Grand Company issued $165,000 of 5-year bonds on January 1, 2022, with a coupon interest rate of 14%, payable annually eachDecember 31. On January 1, 2022, the market interest rate was 12%. Assume effective-interest amortization. (The present valuefactor for $1 at 6% for 10 periods is 0.55839, for $1 at 7% for 10 periods is 0.50835, for $1 at 14% for 5 periods is 0.51937, and for$1 at 12% for 5 periods is 0.56743. The present value of an annuity of $1 for 10 periods at 6% is 7.36009, for 10 periods at 7% is7.02358, for 5 periods at 6% is 4.21236, for 5 periods at 7% is 4.10020, and for 5 periods at 12% is 3.60478).Required:A. Calculate the issue price (total amount received) at January 1, 2022.B. What would be the amount of premium amortization for December 31, 2022? No adjusting journal entries have been madeduring the year.C. What would be the amount of the interest payment on December 31, 2022?D. What is the book value of the bonds at December 31, 2022?Note: For all requirements, round your final answers to the nearest next whole dollar amount.A. Issue priceB. Amount of premium amortizationC. Amount of the interest paymentD. Book value of the bondsCheck my work00000

The question is based on the concept of Financial Accounting.Bonds are in the nature of financial…

Grand Company issued $165,000 of 5-year bonds on January 1, 2022, with a coupon interest rate of 14%, payable annually ea December 31. On January 1, 2022, the market interest rate was 12%. Assume effective-interest amortization. (The present val factor for $1 at 6% for 10 periods is 0.55839, for $1 at 7% for 10 periods is 0.50835, for $1 at 14% for 5 periods is 0.51937, and $1 at 12% for 5 periods is 0.56743. The present value of an annuity of $1 for 10 periods at 6% is 7.36009, for 10 periods at 7% 7.02358, for 5 periods at 6% is 4.21236, for 5 periods at 7% is 4.10020, and for 5 periods at 12% is 3.60478). Required: Check my w A. Calculate the issue price (total amount received) at January 1, 2022. B. What would be the amount of premium amortization for December 31, 2022? No adjusting journal entries have been m during the year. C. What would be the amount of the interest payment on December 31, 2022? D. What is the book value of the bonds at December 31, 2022? Note: For all requirements, round your final answers to the nearest next whole dollar amount. A. Issue price

Grand Company issued $165,000 of 5-year bonds on January 1, 2022, with a coupon interest rate of 14%, payable annually ea December 31. On January 1, 2022, the market interest rate was 12%. Assume effective-interest amortization. (The present val factor for $1 at 6% for 10 periods is 0.55839, for $1 at 7% for 10 periods is 0.50835, for $1 at 14% for 5 periods is 0.51937, and $1 at 12% for 5 periods is 0.56743. The present value of an annuity of $1 for 10 periods at 6% is 7.36009, for 10 periods at 7% 7.02358, for 5 periods at 6% is 4.21236, for 5 periods at 7% is 4.10020, and for 5 periods at 12% is 3.60478). Required: Check my w A. Calculate the issue price (total amount received) at January 1, 2022. B. What would be the amount of premium amortization for December 31, 2022? No adjusting journal entries have been m during the year. C. What would be the amount of the interest payment on December 31, 2022? D. What is the book value of the bonds at December 31, 2022? Note: For all requirements, round your final answers to the nearest next whole dollar amount. A. Issue price

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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On January 1, 2024, Anne Teak Furniture issued $100,000 of 12% bonds, dated January 1. Interest is payable semiannually on June 30 and December 31. The bonds mature in 4 years. The annual market rate for bonds of similar risk and maturity is 14%. What was the issue price of the bonds? Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Multiple Choice $89,460 $120,942 $95,460 $94,029
On January 1, 2024, Wildhorse Co. issued eight-year bonds with a face value of $6010000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Table values are: Present value of 1 for 8 periods at 10% 0.46651 Present value of 1 for 8 periods at 12% 0.40388 Present value of 1 for 16 periods at 5% 0.45811 Present value of 1 for 16 periods at 6% 0.39365 Present value of annuity for 8 periods at 10% Present value of annuity for 8 periods at 12% Present value of annuity for 16 periods at 5% Present value of annuity for 16 periods at 6% 5.33493 4.96764 10.83777 10.10590 The present value of the principal is O $2365837. O $2427319. O $2753241. O $2803725.
On January 1, 2025, Sandhill Co. issued ten-year bonds with a face value of $5,125,000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Table values are. Present value of 1 for 10 periods at 10% 0.38554 Present value of 1 for 10 periods at 12% 0.32197 Present value of 1 for 20 periods at 5% 0.37689 Present value of 1 for 20 periods at 656 0.31180 Present value of annuity for 10 periods at 10% Present value of annuity for 10 periods at 12% Present value of annuity for 20 periods at 536 Present value of annuity for 20 periods at 6% 6.14457 5.65022 1246221 11.46992 (a) Calculate the issue price of the bonds. (Round final answer to O decimal places, e.g. 25,000) Issue price of bond $ eTextbook and Media Save for Later (b) The parts of this question must be completed in order. This part will be available when you complete the part above.
On January 1, 2024, Cool Universe issued 10% bonds dated January 1, 2024, with a face amount of $20.1 million. The bonds mature in 2033 (10 years). For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. Determine the price of the bonds on January 1, 2024. 2. Prepare the journal entry to record the bond issuance by Cool on January 1, 2024. 3. Prepare the journal entry to record interest on June 30, 2024, using the straight-line method. 4. Prepare the journal entry to record interest on December 31, 2024, using the straight-line method. Complete this question by entering your answers in the tabs below. Req 1 Req 2 to 4 Check n Determine the price of the bonds on January 1, 2024. Note: Enter your answers in whole dollars not in millions (l.e., 1,000,000 not 1). Round your intermediate…
When Patey Pontoons issued 10% bonds on January 1, 2024, with a face amount of $880,000, the market yield for bonds of similar risk and maturity was 11%. The bonds mature December 31, 2027 (4 years). Interest is paid semiannually on June 30 and December 31. Required: 1. Determine the price of the bonds at January 1, 2024. 2. Prepare the journal entry to record their issuance by Patey on January 1, 2024. 3. Prepare an amortization schedule that determines interest at the effective rate each period. 4. Prepare the journal entry to record interest on June 30, 2024. 5. What is the amount related to the bonds that Patey will report in its balance sheet at December 31, 2024? 6. What is the amount related to the bonds that Patey will report in its income statement for the year ended December 31, 2024? (Ignore income taxes.) 7. Prepare the appropriate journal entries at maturity on December 31, 2027 Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1.…
On January 1, 2024, Cullumber Co. issued eight-year bonds with a face value of $5920000 and a stated interest rate of 4%, payable semiannually on June 30 and December 31. The bonds were sold to yield 6%. Table values are: Present value of 1 for 8 periods at 4% Present value of 1 for 8 periods at 6% Present value of 1 for 16 periods at 2% Present value of 1 for 16 periods at 3% Present value of annuity for 8 periods at 4% Present value of annuity for 8 periods at 6% Present value of annuity for 16 periods at 2% Present value of annuity for 16 periods at 3% The present value of the principal is O $4312424. O $4325685. O $3714267. O $3689166. 0.73069 0.62741 0.72845 0.62317 6.73274 6.20979 13.57771 12.56110
When Patey Pontoons issued 10% bonds on January 1, 2024, with a face amount of $880,000, the market yield for bonds of similar risk and maturity was 11%. The bonds mature December 31, 2027 (4 years). Interest is paid semiannually on June 30 and December 31. Required: 1. Determine the price of the bonds at January 1, 2024. 2. Prepare the journal entry to record their issuance by Patey on January 1, 2024. 3. Prepare an amortization schedule that determines interest at the effective rate each period. 4. Prepare the journal entry to record interest on June 30, 2024. 5. What is the amount related to the bonds that Patey will report in its balance sheet at December 31, 2024? 6. What is the amount related to the bonds that Patey will report in its income statement for the year ended December 31, 2024? (Ignore income taxes.) 7. Prepare the appropriate journal entries at maturity on December 31, 2027 Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1.…
On April 1, 2016, Lerner Corporation issued $120,000 of five-year, 10% bonds at a market (effective) interestrate of 8%. Interest is payable semiannually on April 1 and October 1What is the amount of the semi-annual interest payment?Will the bonds be issued at a discount or premium?Present Value of the Semiannual Interest PaymentInterest RateNumber of PeriodsFactorPresent Value of the Interest PaymentsPresent Value of the Bond Face AmountInterest RateNumber of PeriodsFactorPresent Value of the FaceBonds ProceedsAmount of Discount or Premium
On January 1, 2023, ABC Company issued $60,000,000 of 20-year, 9.5% bonds when the market rate of interest was 10.25%. Interest is paid semi-annually on June 30 and December 31. Required: Using Excel compute the price at which the bond was issued. Using Excel and the effective interest method of bond amortization prepare an amortization table for the entire life of the bond issue. You are expected to do all calculations in Excel (What are the excel Formulas) Prepare ALL journal entries for the following dates: January 1, 2023, June 30, 2023, December 31, 2023, and December 31, 2042
On March 1, 2024, Baddour, Incorporated, issued 10% bonds, dated January 1, with a face amount of $160 million. The bonds were priced at $142.00 million (plus accrued interest) to yield 12%. The price if issued on January 1 would have been $139.25 million. Interest is paid semiannually on June 30 and December 31. Baddour’s fiscal year ends September 30. Required: 1. to 3. What would be the amount(s) related to the bonds Baddour would report in its balance sheet, income statement and statement of cash flows for the year ended September 30, 2024?
On January 1, 2021, Ithaca Corp. purchases Cortland Inc. bonds that have a face value of $210,000. The Cortland bonds have a stated interest rate of 10%. Interest is paid semiannually on June 30 and December 31, and the bonds mature in 10 years. For bonds of similar risk and maturity, the market yield on particular dates is as follows: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.): January 1, 2021 11.0 % June 30, 2021 12.0 % Required:1. Calculate the price Ithaca would have paid for the Cortland bonds on January 1, 2021 (ignoring brokerage fees), and prepare a journal entry to record the purchase.2. Prepare all appropriate journal entries related to the bond investment during 2021, assuming Ithaca accounts for the bonds as a held-to-maturity investment. Ithaca calculates interest revenue at the effective interest rate as of the date it purchased the bonds.3. Prepare all appropriate…
Mary Smith Company issued $396,000 of 10%, 20-year bonds on January 1, 2025, at 102. Interest is payable semiannually on July 1 and January 1. Mary Smith Company uses the effective-interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%. Click here to view factor tables. Prepare the journal entries to record the following. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) a. b. C. The issuance of the bonds. The payment of interest and related amortization on July 1, 2025. The accrual of interest and the related amortization on December 31, 2025. Date 1/1/25 + Account Titles and Explanation Debit Credit 11₁