On January 1, 2016, Colt Co. issued ten-year bonds with a face amount of $1,000,000 and a stated interest rate of 8% payable annually on January 1. The bonds were priced to yield 10%. The approximate total issue price of the bonds was: Select one: a. $1,491,600 b. $877,106 c. $1,134,198 d. $954,756 e. $922,346

On January 1, 2016, Colt Co. issued ten-year bonds with a face amount of $1,000,000 and a stated interest rate of 8% payable annually on January 1. The bonds were priced to yield 10%. The approximate total issue price of the bonds was: Select one: a. $1,491,600 b. $877,106 c. $1,134,198 d. $954,756 e. $922,346

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: The Bradford Company issued 10% bonds, dated January 1, with a face amount of $82 million on January…

A: Issue price of bonds would be the present value of the interest annuity & maturity amount at…

Q: Which of the following statements is true when 10-year, 6% bonds with a par value of $20,000,000 are…

A: Time = 10 yearsCoupon rate = 6%Face Value = $20,000,000Market Interest rate = 8%

Q: Ivanhoe Company issues $24300000, 8.0%, 5-year bonds dated January 1, 2024 on January 1, 2024. The…

A: The bonds are the long-term liabilities that are issued to raise the money from the market orThe…

Q: On January 1, 2018, Ithaca Corp. purchases Cortland Inc. bonds that have a face value of $150,000.…

A: 1. Calculate the price Ithaca would have paid for the Cortland bonds on January 1, 2018 prepare a…

Q: On January 1, 2024, Cullumber Co. issued eight-year bonds with a face value of $6040000 and a stated…

A: Bonds help companies, government entities, and others acquire the funds required to meet their…

Q: On January 1, 2018, Wauwatosa Inc. issued 5- year bonds with a fave value of $200,000 and a stated…

A: When the issue price of the bond is higher than its face value, the bonds are said to be issued at a…

Q: The Bradford Company issued 10% bonds, dated January 1, with a face amount of $80 million on January…

A: Since we are entitled to answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the…

Q: Kendrick Corporation issued $660,000 of 7%, 10-year bonds payable on March 31, 2019. The market…

A: Issue price of the bond:Par value of the bond = $660,000Market interest rate = 9% per annum (or)…

Q: The present value of the interest is $3006535. $3174325. $3224305. $2955960.

A: Present Value of Interest = Interest Amount * The present value of an annuity for 16 periods at 6%

Q: On January 1, 2016, Broker Corporation issued $3,000,000 par value 12%, 10-year bonds which pay…

A: Issue Price of Bond=Present Value of Maturity amount+Maturity value of Interest payment Present…

Q: Determine the present value of the bonds at issuance.

A: Bond valuation is the process of finding the fair value of the bond. It means to find the present…

Q: Crane Company issues $25300000, 8.0%, 5-year bonds dated January 1, 2024 on January 1, 2024. The…

A: The bonds are the long-term liabilities that are issued to raise the money from the market orThe…

Q: A company issues $10,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2013. Interest is paid…

A: Face Value of Bonds $1,00,00,000 Less: Proceeds from the bonds $98,02,072 Discount on bonds…

Q: On January 1, 2016, Knorr Corporation issued $800,000 of 6%, 5-year bonds dated January 1, 2016. The…

A: A bond is a fixed pay instrument issued to represent to an advance made by a financial specialist to…

Q: On January 1, 2016, Knorr Corporation issued $1,100,000 of 9%, 5-year bonds dated January 1, 2016.…

A: Interest on Bonds = $1,000,000 x 9%= $90,000Present Value of Bonds = Interest on Bonds x PVAF(n=5,…

Q: On January 1, 2015, ABC Co. issued 5-year bonds in the amount of $50, 000. Interest of 4% is…

A: Bonds: Bonds are the financial debt instruments issued by the corporations to raise capital for the…

Q: Agee Technology, Inc., issued 9% bonds, dated January 1, with a face amount of $400 million on July…

Q: Prepare the journal entry for the issuance of these bonds. Assume the bonds are issued for cash on…

A: When the bonds are issued at more than their par value it means that it has been issued at the…

Q: On September 30, 2016, the San Fillipo Corporation issued 8% stated rate bonds with a face amount of…

A: Determine present value of annuity amount (interest).

Q: Shaw Company issued P5,000,000, 12% bonds on January 1, 2012. The principal of the bonds were paid…

Q: January 1, December 31. The bonds mature on January 1, 2034. The bonds are sold to yield 12%, Click…

A: Bonds are financial debt instruments. When the contract rate is less than the market rate the bonds…

Q: Crane Company issues $26400000, 8.0%, 5-year bonds dated January 1, 2024 on January 1, 2024. The…

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

Q: 1. On January 1, 2024, Lansing Group issued $1,000,000 of 6% bonds, dated January 1. Interest is…

A: The objective of the question is to determine the price of the bonds, record the issuance, prepare…

Q: Nicholas Ram Corporation have a $1,700,000 "bond issue" dated March 1, 2016 due in 15 years with an…

A: Journal entry is the act of keeping records of transactions in an accounting journal. An accounting…

Q: Five-year 6% bonds were issued on January 1, 2018, sold to yield 8% interest. Interest is paid…

A: Journal entry refers to those entries which are recorded to make entry of all the financial…

Q: 8% has mature December 31, 2024 (4 years). For bonds of similar risk and maturity the market yield…

A: Bonds are said to be issued at discount when the contract rate or stated interest rate is less than…

Q: Stacy Company issued five-year, 8% bonds with a face value of $6,000 on January 1, 2016. Interest is…

A: Step 1: Step 2:na Step 3: Step 4:

Question

Select one:

$1,491,600

$877,106

$1,134,198

$954,756

$922,346

Definition Definition Calculates the present value of a bond's expected future periodic coupon payments. Bond valuation determines the theoretical fair value of a particular bond and helps investors estimate what rate of return they could expect. The bond's theoretical fair value is computed by discounting the future cash flows or coupon payments by an applicable discount rate.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Gadubhai
On January 1, 2022, P Corp. issued eight-year, 3% bonds with a face value of $400,000, with interest payable semi- annually on June 30 and December 31. The bonds were sold to yield 4%. Table values are: Present value of 1 for 8 periods at 3% .789 Present value of 1 for 8 periods at 4% 731 Present value of 1 for 16 periods at 1.5% 788 Present value of 1 for 16 periods at 2% .728 Present value of annuity for 8 periods at 3% Present value of annuity for 8 periods at 2% 7.020 7.325 Present value of annuity for 16 periods at 1.5% 14.131 Present value of annuity for 16 periods at 2% 13.578 What is the issue price of the bond?
On January 1, 2016, Knorr Corporation issued $1,000,000 of 9%, 5-year bonds dated January 1, 2016. The bonds pay interest annually on December 31. The bonds were issued to yield 10%. Bond issue costs associated with the bonds totaled $18,000. Required: Prepare the journal entries to record the following: January 1, 2016 Sold the bonds at an effective rate of 10% December 31, 2016 First interest payment using the effective interest method December 31, 2016 Amortization of bond issue costs using the straight-line method December 31, 2017 Second interest payment using the effective interest method December 31, 2017 Amortization of bond issue costs using the straight-line method
On January 1, 2017, Ellison Co. issued eight-year bonds with a fase value of S6,000,000 and a stated interest rate of6%, payable semlannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are: Present value of 1 for 8 periods at 6% Present value of 1 for 8 periods at 8% Use the following to answer question 12: .627 .540 Present value of 1 for 16 periods at 3% Present value of 1 for 16 periods at 4% Present value of annuity for 8 periods at 6% Present value of annuity for 8 periods at 8% Present value of annuity for 16 periods at 3% Present value of annuity for 16 periods at 4% .623 .534 6.210 5.747 12.561 11.652 honds issued 12. The present value of the interest is A) $2,068,920. B) $2,097,360. C) $2,235,600. D) $2,260,980.
1)
On January 1, 2016, Instaform, Inc., issued 10% bonds with a face amount of $50 million, dated January 1. The bonds mature in 2035 (20 years). The market yield for bonds of similar risk and maturity is 12%. Interest is paid semiannually. Required: 1. Determine the price of the bonds at January 1, 2016, and prepare the journal entry to record their issuance by Instaform. 2. Assume the market rate was 9%. Determine the price of the bonds at January 1, 2016, and prepare the journal entry to record their issuance by Instaform. 3. Assume Broadcourt Electronics purchased the entire issue in a private placement of the bonds. Using the data in requirement 2, prepare the journal entry to record the purchase by Broadcourt.
On January 1, 2024, Cullumber Co. issued eight-year bonds with a face value of $5920000 and a stated interest rate of 4%, payable semiannually on June 30 and December 31. The bonds were sold to yield 6%. Table values are: Present value of 1 for 8 periods at 4% Present value of 1 for 8 periods at 6% Present value of 1 for 16 periods at 2% Present value of 1 for 16 periods at 3% Present value of annuity for 8 periods at 4% Present value of annuity for 8 periods at 6% Present value of annuity for 16 periods at 2% Present value of annuity for 16 periods at 3% The present value of the principal is O $4312424. O $4325685. O $3714267. O $3689166. 0.73069 0.62741 0.72845 0.62317 6.73274 6.20979 13.57771 12.56110
please provide correct answer
QUESTION INFORMATION: Prior to 2022, a company issued bonds with a face value of $200,000, a stated rate of 10%, and a market rate of 12%. Interest is paid on December 31 of each year. As of December 31, 2022, the bonds had a carrying amount of $180,000. One year later, following the December 31, 2023 annual interest payment, the company called the bonds for 101% of face value. QUESTION TO ANSWER: The loss that the company records on the early extinguishment of the bonds is $_
A company issued 7% 9-year bonds with a face amount of $70,000 for $65,567 On January 1 2024. The market intrest rate for bonds of similar risk and maturity is 8% intrest is paid semianually on june 30 and december 31 Required: Record the bond issue and first intrest payment on june 30 2024