Eagle Corporation issued $9,990,000, 5 percent bonds dated April 1, year 1. The market interest rate was 6 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 8C.1, Table8C.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.)Bond issue price$9,722,7682. 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.)Interest expense3. 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.)EAGLE CORPORATIONAs of December 31, Year 1Statement of financial position:Bonds payable

Bonds:A bond is a fixed-income instrument because a bond is issued with a fixed rate of interest.…

Answered: Eagle Corporation issued $9,990,000, 5…

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 January 1 year 1, a company issues 7%, 10 year $300,000 par value bonds that pay annual interest on December 31 of every year. The bonds were issued at 104. Required: Calculate the total borrowing cost (financing cost) for the company, over the life of the bonds.
On January 1, Elias Corporation issued 10% bonds with a face value of $100,000. The bonds are sold for $97,000. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 10 years from now. Elias records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 of the first year is a. $10,000 b. $3,000 C. $833 d. $10,300
On January 1, Applied Technologies Corporation (ATC) issued $590,000 in bonds that mature in 10 years. The bonds have a stated interest rate of 11 percent. When the bonds were issued, the market interest rate was 11 percent. The bonds pay interest once per year on December 31. Required: 1. Determine the price at which the bonds were issued and the amount that ATC received at issuance. 2. & 3. Prepare the required journal entries to record the bond issuance and the first interest payment on December 31 assuming no interest has been accrued earlier in the year.
Jones Company issued $50,000, 5 year, 8% bonds at 98 ¼ plus accrued interest. The interest is paid semiannually on March 1 and September 1. The bonds are dated March 1, Year 1. The date of sale is May 1, Year 1 Make the journal entry to record the accrued interest at year end on December 31. year 1.
1. On January 1, a company issues bonds dated January 1 with a par value of $300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $312,177. The journal entry to record the issuance of the bond is: Debit Cash $312,177; credit Discount on Bonds Payable $12,177; credit Bonds Payable $300,000. Debit Cash $300,000; debit Premium on Bonds Payable $12,177; credit Bonds Payable $312,177. Debit Bonds Payable $300,000; debit Interest Expense $12,177; credit Cash $312,177. Debit Cash $312,177; credit Premium on Bonds Payable $12,177; credit Bonds Payable $300,000. Debit Cash $312,177; credit Bonds Payable $312,177.
On January 1, Innovative Solutions, Inc., issued $200,000 in bonds at face value. The bonds havea stated interest rate of 6 percent. The bonds mature in 10 years and pay interest once per year onDecember 31.Required:1. Prepare the journal entry to record the bond issuance.2. Prepare the journal entry to record the first interest payment on December 31. Assume nointerest has been accrued earlier in the year.3. Assume the bonds were retired immediately after the first interest payment at a quoted priceof 101. Prepare the journal entry to record the early retirement of the bonds.
Yale Corporation issued $36,000 , 8 % ( cash interest payable semiannually on June 30 and December 31) 10-year bonds dated and sold on January 1. Yale amortizes any bond discount or premium using the effective interest amortization method and bond issuance costs are $900. 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 answers to the nearest whole dollar. Date a. Jan. 1 Account Name Cash Discount and Debt Issuance Costs Bonds Payable To record bond issuance. b. June 30 Interest Expense Discount on Bonds Payable Cash To record interest payment. V V V V ✓ V Dr. 32,758 3,242 0 1,474 0 0 Cr. 0✔ 0✓ 36,000 ✓ 0x 30 x 1,440
Levi Company issued $78,000 of 9% bonds on January 1 of the current year at face value. The bonds pay interest semiannually on January 1 and July 1. The bonds are dated January 1 and mature in 5 years on January 1. The total interest expense related to these bonds for the current year ending on December 31 is a. $3,510 b. $585 c. $7,020 d. $5,265
On January 1, firm issued $500,000 of 15 year, 6 percent bonds payable for $552,325, yielding an effective rate of 5 percent. Interest is payable on June 30 and December 31 each year. The firm records amortization on each interest date.Bond interest expense for the first six months, using effective interest amortization, is: Select one: A. $15,000 B. $13,808 C. $14,059 D. $16,587 PreviousSave AnswersNext
Levi Company issued $84,000 of 11% bonds on January 1 of the current year at face value. The bonds pay interest semiannually on January 1 and July 1. The bonds are dated January 1 and mature in 5 years on January 1. The total interest expense related to these bonds for the current year ending on December 31 is a. $4,620 b. $770 c. $6,930 d. $9,240
On January 1, firm issued $500,000 of 15 year, 6 percent bonds payable for $552,325, yielding an effective rate of 5 percent. Interest is payable on June 30 and December 31 each year. The firm records amortization on each interest date.Bond interest expense for the first six months, using effective interest amortization, is: Select one: A. $14,059 B. $16,587 C. $15,000 D. $13,808
On January 1, firm issued $500,000 of 15 year, 6 percent bonds payable for $552,325, yielding an effective rate of 5 percent. Interest is payable on June 30 and December 31 each year. The firm records amortization on each interest date.Bond interest expense for the first six months, using effective interest amortization, is: Select one: A. $13,808 B. $14,059 C. $16,587 D. $15,000 PreviousSave AnswersNext

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Eagle Corporation issued $9,990,000, 5 percent bonds dated April 1, year 1. The market interest rate was 6 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 8C.1, Table 8C.2.