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Determine the total interest expense for Year 1. $ 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? O Yes O No 5. Compute the price of $28,279,368 received for the bonds by using the tables shown in Present Value Tables. (Round to the nearest dollar)

Determine the total interest expense for Year 1. $ 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? O Yes O No 5. Compute the price of $28,279,368 received for the bonds by using the tables shown in Present Value Tables. (Round to the nearest dollar)

Financial & Managerial Accounting
Financial & Managerial Accounting
13th Edition
ISBN:9781285866307
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter12: Long-Term Liabilities: Bonds And Notes
Section: Chapter Questions
Problem 12.2APR
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**Final Questions** 1. **Determine the total interest expense for Year 1.** $ __________ 2. **Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest?** - [ ] Yes - [ ] No 3. **Compute the price of $28,279,368 received for the bonds by using the tables shown in Present Value Tables. (Round to the nearest dollar.)** | Column | Value | |--------|-------| | Present value of the face amount | $ __________ | | Present value of the semiannual interest payments | $ __________ | | Price received for the bonds | $ __________ | **Explanation of Graphs or Diagrams:** - There are no graphs or diagrams in this image. The content consists entirely of text-based questions and input fields that appear to be a part of an online educational platform. The questions pertain to bond valuation and interest expense calculation.
Transcribed Image Text:**Final Questions** 1. **Determine the total interest expense for Year 1.** $ __________ 2. **Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest?** - [ ] Yes - [ ] No 3. **Compute the price of $28,279,368 received for the bonds by using the tables shown in Present Value Tables. (Round to the nearest dollar.)** | Column | Value | |--------|-------| | Present value of the face amount | $ __________ | | Present value of the semiannual interest payments | $ __________ | | Price received for the bonds | $ __________ | **Explanation of Graphs or Diagrams:** - There are no graphs or diagrams in this image. The content consists entirely of text-based questions and input fields that appear to be a part of an online educational platform. The questions pertain to bond valuation and interest expense calculation.
--- ### Instructions for Bond Issuance and Interest Payment Journal Entries On July 1, Year 1, Danzer Industries Inc. issued $30,000,000 of 10-year, 11% bonds at a market (effective) interest rate of 12%, receiving cash of $28,279,368. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. #### Required: 1. **Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.** 2. **Journalize the entries to record the following:** - a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) - b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) 3. **Determine the total interest expense for Year 1.** 4. **Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest?** 5. **Compute the price of $28,279,368 received for the bonds by using the tables shown in Present Value Tables. (Round to the nearest dollar.)** *Refer to the Chart of Accounts for exact wording of account titles.* --- ### Explanation #### Section 1: Journalizing Cash Proceeds - Details the process and entry required to document the proceeds from the bond issuance. #### Section 2: Journalizing Interest Payments and Amortization - **Subsection a:** Covers the journal entry for the first semiannual interest payment and corresponding bond discount amortization using the straight-line method. - **Subsection b:** Details the subsequent semiannual interest payment on June 30, Year 2, including the amortization amount. #### Section 3: Interest Expense Calculation - Guides on how to determine the total interest expense for the first year. #### Section 4: Bond Proceeds and Market Rates - Explores if bond proceeds are always lower than the bond's face value when contract rates fall below market rates. #### Section 5: Bond Pricing Using Present Value Tables - Instructions on how to compute the actual received price of the
Transcribed Image Text:--- ### Instructions for Bond Issuance and Interest Payment Journal Entries On July 1, Year 1, Danzer Industries Inc. issued $30,000,000 of 10-year, 11% bonds at a market (effective) interest rate of 12%, receiving cash of $28,279,368. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. #### Required: 1. **Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.** 2. **Journalize the entries to record the following:** - a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) - b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) 3. **Determine the total interest expense for Year 1.** 4. **Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest?** 5. **Compute the price of $28,279,368 received for the bonds by using the tables shown in Present Value Tables. (Round to the nearest dollar.)** *Refer to the Chart of Accounts for exact wording of account titles.* --- ### Explanation #### Section 1: Journalizing Cash Proceeds - Details the process and entry required to document the proceeds from the bond issuance. #### Section 2: Journalizing Interest Payments and Amortization - **Subsection a:** Covers the journal entry for the first semiannual interest payment and corresponding bond discount amortization using the straight-line method. - **Subsection b:** Details the subsequent semiannual interest payment on June 30, Year 2, including the amortization amount. #### Section 3: Interest Expense Calculation - Guides on how to determine the total interest expense for the first year. #### Section 4: Bond Proceeds and Market Rates - Explores if bond proceeds are always lower than the bond's face value when contract rates fall below market rates. #### Section 5: Bond Pricing Using Present Value Tables - Instructions on how to compute the actual received price of the
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