Computation of Effective Interest RateOn June 30, 2019, Gaston Corporation sold $710,000 of 9% face value bonds for $749,470.61. On December 31, 2019, Gaston sold $490,000 of this same bond issue for $465,748.35. Thebonds were dated January 1, 2019, pay interest semiannually on each December 31 and June 30, and are due December 31, 2026.Required:Compute the effective yield rate on each issuance of Gaston's 9% bonds. Click here to access the tables to use with this problem. Round your answers to the nearest whole percentage.June 30, 2019 issuance:December 31, 2019 issuance:%%

Effective yield rate refers to the interest that is being paid on the borrowed amount after…

Answered: Computation of Effective Interest Rate…

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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Recording Bond Entries and Preparing an Amortization Schedule-Debt Issuance Costs
Computation of Effective Interest Rate On June 30, 2019, Gaston Corporation sold $890,000 of 9% face value bonds for $843,810.43. On December 31, 2019, Gaston sold $480,000 of this same bond issue for $505,351.46. The bonds were dated January 1, 2019, pay interest semiannually on each December 31 and June 30, and are due December 31, 2026. Required: Compute the effective yield rate on each issuance of Gaston's 9% bonds. Click here to access the tables to use with this problem. Round your answers to the nearest whole percentage. June 30, 2019 issuance: fill in the blank 1% December 31, 2019 issuance: fill in the blank 2%
Current Attempt in Progress On July 1, 2023, Ivanhoe Inc. issued $330000, 9% bonds, which mature on July 1, 2030. The bonds were issued for $313934 to yield 10%. Ivanhoe uses the effective interest method of amortizing bond discount. Interest is payable annually on June 30. At June 30, 2025, the adjusted balance in the Bonds Payable account should be O $315627. O $330000. $330427. $317490.
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When Patey Pontoons issued 10% bonds on January 1, 2024, with a face amount of $880,000, the market yield for bonds of similar risk and maturity was 11%. The bonds mature December 31, 2027 (4 years). Interest is paid semiannually on June 30 and December 31. Required: 1. Determine the price of the bonds at January 1, 2024. 2. Prepare the journal entry to record their issuance by Patey on January 1, 2024. 3. Prepare an amortization schedule that determines interest at the effective rate each period. 4. Prepare the journal entry to record interest on June 30, 2024. 5. What is the amount related to the bonds that Patey will report in its balance sheet at December 31, 2024? 6. What is the amount related to the bonds that Patey will report in its income statement for the year ended December 31, 2024? (Ignore income taxes.) 7. Prepare the appropriate journal entries at maturity on December 31, 2027 Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1.…
When Patey Pontoons issued 10% bonds on January 1, 2024, with a face amount of $880,000, the market yield for bonds of similar risk and maturity was 11%. The bonds mature December 31, 2027 (4 years). Interest is paid semiannually on June 30 and December 31. Required: 1. Determine the price of the bonds at January 1, 2024. 2. Prepare the journal entry to record their issuance by Patey on January 1, 2024. 3. Prepare an amortization schedule that determines interest at the effective rate each period. 4. Prepare the journal entry to record interest on June 30, 2024. 5. What is the amount related to the bonds that Patey will report in its balance sheet at December 31, 2024? 6. What is the amount related to the bonds that Patey will report in its income statement for the year ended December 31, 2024? (Ignore income taxes.) 7. Prepare the appropriate journal entries at maturity on December 31, 2027 Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1.…
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What is the interest revenue for 2016 and the carrying amount of the debt investment at amortized cost on Decemeber 31, 2016
QUESTION INFORMATION: Prior to 2022, a company issued bonds with a face value of $200,000, a stated rate of 10%, and a market rate of 12%. Interest is paid on December 31 of each year. As of December 31, 2022, the bonds had a carrying amount of $180,000. One year later, following the December 31, 2023 annual interest payment, the company called the bonds for 101% of face value. QUESTION TO ANSWER: The loss that the company records on the early extinguishment of the bonds is $_
On June 30, 2020, Wayne's Company issued $4,000,000 face value of 13%, 20-year bonds at $4,300,920, a yield of 12%.Wayne uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. #1. Set up a schedule of interest expense and premium/discount amortization under the effective-interest method. (Hint: The eff ective-interest rate must be computed.) (Please use excel & show all formulas)
Answer isn’t 1,000,000

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