Metlock Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requestedconstruction of a new plant to meet the increasing demand for the company's bikes. After a careful evaluation of the request, theboard of directors has decided to raise funds for the new plant by issuing $3,294,900 of 12% term corporate bonds on March 1,2020, due on March 1, 2035, with interest payable each March 1 and September 1, with the first interest payment on September1st, 2020. At the time of issuance, the market interest rate for similar financial instruments is 10%.Click here to view factor tablesAs the controller of the company, determine the selling price of the bonds. (Round factor values to 5 decimal places, e.g.1.25124 and final answer to 0 decimal places, e.g. 458,581.)Selling price of the bonds3796118

Time value of money :— According to this concept, value of money in present day is greater than the…

Answered: Metlock Inc. manufactures cycling…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Pina Co. is building a new hockey arena at a cost of $2,510, 000. It received a downpayment of $490,000 from local businesses to support the project, and now needs to borrow $ 2,020,000 to complete the project. It therefore decides to issue $2,020,000 of 10.0 %, 10- year bonds. These bonds were issued on January 1, 2024, and pay interest annually on each January 1. The bonds yield 9% . Assume that on July 1, 2027, Pina Co. redeems half of the bonds at a cost of $1,079, 300 plus accrued interest. Prepare the journal entry to record this redemption.
Riverbed Co. is building a new music arena at a cost of $5,652,000. It received a down payment of $642,000 from local businesses to support the project, and now needs to borrow $5,010,000 to complete the project. It therefore decides to issue $5,010,000 of 7%, 20- year bonds. These bonds were issued on January 1, 2024, and pay interest annually on each January 1. The bonds yield 9%. Prepare the journal entry to record the issuance of the bonds on January 1, 2024. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal place e.g. 58,971. 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.) Date Account Titles and Explanation January 1,2024 Cash Discount on Bonds Payable Bonds Payable Debit 4095316 914684 Credit 5010000 Prepare a bond amortization…
Voters of Valdez School District, a public school district, approved construction of a new high school at a cost not to exceed $20 million. The district will finance the construction by issuing $20 million of 6 percent term bonds payable in 20 years. Because the site had already been prepared, the school district began construction immediately but the bonds would not be issued for nearly a year. Shortly before the fiscal year-end, the school district borrowed $5 million from a local bank due in one year with interest at 6.2 percent. The note will be repaid from bond proceeds. The school district secured a financing agreement with the bank to convert the debt to a 10-year debt if the school district is unable to sell the bonds by the due date. At year-end, how should the $5 million note be displayed in the government-wide financial statements? A.) Notes payable-long term $5 million; B.) Notes payable-short term $5 million; C.) Nothing D.) None of above
Katarina Witt, Inc. manufactures skating equipment. Recently the Vice President of Operations of the company has requested construction of a new plant to meet the increasing needs for the company’s skates. After a careful evaluation of the request, the board of directors have decided to raise funds for the new plant by issuing $2,000,000 of 11% term corporate bonds on January 1, 2008, due on January 1, 2018, with interest payable each January 1 and July 1. At the time of issuance, the market interest rate for similar financial instruments is 10%. As the controller of the company, determine the selling price of the bonds: Please avoid images in solution thnx
The Helpful Hands Society, formed in January 2020, undertook a fundraising campaign in the summer of 2020. The NFPO was able to raise $450,000 in pledges. The Society expects to collect at least 80 percent of these pledges. As of December 31, 2020, the society collected $125,000 in pledges from the summer campaign. Which of the following amounts is the value of net pledge receivable at December 31, 2020? $0 $125,000 $360,000 $235,000
Precision Castparts, a manufacturer of processed engine parts in the automotive and airline industries, borrows $40.4 million cash on October 1, 2024, to provide working capital for anticipated expansion. Precision signs a one-year, 9% promissory note to Midwest Bank under a prearranged short-term line of credit. Interest on the note is payable at maturity. Each company has a December 31 year-end. Required: 1. Prepare the journal entries on October 1, 2024, to record (a) the notes payable for Precision Castparts and (b) the notes receivable for Midwest Bank. 2. Record the adjusting entry on December 31, 2024, for (a) Precision Castparts and (b) Midwest Bank. 3. Prepare the journal entries on September 30, 2025, to record payment of (a) the notes payable for Precision Castparts and (b) the notes receivable for Midwest Bank. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare the journal entries on October 1, 2024, to record (a) the…
Novak Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested construction of a new plant to meet the increasing demand for the company's bikes. After a careful evaluation of the request, the board of directors has decided to raise funds for the new plant by issuing $3,492,700 of 10% term corporate bonds on March 1, 2025, due on March 1, 2040, with interest payable each March 1 and September 1. At the time of issuance, the market interest rate for similar financial instruments is 8%. Click here to view factor tables. As the controller of the company, determine the selling price of the bonds. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) Selling price of the bonds $
The Drug-Free Center, a growing nonprofit, is currently considering the construction of a new wing to extend its treatment building. After consulting with a law firm that specializes in municipal bonds, the nonprofit has decided to issue a tax-exempt municipal bond, taking advantage of the potential lower financing costs. The initial consideration of the bond issue is $50 million, and the bond issuance cost is estimated to be $1 million, including all professional services of the bond counsel and financial adviser, in addition to the underwriting firm. The full term of the bond issue is twenty years, in consideration of the economic life of the facility before the major renovation is needed. The interest rate is 6 percent, based on the market rate for tax-exempt municipal bonds for similar projects at the time. The city authority has agreed to issue the bond based on a signed inducement. You are the nonprofit's financial manager and are asked to create a bond structure and payment…

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS