Is this a Premium or Discount Bond?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question

Transcribed Image Text:ACT 202: Homework Bond Exercises
on
(P
Bond #1:
Given:
The Max Corporation issued a 5-year $400,000 bond at a contract rate of 12% of
January 1, 2017; the bond matures on December 31, 2021. Cash interest is paid to investors on
June 30 and December 31. The market yield for bonds of similar risk and maturity was 10%.
REQUIRED: A. Is this a Premium or Discount Bond?
ROY YOUIA
B. Determine the sales price of the bond using Present Value Tables.
C. Determine the total amount of interest expense for this bond at maturity using
the Interest expense calculating formula.
Mona
D. Prepare the Bond Amortization Table for this bond.
E. Prepare the Journal Entries for the date of issue, first interest payment, and
at maturity.

Transcribed Image Text:Bond#2:
Given:
The Mason Corporation issued a 3-year $500,000 bond at a coupon rate of 9% on
January 1, 2017; the bond matures on December 31, 2019. Cash payments are made to investors
on June 30 and December 31. The market yield for bonds of similar risk and maturity was 12%.
REQUIRED: Prepare the answers to the same Requirements as for Bond# 1.
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