$100,000 Face Value, 8% coupon, four-year bond issued December 31, 2021 for a price of 107.020. Market rate interest at the time is 6%. Interest paid semiannually 6/30 and 12/31. Date Account DR CR 31-DecCashCorrect$107,020 Correct Premium on Bonds PayableCorrect Incorrect Bond PayableCorrect $100,000 Correct

The bond has a face value of $100,000, an 8% coupon rate, and a four-year term. It was issued on…

Answered: $100,000 Face Value, 8% coupon,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Premium Amortization On the first day of the fiscal year, a company issues a $3,500,000, 6%, 9-year bond that pays semiannual interest of $105,000 ($3,500,000 × 6% × ½), receiving cash of $4,322,808. Journalize the first interest payment and the amortization of the related bond premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Interest Expense Premium on Bonds Payable Cash
Bond of $ 1000 par value issued at $996 . Coupon rate 3.8% ,coupon paid at the end of every year. Bond will be repaid at $ 1002 i.e. $ 2 on redemption of the bond. Bond will mature after 5 years. The corporate tax rate is 30%. Calculate cost of bond.
Discount Amortization On the first day of the fiscal year, a company issues a $8,900,000, 9%, 7-year bond that pays semiannual interest of $400,500 ($8,900,000 × 9% × ½), receiving cash of $8,459,510. Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.
Determining Selling Prices of Bonds Under Different Interest Assumptions Olay Inc. issues $50,000, 8%, 10-year bonds payable on January 1, 2020. Calculate the selling price of the bonds under the following separate assumptions. • Round your answer to the nearest whole number. • Do not use negative signs with your answers. a. The bonds pay cash interest annually ($4.000) and the market rate of interest on similar bonds is 10%. b. The bonds pay cash interest annually (54.000) and the market rate of interest on similar bonds is 8%. c. The bonds pay cash interest annually ($4.000) and the market rate of interest on similar bonds is 6%. d. The bonds pay cash interest semiannually ($2.000) and the market rate of interest on similar bonds is 10%. S e. The bonds pay cash interest semiannually ($2.000) and the market rate of interest on similar bonds is 8%, s f. The bonds pay cash interest semiannually ($2.000) and the market rate of interest on similar bonds is 6%. %24 47,738 x 50.000 v 52,600…

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$100,000 Face Value, 8% coupon, four-year bond issued December 31, 2021 for a price of 107.020. Market rate interest at the time is 6%. Interest paid semiannually 6/30 and 12/31.


Date	Account		DR		CR
31-Dec	Cash	Correct	$107,020	Correct
	Premium on Bonds Payable	Correct				Incorrect
	Bond Payable	Correct			$100,000	Correct