On January 1, 2018, Mania Enterprises issued 12% bonds dated January 1, 2018, with a face amount of $20.7 million. The bonds maturein 2027 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 andDecember 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 tablesprovided. Enter your answers in whole dollars.)Required:1. Determine the price of the bonds at January 1, 2018.2. Prepare the journal entry to record the bond issuance by Mania on January 1, 2018.3. Prepare the journal entry to record interest on June 30, 2018, using the effective interest method.4. Prepare the journal entry to record interest on December 31, 2018, using the effective interest method.Complete this question by entering your answers in the tabs below.Required 1Required 2Required 3Required 4Determine the price of the bonds at January 1, 2018.Bond value< Required 1Required 2 >

1. Issue Price of the bonds = Present value of principal + Present value of interest payments = face…

Answered: On January 1, 2018, Mania Enterprises…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 2012, Instaform Company issued 10% bonds with a principal amount of $50 million, dated January 1. The bonds mature in 2031 (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 on January 1, 2012, and prepare the journal entry to record their issuance by Instaform 2. Assume the market rate was 9%. Determine the price of the bonds on January 1, 2012, and prepare the journal entry to record their issuance by Instaform. 3. Assume Broadcourt Electronics purchased the entire issoe in a private placement of the bonds. Using the data in requirement 2. prepare the journal entry to recced their purchase by Broadcourt .
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