Eagle Corporation issued $9,950,000, 6 percent bonds dated April 1, year 1. The market interest rate was 7 percent, with interest paid each March 31. The bonds mature in three years, on March 31, year 4. Eagle's fiscal year ends on December 31, Use Table 8C1, Table 8C.2. Required: 1. What was the issue price of these bonds? (Round time value factor to 4 decimal places. Round the final answer to the nearest whole dollar.) ed Bond issue price $ 9,688,892 2. Compute the interest expense for the period ended December 31, year 1. The company uses the effective-interest method of amortization. (Round time value factor to 4 decimal places. Round intermediate and final answer to the nearest whole dollar.) Interest expense $ 508,666 3. Show how the bonds should be reported on the statement of financial position at December 31, year 1. (Round intermediate and final answer to the nearest whole dollar.) EAGLE CORPORATION As of December 31, Year 1 Statement of financial position: Bonds payable 9,180,226x 4-a. What amount of interest expense will be recorded on March 31, year 2? (Round time value factor to 4 decimal places. Round the final answer to the nearest dollar amount.) Interest expense $ 169,555 4-b. Is this amount different from the amount of cash that is paid? Yes✔ No
Eagle Corporation issued $9,950,000, 6 percent bonds dated April 1, year 1. The market interest rate was 7 percent, with interest paid each March 31. The bonds mature in three years, on March 31, year 4. Eagle's fiscal year ends on December 31, Use Table 8C1, Table 8C.2. Required: 1. What was the issue price of these bonds? (Round time value factor to 4 decimal places. Round the final answer to the nearest whole dollar.) ed Bond issue price $ 9,688,892 2. Compute the interest expense for the period ended December 31, year 1. The company uses the effective-interest method of amortization. (Round time value factor to 4 decimal places. Round intermediate and final answer to the nearest whole dollar.) Interest expense $ 508,666 3. Show how the bonds should be reported on the statement of financial position at December 31, year 1. (Round intermediate and final answer to the nearest whole dollar.) EAGLE CORPORATION As of December 31, Year 1 Statement of financial position: Bonds payable 9,180,226x 4-a. What amount of interest expense will be recorded on March 31, year 2? (Round time value factor to 4 decimal places. Round the final answer to the nearest dollar amount.) Interest expense $ 169,555 4-b. Is this amount different from the amount of cash that is paid? Yes✔ No
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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Transcribed Image Text:Eagle Corporation issued $9,950,000, 6 percent bonds dated April 1, year 1. The market interest rate was 7 percent, with interest paid
each March 31. The bonds mature in three years, on March 31, year 4. Eagle's fiscal year ends on December 31, Use Table 8C1, Table
8C.2.
Required:
1. What was the issue price of these bonds? (Round time value factor to 4 decimal places. Round the final answer to the nearest
whole dollar.)
ed
Bond issue price
$
9,688,892
2. Compute the interest expense for the period ended December 31, year 1. The company uses the effective-interest method of
amortization. (Round time value factor to 4 decimal places. Round intermediate and final answer to the nearest whole dollar.)
Interest expense
$
508,666
3. Show how the bonds should be reported on the statement of financial position at December 31, year 1. (Round intermediate and
final answer to the nearest whole dollar.)
EAGLE CORPORATION
As of December 31, Year 1
Statement of financial position:
Bonds payable
9,180,226x
4-a. What amount of interest expense will be recorded on March 31, year 2? (Round time value factor to 4 decimal places. Round the
final answer to the nearest dollar amount.)
Interest expense
$
169,555
4-b. Is this amount different from the amount of cash that is paid?
Yes✔
No
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Step 1: Given information for computation.
VIEWStep 2: Compute the issue price of the bond.
VIEWStep 3: Compute the interest expense for the period ended December year one.
VIEWStep 4: Identify how the bonds will be reported on the balance sheet at period ended December year one.
VIEWStep 5: Compute the interest expense to be recorded on March 31, year two.
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