On January 1, 2025, Cullumber Co. issued five-year bonds with a face value of $510,000 and a stated interest rate of 10% payablesemiannually on July 1 and January 1. The bonds were sold to yield 6%.Present value table factors are:Present value of 1 for 5 periods at 6%Present value of 1 for 5 periods at 10%Present value of 1 for 10 periods at 3%Present value of 1 for 10 periods at 5%Present value of an ordinary annuity of 1 for 5 periods at 6%Present value of an ordinary annuity of 1 for 5 periods at 10%Present value of an ordinary annuity of 1 for 10 periods at 3%Present value of an ordinary annuity of 1 for 10 periods at 5%Click here to view factor tables0.747260.620920.744090.613914.212363.790798.530207.72173Calculate the issue price of the bonds. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g.458,582.)

Face value$510,000Coupon rate10%YTM6%Years to maturity5Compounding frequency2Present value of 1 for…

Answered: On January 1, 2025, Cullumber Co.…

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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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?
3. On July 1, 2018, Volunteer Inc. issued bonds with a $500,000 face value at 108.0 and the 5-year bonds have a 10% interest rate in a market with a rate of 8%. Interest is payable semi-annually and the effective-interest method is used for amortization. Prepare journal entries for the following transactions. Premium on Bonds Payable Interest Income Discount on Bonds Payable Interest Expense Cash Bonds Payable PLEASE NOTE: For each of the following journal entries there is one account's treatment (DR or CR), that depends on whether it is a bond issued at a premium or a discount. You are to identify if it is a DR or a CR. You must enter the account names exactly as written above and all dollar amounts will be rounded to whole dollars with "$" and commas as needed (i.e. $12,345). July 1, 2018: to record issuing the bonds DR DR/CR ? CR Dec. 31, 2018: to record the amortization & payment of interest to bondholders: DR…
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.
On January 1, 2024, Anne Teak Furniture issued $100,000 of 12% bonds, dated January 1. Interest is payable semiannually on June 30 and December 31. The bonds mature in 4 years. The annual market rate for bonds of similar risk and maturity is 14%. What was the issue price of the bonds? Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Multiple Choice $89,460 $120,942 $95,460 $94,029
Carla Vista Inc. issued $920,000 of 10 - year, 3% bonds on January 1, 2024. Interest is to be paid semi-annually. The market interest rate was 4%. What is the face value of the bond? When will this be paid?
On January 1, 2024, Wildhorse Co. issued eight-year bonds with a face value of $6010000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Table values are: Present value of 1 for 8 periods at 10% 0.46651 Present value of 1 for 8 periods at 12% 0.40388 Present value of 1 for 16 periods at 5% 0.45811 Present value of 1 for 16 periods at 6% 0.39365 Present value of annuity for 8 periods at 10% Present value of annuity for 8 periods at 12% Present value of annuity for 16 periods at 5% Present value of annuity for 16 periods at 6% 5.33493 4.96764 10.83777 10.10590 The present value of the principal is O $2365837. O $2427319. O $2753241. O $2803725.
On January 1, 2025, Sandhill Co. issued ten-year bonds with a face value of $5,125,000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Table values are. Present value of 1 for 10 periods at 10% 0.38554 Present value of 1 for 10 periods at 12% 0.32197 Present value of 1 for 20 periods at 5% 0.37689 Present value of 1 for 20 periods at 656 0.31180 Present value of annuity for 10 periods at 10% Present value of annuity for 10 periods at 12% Present value of annuity for 20 periods at 536 Present value of annuity for 20 periods at 6% 6.14457 5.65022 1246221 11.46992 (a) Calculate the issue price of the bonds. (Round final answer to O decimal places, e.g. 25,000) Issue price of bond $ eTextbook and Media Save for Later (b) The parts of this question must be completed in order. This part will be available when you complete the part above.
On January 1, 2024, Cool Universe issued 10% bonds dated January 1, 2024, with a face amount of $20.1 million. The bonds mature in 2033 (10 years). For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. Determine the price of the bonds on January 1, 2024. 2. Prepare the journal entry to record the bond issuance by Cool on January 1, 2024. 3. Prepare the journal entry to record interest on June 30, 2024, using the straight-line method. 4. Prepare the journal entry to record interest on December 31, 2024, using the straight-line method. Complete this question by entering your answers in the tabs below. Req 1 Req 2 to 4 Check n Determine the price of the bonds on January 1, 2024. Note: Enter your answers in whole dollars not in millions (l.e., 1,000,000 not 1). Round your intermediate…
When Patey Pontoons issued 10% bonds on January 1, 2024, with a face amount of $880,000, the market yield for bonds of similar risk and maturity was 11%. The bonds mature December 31, 2027 (4 years). Interest is paid semiannually on June 30 and December 31. Required: 1. Determine the price of the bonds at January 1, 2024. 2. Prepare the journal entry to record their issuance by Patey on January 1, 2024. 3. Prepare an amortization schedule that determines interest at the effective rate each period. 4. Prepare the journal entry to record interest on June 30, 2024. 5. What is the amount related to the bonds that Patey will report in its balance sheet at December 31, 2024? 6. What is the amount related to the bonds that Patey will report in its income statement for the year ended December 31, 2024? (Ignore income taxes.) 7. Prepare the appropriate journal entries at maturity on December 31, 2027 Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1.…
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
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On January 1, 2020, Pine Co. issued 10%, 10-year bonds with a face value of $12,000,000. The bonds were issued for $13,620,000 to yield 8%. Interest is payable annually on December 31. Pine amortizes bond premium using the effective-interest method. The bond premium reported on Pine’s balance sheet dated December 31, 2020, would be

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