On 2/1/2012, the Union Company issued an amount of 1,500,000 dinars in the form of bonds with a value of 10% due on December 31, 2021. Note that the interest rate in the market is 11%. Interest on the bonds is accrued annually at the end of each year 12/31. The bond carries a callable bound, and the company decided to use the real interest method to amortize the difference between the bond interest rate and the market price, and on 1/2/2015, Al-Ittihad decided to call the bond (pay the bond value) at 1,010,000 dinars of the face value for bonds. Required: (A) Determining the price of Union Company bonds when they are issued on 2/1/2012. (B) Determining the book value of the bond in 2016. (Through the amortization schedule for the period 2012-2016 or using the formula) (C) Preparing the journal entries for the bond payment on 2/1/2015

On 2/1/2012, the Union Company issued an amount of 1,500,000 dinars in the form of bonds with a value of 10% due on December 31, 2021. Note that the interest rate in the market is 11%. Interest on the bonds is accrued annually at the end of each year 12/31. The bond carries a callable bound, and the company decided to use the real interest method to amortize the difference between the bond interest rate and the market price, and on 1/2/2015, Al-Ittihad decided to call the bond (pay the bond value) at 1,010,000 dinars of the face value for bonds. Required: (A) Determining the price of Union Company bonds when they are issued on 2/1/2012. (B) Determining the book value of the bond in 2016. (Through the amortization schedule for the period 2012-2016 or using the formula) (C) Preparing the journal entries for the bond payment on 2/1/2015

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 4EA: On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated...

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On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market rate of 4%. The bonds paid interest semi-annually on June 30 and Dec. 31. How much money did the company receive when the bonds were issued? The bonds would be quoted at what rate?
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