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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On January 1, Parson Freight Company issues 8.5%, 10-year bonds with a par value of $4,300,000. The bonds pay interest semiannually. The market rate of interest is 9.5% and the bond selling price was $4,007,812. The bond issuance should be recorded as: Multiple Choice Debit Cash $4,007,812; debit Interest Expense $292,188; credit Bonds Payable $4,300,000. Debit Cash $4,007,812; credit Bonds Payable $4,007,812. Debit Cash $4,300,000; credit Bonds Payable $4,007,812; credit Discount on Bonds Payable $292,188. Debit Cash $4,300,000; credit Bonds Payable $4,300,000. Debit Cash $4,007,812; debit Discount on Bonds Payable $292,188; credit Bonds Payable $4,300,000.
Enviro Company issues 8%, 10-year bonds with a par value of $170,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87 1⁄2. The straight-line method is used to allocate interest expense. 1. What are the issuer's cash proceeds from issuance of these bonds?2. What total amount of bond interest expense will be recognized over the life of these bonds?3. What is the amount of bond interest expense recorded on the first interest payment date?
On January 1, Year 1, Twain Corporation sold $620,000 of its own 5 percent, 10-year bonds. Interest is payable annually on December 31. The bonds were sold to yield an effective interest rate of 6 percent. Twain uses the effective interest rate method. The bonds sold for $574,368. Requireda. Prepare the journal entry for the issuance of the bonds.b. Prepare the journal entry for the amortization of the bond discount and the payment of the interest at December 31, Year 1. (Assume effective interest amortization.)c. Prepare the journal entry for the amortization of the bond discount and the payment of interest on December 31, Year 1. (Assume straight-line amortization.)d. Calculate the amount of interest expense for Year 2. (Assume effective interest amortization.) e. Calculate the amount of interest expense for Year 2. (Assume straight-line amortization.)
1.On January 1, Year 1, Wayne Company issued bonds with a face value of $600,000, a 6% stated rate of interest, and a 10-year term. Interest is payable in cash on December 31 of each year. Wayne uses the straight-line method to amortize bond discounts and premiums. Assuming Wayne issued the bonds for 102.5, what is the amount of interest expense that will be reported on the income statement for the year ending December 31, Year 1? 2. On January 1, Year 1, Wayne Company issued bonds with a face value of $600,000, a 6% stated rate of interest, and a 10-year term. Interest is payable in cash on December 31 of each year. Wayne uses the straight-line method to amortize bond discounts and premiums. 2.Assuming Wayne issued the bonds for 102.5, what is the amount of interest expense that will be reported on the income statement for the year ending December 31, Year 1? 3.Perry Corporation was established on January 1, Year 1 when it issued 20,000 shares of $50 par, 5 percent, cumulative…
Enviro Company issues 10%, 10-year bonds with a par value of $240,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 12%, which implies a selling price of 88 1/2. Prepare the journal entry for the issuance of the bonds for cash on January 1. View transaction list Journal entry worksheet 1 Record the issue of bonds with a par value of $240,000. Note: Enter debits before credits. Date January 01 Record entry General Journal Clear entry Debit Credit View general journal
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Company E issues $300,000 worth of 7.5% bonds on January 1, 20x2, which will mature on December 31, 20x3. The market rate on the date of issuance is 6%. Interest will be paid semiannually on June 30 and December 31. Calculate the purchase price of the bonds. Does the price make sense? Explain. How will the bond value appear in the newspaper? Record all journal entries necessary from the date of issue until the maturity date. Be sure to show all calculations.
On January 1, Bramble Corp. issued 10 year, S6,000,000, 9% bonds for $6,842,830. The market rate of interest for these bonds is 79%. Interest is payable annually on December 31 (note that these bonds are ANNUAL bonds). Bramble uses the effective-interest method of amortizing bond premium. At the end of the second year, Bramble should report unamortized bond premium of Group of answer choices $722.000 $716,556 5691,933 $319,093
On March 31, 20x7, KEEPU issued for P1,774,000, P2,000,000 face amount of its 10%, P1,000 bonds. The bonds were issued to yield 12%. The bonds are dated July 1, 20x7 and mature on July 1, 20x10. Interest is payable annually on July 1. KEEPU uses the interest method to amortize bond discount. Determine the interest expense of the Bonds on December 31, 20x8. Determine the carrying value of the Bonds on December 31, 20x7.

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