On 1 January 2018, TLC bought a GHS100,000 5% bond for GHS95,000, incurring issue costs of GHS2,000. Interest is received in arrears. The bond will be redeemed at a premium of GHS5,960 over nominal value on 31 December 2020. The effective rate of interest is 8%. The fair value of the bond was as follows: 31 December 2018 GHS110,000 31 December 2019 GHS104,000 Required: Explain, with calculations, how the bond will be accounted for over all the relevant years if:

On 1 January 2018, TLC bought a GHS100,000 5% bond for GHS95,000, incurring issue costs of GHS2,000. Interest is received in arrears. The bond will be redeemed at a premium of GHS5,960 over nominal value on 31 December 2020. The effective rate of interest is 8%. The fair value of the bond was as follows: 31 December 2018 GHS110,000 31 December 2019 GHS104,000 Required: Explain, with calculations, how the bond will be accounted for over all the relevant years if:

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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Af the fimе oj of On January 1, 2007, FFF Inc. issued its 10 percent bonds in the face amount of P1,500,000. They mature on January 1, 2017. The bonds were issued for P1,329,000 to yield 12 percent, resulting in bond discount of P171,000. FFF uses the effective-interest method of amortizing bond discount. Interest is payable July 1 and January 1. 5. For the six months ended June 30, 2007, FFF should report bond interest expense of Nos. 6-8 pertains to the following: On February 28, 2017, GGG Industries issued 10% bonds, dated January 1, with a face amount of P48 million. The bonds were priced at P42 million (plus accrued interest) to yield 12%. Interest is paid semiannually on June 30 and December 31. Required: What would be the amount(s) related to the honds GCC 6.
On January 1, 2020, XYZ Co. issued a bond with a $400,000 par (face) value. The bond is a 5-year bond and will mature on December 31, 2025. The bond has a contract rate of interest of 5% and interest is paid semi-annually on June 30 and December 31 of each year. On January 1, 2020, the market rate of interest for bonds was 6%. The issue price of the bond was $382,942. The journal entry to record issuance of the bond would be: Debit Credit Cash $382,942 Discount on B/P 17,058 Bonds Payable $400,000 prepare the journal entry to record the first interest payment on XYZ Co.'s bond on June 30, 2020 using the straight-line method. (Show your work in each step using the recommended approach.)
The following are two independent situations. 1. 2. Crane plc. redeemed £121,000 face value, 10% bonds on June 30, 2020, at 102. The carrying value of the bonds at the redemption date was £108,500. The bonds pay annual interest, and the interest payment due on June 30, 2020, has been made and recorded. For each independent situation above, prepare the appropriate journal entry for the redemption of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) 1. Tastove Inc. redeemed £155,000 face value, 11% bonds on June 30, 2020, at 96. The carrying value of the bonds at the redemption date was £157,650. The bonds pay annual interest, and the interest payment due on June 30, 2020, has been made and recorded. No. Account Titles and Explanation 2. Debit Credit NAR
Debond Corp. issues £1,000,000 worth of fi ve-year bonds, dated 1 January 2010, whenthe market interest rate on bonds of comparable risk and terms is 6 percent. Th e bondspay 5 percent interest annually on 31 December. What are the sales proceeds of thebonds when issued, and how is the issuance refl ected in the fi nancial statements?
15. On Januory 1,2020, Auro Compony purchased bonds with foce voue of P5,000000 for P4,766000. the stated rate on the bonds is 10% but the bonds are aCcuired to yield 12%. The bonds mature of the rote of P1.000,000 annuoly every December 31 and the interest is payable annually also every December 31. The entity uses the effective interestmethod of omortizing disCount. Aura Compony shouid report the held to maturity bond investment on December 31,2020 at a. 4,766,000 b. 3694080 C. 4,837,920. d. 3837,920
On January 1, 2021, Jackie Company issued 2,000 P5,000 8% five-year bonds at 90.35 when the market rate is 11%. Interest is payable every January 1 and July 1 starting 2021. How much is the interest expense for 2021? How much is the discount amortization during 2022? How much is the interest expense for 2023? How much is the discount amortization during 2024? How much is the unamortized discount as of July 1, 2025? Round off all final answers to the nearest peso. Round off present value factors to four decimal places. Round off interpolated rates to the nearest percentage
A 15000 Manulife Financial Corporation bond bearing interest at 5.66% payable semi-annually is redeemable at par on March 12,2028. The bond is sold on the primary market on January 5,2021, to yield 6.42% compounded semi-annually. a) Calculate the purchased price.(use Bond key) b) The accrued interest
8. On January 1,2020, Care Company purchased Bay Cormpany's 9% bonds with a face amount of P4000,000 for P3,756000 to yield to 10%. The bonds are dated Jonvary 1,2020,mature on December 31,2029, and pay interest annualy on December 31. Care uses the interest method. Whatamount should Care report as interest revenve for 20207 Q. 400,000 b. 344,400 C. 360,000 d. 375,600 purchosed P5.000.000 foce omount.8% bonoS of
On 1 January 2020, ABC bought a USD 150,000 5% bond for USD 145,000, incurring issue costs of USD 2,000. Interest is received in arrears. The bond will be redeemed at USD 151,059 on 31 December 2022. The effective rate of interest is 7%. The fair value of the bond was as follows: 31/12/20 USD 160,000 31/12/21 USD 154,000 Required: Pass Journal Entries and provide extracts of Financial Statements, with calculations for how the bond will have been accounted for if: a) ABC planned to hold the bond until the redemption date. b) ABC planned to trade the bond in the shortterm, selling it for its fair value on 1 January 2021. Answer both the subparts asap .
Compu tech Ltd issued OMR 100,000, 6% 5 years term bonds on 1 January2020, it is due for redemption on 1 January 2025, with interest payable once in six months on 1 July and 1 January. The effective interest Rate (Market Rate)was 4%.The issue price of the Bond is?
On January 1, 2017, Barclays bank issued 8 %, 5-year bonds with a face amount of K750,000 to Puma Zambia Interest is payable annually at the beginning of the year. The bond is issued for an effective interest rate of 10%. In addition to the purchase price Puma paid the broker K 30,000 to facilitate the purchase of this bond. Requireda) Calculate the value of the bond and prepare the entries to record the issuance of the bonds in the books of Barclays and Pumab) Prepare the entries to record the first annual interest accrual and the payment assuming that the company uses effective-interest amortization. In both Barclays and Puma c) At the end of year 3 Barclays decided to buy back this bond at a cost of K600, 000.Calculate the gain on loss on this transaction and show the double entry also advice if the bond should be bought back. In both Barclays and Puma
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…

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