On February 1, 2024, Sanyal Motor Products issued 6% bonds, dated February 1, with a face amount of $85 m . The bonds mature on January 31, 2028 (four years). . The market yield for bonds of similar risk and maturity was 8% • Interest is paid semiannually on July 31 and January 31. Barnwell Industries acquired $85,000 of the bonds as a long-term investment. The fiscal years of both firms end December 31. . . Required: 1. Determine the price of the bonds 2024

On February 1, 2024, Sanyal Motor Products issued 6% bonds, dated February 1, with a face amount of $85 m . The bonds mature on January 31, 2028 (four years). . The market yield for bonds of similar risk and maturity was 8% • Interest is paid semiannually on July 31 and January 31. Barnwell Industries acquired $85,000 of the bonds as a long-term investment. The fiscal years of both firms end December 31. . . Required: 1. Determine the price of the bonds 2024

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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Federal Semiconductors issued 11% bonds, dated January 1, with a face amount of $800 million on January 1, 2021. The bonds sold for $739,814,813 and mature on December 31, 2040 (20 years). For bonds of similar risk and maturity the market yield was 12%. Interest is paid semiannually on June 30 and December 31.Required:1. Prepare the journal entry to record their issuance by Federal on January 1, 2021.2. Prepare the journal entry to record interest on June 30, 2021 (at the effective rate).3. Prepare the journal entry to record interest on December 31, 2021 (at the effective rate).4. At what amount will Federal report the bonds among its liabilities in the December 31, 2021, balance sheet?
On February 1, 2024, Sanyal Motor Products issued 6% bonds, dated February 1, with a face amount of $75 million. ⚫ The bonds mature on January 31, 2028 (four years). The market yield for bonds of similar risk and maturity was 8%. • Interest is paid semiannually on July 31 and January 31. Barnwell Industries acquired $75,000 of the bonds as a long-term investment. • The fiscal years of both firms end December 31. Required: 1. Determine the price of the bonds issued on February 1, 2024. 2-a. Prepare amortization schedules that indicate Sanyal's effective interest expense for each interest period during the term to maturity. 2-b. Prepare amortization schedules that indicate Barnwell's effective interest revenue for each interest period during the term to maturity. 3. Prepare the journal entries to record the issuance of the bonds by Sanyal and Barnwell's investment on February 1, 2024. 4. Prepare the journal entries by both firms to record all events related to the bonds through January…
Myriad Solutions, Incorporated issued 12% bonds, dated January 1, with a face amount of $390 million on January 1, 2024, for $348,683,634. • The bonds mature on December 31, 2033 (10 years). For bonds of similar risk and maturity the market yield is 14%. • Interest is paid semiannually on June 30 and December 31. Required: 1. What would be the net amount of the liability Myriad would report in its balance sheet at December 31, 2024? 2. What would be the amount related to the bonds that Myriad would report in its income statement for the year ended December 31, 2024? 3. What would be the amount(s) related to the bonds that Myriad would report in its statement of cash flows for the year ended December 31, 2024? Note: Round your answers to the nearest whole dollar. 1. Net liability reported 2. Interest Expense 3. Amount reported in Statement of Cash flows $ $ 350,769,893 24,478,404
On January 1 of the current year, Barton Corporation issued 11%, 5-year bonds with a face value of $112,000. The bonds are sold for $106,400. The bonds pay interest semiannually on June 30 and December 31, and the maturity date is December 31, 5 years from now. Barton records straight-line amortization of the bond discount. The bond interest expense for the current year ended December 31 is a.$560 b.$13,440 c.$14,000 d.$6,160
Ellis Company issues 6.5%, five-year bonds dated January 1, 2021, with a $250,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $255,333. The annual market rate is 6% on the issue date. Required: 1. Compute the total bond interest expense over the bonds' life. 2. Prepare an effective interest amortization table for the bonds' life. 3. Prepare the journal entries to record the first two interest payments.
On February 1, 2018, Cromley Motor Products issued 9% bonds, dated February 1, with a face amount of $80 million. The bonds mature on January 31, 2022 (4 years). The market yield for bonds of similar risk and maturity was 10%. Interest is paid semiannually on July 31 and January 31. Barnwell Industries acquired $80,000 of the bonds as a long-term investment. The fiscal years of both firms end December 31. (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.) Required: 1. Determine the price of the bonds issued on February 1, 2018. 2-a. Prepare amortization schedules that indicate Cromley's effective interest expense for each interest period during the term to maturity. 2-b. Prepare amortization schedules that indicate Barnwell's effective interest revenue for each interest period during the term to maturity. 3. Prepare the journal entries to record the issuance of the bonds by Cromley and Barnwell's investment on…
On March 1, 2024, Baddour, Incorporated, issued 10% bonds, dated January 1, with a face amount of $160 million. The bonds were priced at $141.50 million (plus accrued interest) to yield 12%. • The price if issued on January 1 would have been $138.75 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? Note: Enter your answers in whole dollars. Negative amounts should be indicated by a minus sign. Balance sheet: Bonds payable (net) Financing activities Interest payable Income statement: Interest expense Statement of cash flows: $ 160,000,000 (18,500,000) 141,500,000 12,735,000
On January 1, Bramble Corp. issued 10 year, S6,000,000, 9% bonds for $6,842,830. The market rate of interest for these bonds is 79%. Interest is payable annually on December 31 (note that these bonds are ANNUAL bonds). Bramble uses the effective-interest method of amortizing bond premium. At the end of the second year, Bramble should report unamortized bond premium of Group of answer choices $722.000 $716,556 5691,933 $319,093
On January 1, 2022, Aaron Incorporated issued $1,530,000 par value, 6%, 7-year bonds (i.e., there were 1,530 of $1,000 par value bonds in the issue). Interest is payable semiannually each January 1 and July 1 with the first interest payment due at the end of the period on July 1. The issue price of the bonds based on a 12% market rate of interest is $1,103,360. Prepare the amortization table for the first 2 years, assuming Aaron uses the straight-line method. (Round each calculation to the nearest whole number and then use the rounded value for each subsequent calculation in the table.) Date January 1, 2022 July 1, 2022 January 1, 2023 July 1, 2023 January 1, 2024 Cash Interest Straight-Line Interest Discount/Premium Amortization Carrying Value
On February 1, 20x1, Broncos Company issued 9.75% bonds with a face amount of $20 million. The bonds mature in 5 years. For bonds of similar risk and maturity, the market yield is 11.5%. Interest is paid semiannually on July 31 and January 31. Broncos is a calendar-year corporation. 1) Determine the price of the bonds on February 1, 20x1 using the Excel. 2) Prepare the journal entry to record the bond issuance on February 1, 20x1. 3) Prepare an amortization table for 5 years using the effective interest method. 4) Prepare the journal entries (using the effective interest method) on July 31, 20x1 (1st payment). 5) Prepare the journal entry (using the effective interest method) on December 31, 20x1 (adjusting entry, no cash payment!) 6) What would be the journal entry if all bonds are retired at 102.5 on August 1, 20x2 right after the third payment. Prepare the journal entry for the bond retirement.
Federal Semiconductors issued 8% bonds, dated January 1, with a face amount of $740 million on January 1, 2024. The bonds sold for $671,914,968 and mature on December 31, 2043 (20 years). For bonds of similar risk and maturity the market yield was 9%. Interest is paid semiannually on June 30 and December 31. 1- Prepare the journal entries to record their issuance by Federal on January 1, 2024 2- At what amount will Federal report the bonds among its liabilities in the December 31, 2024, balance sheet?
XYZ Corporation issued $20,000,000 of 5 year, 9% bonds on April 1 of the current year at face value, with interest payable semi-annually on April 1 and October 1. The bonds were issued at a market interest rate of 8%, resulting in XYZ Corporation receiving cash of $20,811,020. Journalize the entries to record the following transactions: Issuance of the bonds on April 1 Paid the first semi-annual interest on the bonds on October 1 Is the semi annual interest done as: 20,000,000*9%*1/2 = 4,50,000 or interest Expense Debit 720,000 [(20,000,000 x 9%)/2] Premium on Bonds Payable Debit 27,050 (amortization of premium) Cash Credit 747,050

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