Eagle Corporation issued $9,950,000, 6 percent bonds dated April 1, year 1. The market interest rate was 7 percent, with interest paideach March 31. The bonds mature in three years, on March 31, year 4. Eagle's fiscal year ends on December 31. Use Table 8C1, TableBC.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 nearestwhole dollar.)Answer is complete but not entirely correct.Bond issue price$9,688,8812. Compute the interest expense for the period ended December 31, year 1. The company uses the effective-interest method ofamortization. (Round time value factor to 4 decimal places. Round intermediate and final answer to the nearest whole dollar.)Answer is complete and correct.Interest expense$508,6663. Show how the bonds should be reported on the statement of financial position at December 31, year 1. (Round intermediate andfinal answer to the nearest whole dollar.)Answer is complete but not entirely correct.EAGLE CORPORATIONAs of December 31, Year 1Statement of financial position:Bonds payable10,197,5474-a. What amount of interest expense will be recorded on March 31, year 2? (Round time value factor to 4 decimal places. Round thefinal answer to the nearest dollar amount.)Answer is complete but not entirely correct.Interest expense713,8284-b. Is this amount different from the amount of cash that is paid?YesNo

The bond issue price is determined by adding the present value of interest payable over the bond…

Answered: Eagle Corporation issued $9,950,000, 6…

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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On Jan. 1, Year 1, Foxcroft Inc. issued 110 bonds with a face value of $920 for $105,200. The bonds had a stated rate of 10% and paid interest semi-annually. What is the journal entry to record the issuance of the bonds? If an amount box does not require an entry, leave it blank. Jan. 1 fill in the blank 2 fill in the blank 3 fill in the blank 5 fill in the blank 6 fill in the blank 8 fill in the blank 9
On Jan. 1, Year 1, Foxcroft Inc. issued 110 bonds with a face value of $990 for $112,200. The bonds had a stated rate of 10% and paid interest semiannually. What is the journal entry to record the first payment to the bondholders? If an amount box does not require an entry, leave it blank. Jun. 30 Interest Expense Cash v
Luke Corp. issued $2,000,000 of 20-year, 9% callable bonds on July 1, Year 1, with interest payable on June 30 and December 31. The fiscal year of the company is the calendar year. What is the entry to record the payment of interest on December 31 in the year the bonds were issued? a. Interest Expense Cash Ob. Interest Payable Interest Expense Cash Oc. Interest Expense Cash d. Cash Interest Expense 90,000 90,000 90,000 180,000 90,000 90,000 180,000 180,000 90,000
On January 1, Year 1, Eureka Company issued $250,000 of 5-year, 6% bonds at face value. The annual cash payment for interest is due on January 1 of each year beginning January 1, Year 2. Based on this information, what is the total amount of liabilities related to these bonds that will be reported on the balance sheet at December 31, Year 1? (Hint: Consider the interest that might be owed to bondholders at December 31, Year 1.) Multiple Choice O O O O $15,000 $250,000 $265,000 $248,500
A business is planning to issue 10%, 6-year bonds with a par value of $525,000 on January 1 of the current year. The bonds pay semiannual interest on June 30 and December 31. Assuming the market rate for the bonds on the issue date is 8%, compute the total cash proceeds from the bond issue. Note: Use factor(s) from tables provided. Round "Table value" to 4 decimals and final answer to the nearest whole dollar. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Table Values are Based on: Cash Flow Present (maturity) value Interest (annuity) Total cash proceeds n = Table Value Amount Present Value
A bond issue of 4%, 8-year bonds with a face value of $43,000 with interest payable annually on January 1. Market interest rate is 6%. What is the present value of the bonds? (For calculation purposes, use five decimal places as displayed in the factor table provided. Round your answers to O decimal places (e.g., 5,275).) Click here to view the factor table. Present value of interest payments $ Present value of principal $ Present value of the bonds $ 69
On April 30, Year 6, Tuesday Ltd. issued $1,000,000 of 20-year bonds paying interest twice a year on October 31 and April 30. The coupon rate is 5%, and the market rate was 7%. The bonds were issued at 78.6449. Required a. Calculate the issue price. Round your numbers to the nearest dollar. b. Prepare a bond amortization table for the initial issue of the bonds and the first four interest periods. c. Using the net method, prepare journal entries for the issue of the bonds and the following: • Interest payment on October 31, Year 6⚫ Interest accrual, rounded to 2 months, on December 31, Year 6 ⚫ Interest payment on April 30, Year 7⚫ Interest payment on October 31, Year 7 • Interest accrual on December 31, Year 7
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On January 1, 20x1, Company A issues bonds with face amount of P5,000,000 for P5,773,129. The bonds mature on December 31, 20x3 and pay annual interest of 14%. The effective interest rate is 8%. Requirement:Prepare all the journal entries during the term of the bonds. Given: Amortization Table Date Interest payment (5,000,000 * 14%) Interest expense (Carrying value * 8%) Premium amortized Carrying value of bonds payable Jan 1, 20x1 P5,773,129 Dec 31, 20x1 P700,000 P461,850 P238,150 P5,534,979 Dec 31, 20x2 P700,000 P442,798 P257,202 P5,277,777 Dec 31, 20x3 P700,000 P422,223 P277,777 P5,000,000 Total P773,129
On May 1, Saxophone Corp. issued $300,000, 9%, 10-year bonds for $281,307 when the market rate was 10%. Required: Prepare the general journal entry for the first semiannual interest payment and bond discount amortization on November 1, using the effective interest method.
Pronghorn Corporation issues $590,000 of 9% bonds, due in 10 years, with interest payable semiannually. At the time of issue, the market rate for such bonds is 10%. Click here to view factor tables. Compute the issue price of the bonds. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O

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