Exercise 7-19 (Algo) Bonds payable-various issues LO 7-8 Reynolds Company issued $71 million face amount of 4.25% bonds when market interest rates were 4.13% for bonds of similar risk and other characteristics. Required: a. How much interest will be paid annually on these bonds? Note: Enter your answer in dollars, not millions of dollars. b. Were the bonds issued at a premium or discount? c. Will the annual interest expense on these bonds be more than, equal to, or less than the amount of interest paid each year? a. Annual interest payment b. Bonds issued c. Annual interest expense will be

Exercise 7-19 (Algo) Bonds payable-various issues LO 7-8 Reynolds Company issued $71 million face amount of 4.25% bonds when market interest rates were 4.13% for bonds of similar risk and other characteristics. Required: a. How much interest will be paid annually on these bonds? Note: Enter your answer in dollars, not millions of dollars. b. Were the bonds issued at a premium or discount? c. Will the annual interest expense on these bonds be more than, equal to, or less than the amount of interest paid each year? a. Annual interest payment b. Bonds issued c. Annual interest expense will be

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 52BE

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Interest Expense Discount on Bonds Payable v Cash v Feedback V Check My Work The straight-line method of amortization provides equal amounts of amortization over the life of the bond. 3. Determine the total interest expense for 20Y1. Round to the nearest dollar. $ 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? Yes 5. Compute the price of $5,946,703 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final answers to the nearest dollar. Your total may vary slightly from the price given due to rounding differences. Present value of the face amount $ Present value of the semiannual interest payments Price received for the bonds 2$ 00
Use the following to answer questions 11 – 15 AL issues 4.0%, 20-year bonds with a face amount of $1,000,000 for $986,529.23. The market interest rate for bonds of similar risk and maturity is 4.1%. Interest is paid annually. 11. $. Determine the interest payment. 12. $ (rounded to nearest dollar). Determine interest expense for the first interest payment. What will happen to interest expense each interest payment? (Increase, decrease, remain constant) 13. What will happen to the bond liability (carrying value) each interest payment? (Increase, decrease, remain constant). 14. How much will the company pay out $ when the bonds mature in 20 years (assume all interest payments have already been paid)? 15.
Instructions Present Value Tables Chart of Accounts Journal Final Questions Instructions Campbell Inc. produces and sells outdoor equipment. On July 1, Year 1, Campbell Inc. issued $60,400,000 of 10-year, 12% bonds at a market (effective) interest rate of 11%, receiving cash of $64,009,069. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.* 2. Journalize the entries to record the following:* a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.) b. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.) 3. Determine the total interest expense for Year 1. 4. Will the bond proceeds always be…
Solved: A comp... bond price calcu. Price Calculator Financial Calcu Value apter 14, Assignment 2 Submitted 40.65/50 Total points awarde You received no credit for this question in the previous attempt. A company issued 8%, 20-year bonds with a face amount of $110 million. The market yield for bonds of similar risk and maturity is 6%. Interest is paid semiannually. At what price did the bonds sell? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Enter your answers in whole dollars.) 135,426,249 734 pints awarded Price of bonds Scored eBook Print References Next > 3 of 7 ( Prev
S14-4 Pricing bonds Bond prices depend on the market rate of interest, stated rate of interest and time. Requirements 1. Compute the price of the following 8% bonds of Country Telecom. a. $100,000 issued at 75.25 c. $100,000 issued at 94.50 b. $100,000 issued at 103.50 d. $100,000 issued at 103.25 2. Which bond will Country Telecom have to pay the most to retire at maturity: Explain your answer.
4. What is the carrying value of the bonds at the end of the second period (third number)? Premium 57,913.01 Carrying value (bonds) 432,913.01 Face Rate Market Rate Semiannual payments a. b. Cash Payment C. d. e. 14% 10% 0 or 1 2 or 3 4 or 5 6 or 7 8 or 9 Interest Expense Today Period #1 26,250.00 Period #2 26,250.00 Carrying value at end of second period (third number) ___________?__ 2. Disc. or Prem. Amort. 21,645.65 21,415.43 Disc. or Prem. 4,604.35 4,834.57 57,913.01 53,308.66 48,474.10 Face Value 375,000.00 375,000.00 375,000.00 Carrying Value 432,913.01 428,308.66 423,474.10
Question 12 Gulf Company issued bonds with a par value of $500,000 for cash of $530,000. What is the account's name and type representing the difference between par value and issue price? OA A bond premium; a contra asset account O B. A bond discount; a contra equity account. OCA bond premium; an adjunct account. O D. A bond discount; a contra liability account.
Q-3: Dawlance Company issues 12%, 10-year bonds with a par value of Rs. 200,000 and annual interest payments. On the issue date, the annual market rate for these bonds is implies a selling price of 112. The effective interest method is used to allocate interest expense. A. What are the issuer's cash proceeds from issuance of these bonds? B. What total amount of bond interest expense will be recognized over life of these bonds? C. What amount of bond interest expense is recorded on the first interest payment date? D. Prepare the journal entries for the issuance of the bonds. Also calculate market price. 10%, which
A Interest payments per year 13 14 15 a) 16 17 18 19 20 21 22 23 24 25 26 b) B Annual Market Rate Semiannual Interest Payment: PV of Face Amount: PV of Interest Payments: + = Bond Selling Price: $500,000 15 7% 2 1 2 On January 1, Ruiz Company issued bonds as follows: 3 4 Face Amount: 5 Number of Years: 6 Stated Interest Rate: 7 8 9 Required: 10 1) Calculate the bond selling price given the two market interest rates below. 11 Use formulas that reference data from this worksheet and from the appropriate future or present value tables (found by clicking the tabs at the bottom of 12 this worksheet). Note: Rounding is not required. Annual Market Rate Semiannual Interest Payment: PV of Face Amount: + PV of Interest Payments: = Bond Selling Price: C 29 The bond in (a) sold at a: 30 The bond in (b) sold at a: 31 32 3. Use the Excel PV function to verify the selling prices of the bonds. 33 a) Annual Market Rate 34 Bond Selling Price 35 36 b) 37 Annual Market Rate Bond Selling Price 27 2. Use…
QUESTION 10 A $545,000 bond issue on which there is an unamortized discount of $44.000 is redeemed ior $474,000. Journalize the redemption of the bonds using the straight-line method and the chart of accounts below. Gain on Redemption of Bonds Interest Expense Interest Payable Interest Revenue Bonds Payable Cash Discount on Bonds Payable Loss on Redemption of Bonds Premiun on Bonds Payable Enter your answers into the table below. Key the account names carefully (exactly as shown above) and follow formatting instructions below. DO NOT USE A DECIMAL WITH ZEROES FOR WHOLE DOLLAR AMOUNTS AND USE COMMAS APPROPRIATELY. WHEN THE DEBIT/CREDIT DOES NOT REQUIRE AN ENTRY, LEAVE IT BLANK. Account Debit Credit THIS QUESTION WILL ALSO BE CHECKED MANUALLY (to make adjustments for typos). Click Save and Submit to saue and submit Clil Saue 47l aacars to na
RCISES i S Exercise 14-17A (Algo) Computing bond interest and price; recording bond issuance LO C2 Brin Company issues bonds with a par value of $700,000. The bonds mature in 6 years and pay 6% annual interest in semiannual payments. The annual market rate for the bonds is 8%. (Table B.1 Table B.2, Table B.3, and Table B.4) Note: Use appropriate factor(s) from the tables provided. 1. Compute the price of the bonds as of their issue date. 2. Prepare the journal entry to record the bonds' issuance. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the price of the bonds as of their issue date. Note: Round all table values to 4 decimal places, and use the rounded table values in calculations. Round intermediate calculations to the nearest dollar amount. Table Values are Based on: Cash Flow Par (maturity) value Interest (annuity) Price of bonds n = i= Table Value Amount Required 1 Present Value $ Saved Required 2 > 0
Please question A B and C is required Bond Consider a bank with the following balance sheet (M means million): Assets Value Duration of the Asset Convexity of the Asset 5yr bond bought at a yield of 3.4% (lending money) $550M 4.562 12.026 12yr bond bought at a yield of 4% (lending money) $800M 9.453 53.565 Liabilities Value Duration of the Liability Convexity of the Liability 2yr bond sold at a yield of 2.4% (borrowing money) $300M 1.941 2.384 4yr bond sold at a yield of 2.8% (borrowing money) $500M 3.759 8.206 a) Calculate the equity (total asset – total liability) to asset ratio of the bank (Hint: equity to asset ratio = total equity/total asset) b) Calculate the duration and convexity of the both asset and liability sides; c) If the interest rates go up by 1%, using the duration and convexity rule to determine the net worth of the bank and the equity to asset ratio;