Determining Bond Features and Selling PriceOn January 1 of Year 1, the following debt was authorized and issued by Anderson Company.1. $60,000, 5-year, 9% convertible bonds payable, cash interest payable semiannually on June 30 and December 31 to yield 10%.2. $12,000, 8-year, 10% note payable, cash interest payable semiannually on June 30 and December 31 to yield 9.5%.3. $36,000, 10-year, zero-interest-bearing bonds to yield 11% annually.Note: Enter the percentages rounded to two digits after the decimal; enter 2.04 for 2.044% or 2.05 for 2.045%.Note: Round dollar amounts to the nearest dollar.For each debt, indicate the following:a. Face value.b. Stated rate per interest period.c. Stated interest amount per interest period.d. Market rate per interest period.e. Number of interest periods over life of the debt.f. Selling price.g. Maturity date.h. Authorization date.Check23$60,000 $12,000 $36,0000%0%0%0 $0 $00%0%0%000$0 $0 $0÷

When a bond, i.e., a debt security that doesn't provide interest (also known as coupons), and rather…

Answered: Determining Bond Features and Selling…

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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Yale Corporation issued to Zap Corporation $60,000, 8% (cash interest payable semiannually on June 30 and December 31) 10-year bonds dated and sold on January 1. Assume that the company uses the effective interest amortization method and bond issuance costs are $1,500. If the bonds were sold to yield 9%, provide journal entries to be made at each of the following dates. a. January 1, for issuance of bonds. b. June 30, for the first interest payment. • Note: Round your answer to the nearest whole dollar. Date a. Jan. 1 Account Name Cash Discount on Bonds Payable Bonds Payable To record bond issuance. b. June 30 Interest Expense Discount on Bonds Payable Cash To record interest payment. > Dr. 54,597 0 0 0 0 0 Cr. 0x 2,374 * 60,000 0x 0x 0x
Keaubie Co. issued $400,000, 6.75% 15-year bonds payable at a price of 100 (face value), on Jan. 1a.Journalize the issuance of the bondsb. Journalize the first annual interest payment and amortization of the discount or premium.c.Journalize the retirement of the bonds at maturity.
Smith Corporation issues $1,800,000, 10-year, 9% bonds payable at a price of 98. The journal entry to record the issuance will include a: A. credit to Bonds Payable for $1,764,000. OB. debit to Cash of $1,800,000. OC. O D. credit to Discount on Bonds Payable for $36,000. debit to Cash for $1,764,000.
Entries for Issuing Bonds and Amortizing Premium by Straight-Line Method Instructions Chart of Accounts Journal Final Question Instructions Favreau Corporation wholesales repair products to equipment manufacturers. On April 1. Year 1, Favreau Corporation issued $12,700,000 of five-year, 11% bonds at a market (effective) interest rate of 9%, receiving cash of S13,704,946. Interest is payable semiannually on April 1 and October 1. Required: a. Journalize the entries to record the following. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. 1. Issuance of bonds on April 1. 2. First interest payment on October 1 and amortIzation of bond premium for six months, using the straight-line method. The bond premium amortization is combined with the semiannual…
ABC Company issued $20,000 of 5-year bonds, stated rate 10%, effective rate 8%, interest paid semi-annually at 108 on 1/1/00. match the correct set of journal entries for The first interest payment The issuance of the bonds 1. 2. 3. 4. Cash Cash Premium Bond Payable Premium Bond Payable Interest exp Premium Cash Interest exp Premium 20,800 21,600 832 160 Cash 800 20,000 1,600 20,000 1,000 864 136 1,000
Entries for Bonds Payable and Installment Note Transactions The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: Year 1 July 1. Issued $5,110,000 of five-year, 11% callable bonds dated July 1, Year 1, at a market (effective) rate of 13%, receiving cash of $4,742,651. Interest is payable semiannually on December 31 and June 30. Oct. 1. Borrowed $120,000 by issuing a 10-year, 7% installment note to Nicks Bank. The note requires annual payments of $17,085, with the first payment occurring on September 30, Year 2. Dec. 31. Accrued $2,100 of interest on the installment note. The interest is payable on the date of the next installment note payment. 31. Paid the semiannual interest on the bonds. The bond discount amortization of $36,735 is combined with the semiannual interest payment. Year 2 June 30. Paid the semiannual interest on the bonds. The bond discount amortization of $36,735 is combined with the semiannual interest…
Meman
Entries for bond (held-to-maturity) investments The following bond investment transactions were completed by Starks Company: Jan. 31 Purchased 39, $1,000 government bonds at 100 plus accrued interest of $195 (1 month). The bonds pay 6% annual interest on July 1 and January 1. July 1 Received semiannual interest on bond investment. Aug. 30 Sold 15, $1,000 bonds at 97 plus $150 accrued interest (2 months). a. Journalize the entries for these transactions. Assume a 360-day year. Do not round interim calculations. Round final answers to nearest dollar. If an amount box does not require an entry, leave it blank. Jan. 31 Investments-Government Bonds Interest Receivable Cash July 1 Cash Interest Receivable Interest Revenue Aug. 30 Cash Sale of Investments Interest Revenue InvestmentsInvestments-Government Bonds b. Journalize the December 31 adjusting entry for semiannual interest…
On 31 December 20X7, Dunder Mifflin has the following bond on the statement of financial position: Bond payable, 8%, interest due semi-annually on 31 March and 30 September; maturity date, 30 September 20X10 $16,000,000 Discount on bonds payable (83,000) $15,917,000 Accrued interest payable of $400,000 was recorded on 31 December 20X7 ($16,000,000 × 10% × 3/12) and the bond discount was correctly amortized to 31 December 20X7. On 31 March 20X8, semi-annual interest was paid and the bond discount was amortized by a further $8,400. Then, 35% of the bond was retired at a cost of $5,488,000 (exclusive of interest). Required: Provide the entries to record the bond interest and retirement on 31 March 20X8.
Analyzing and Reporting Financial Statement Effects of Bond Transactions On January 1 of the current year, Shields Inc. issued $700,000 of 9%, 20-year bonds for $769,275, yielding a market (yield) rate of 8%. Semiannual interest is payable on June 30 and December 31 of each year. a. Show Excel inputs to confirm the bond issue price. Note: Round your answer to two decimal places. rate= nper pmt FV => Answer = $ b. Indicate the financial statement effects using the template for (1) bond issuance, (2) semiannual interest payment and premium amortization on June 30 of the current year, and (3) semiannual interest payment and premium amortization on December 31 of the current year. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount. Note: Round your answers to the nearest whole dollar. Balance Sheet…
Do not answer in image format. Maintain accuracy and quality in your answer. Answer completely.
Assume the bonds in were issued for $644,636 and the effective-interest rate is 6%, prepare the company's journal entries

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