On January 1, 2021, Instaform, Inc., issued 10% bonds with a face amount of $53 million, dated January 1. The bonds mature in 2040 (20 years). The market yield for bonds of similar risk and maturity is 12%. Interest is paid semiannually. (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-a Determine the price of the bonds at January 1, 2021. 1-b Prepare the journal entry to record their issuance by instaform. 2-a Assume the market rate was 9%. Determine the price of the bonds at January 1, 2021. 2-b Assume the market rate was 9%. 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 1, prepare the journal entry to record the purchase by Broadcourt.
On January 1, 2021, Instaform, Inc., issued 10% bonds with a face amount of $53 million, dated January 1. The bonds mature in 2040 (20 years). The market yield for bonds of similar risk and maturity is 12%. Interest is paid semiannually. (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-a Determine the price of the bonds at January 1, 2021.
1-b Prepare the
2-a Assume the market rate was 9%. Determine the price of the bonds at January 1, 2021.
2-b Assume the market rate was 9%. 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 1, prepare the journal entry to record the purchase by Broadcourt.
The bond is priced at the discounted value of all the future cash flows of the bond at the market interest rate.
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