On January 1, 2025, Cullumber Co. issued ten-year bonds with a face value of $5,625,000 and a stated interest rate of 10%, payablesemiannually 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%Present value of 1 for 10 periods at 12%Present value of 1 for 20 periods at 5%Present value of 1 for 20 periods at 6%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 5%Present value of annuity for 20 periods at 6%(a)0.38554Issue price of bond0.321970.376890.311806.144575.6502212.4622111.46992Calculate the issue price of the bonds. (Round final answer to O decimal places, e.g. 25,000.)

Issue price of a bond means the price at which the bonds are issued by the entity on the market. If…

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, Eleanor Co. issued ten-year bonds with a face value of $5,000,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31. Required: Calculate the issue price of the bonds if the market interest rate is 4%. Calculate the issue price of the bonds if the market interest rate is 8%.
On January 1, 2020 Lance Co. issued five-year bonds with a face value of $700,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Calculate the issue price of the bonds.
On March 31, 2020, Adtech Inc. issued $200,000, 9%,10-year bonds. The bonds pay interest semi-annually, on September 30 and March 31. The first interest payment is on September 30, 2020. The bonds are issued at a price of 1141/4 (i.e., $228,500). The issuance price implies an effective interest rate of 7%. Bond issue costs are $10,000, which are amortized using the straight-line method. Adtech’s fiscal year-end is on December 31. 1. Prepare all necessary journal entries in relation to these bonds between March 30, 2020 and April 1, 2021. Make sure you indent your credits, and clearly mark the date for each journal entry. 2. What is the amount of the liability that Adtech has to the bondholders on September 30, 2021, after the interest payment on that date?
The Bradford Company issued 10% bonds, dated January 1, with a face amount of $94 million on January 1, 2021. The bonds mature on December 31, 2030 (10 years). For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31. (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 at January 1, 2021.2. to 4. Prepare the journal entries to record their issuance by The Bradford Company on January 1, 2021, interest on June 30, 2021 and interest on December 31, 2021 (at the effective rate).
Crane Company issues $26400000, 8.0%, 5-year bonds dated January 1, 2024 on January 1, 2024. The bonds pay interest semiannually on June 30 and December 31. The bonds are issued to yield 7.0%. Given the following present value factors, what are the proceeds from the bond issue? Present value of a single sum for 5 periods Present value of a single sum for 10 periods Present value of an annuity for 5 periods Present value of an annuity for 10 periods $27487261 $26400000 $27446108 O $27497828 3.5% 0.84197 4.0% 4.51505 0.82193 0.70892 0.67556 4.45182 8.31661 8.11090 7.0% 0.71299 0.50835 4.10020 7.02358 8.0% 0.68058 0.46319 3.99271 6.71008
On January 1, 2021, Cheyenne Co. issued ten-year bonds with a face value of $4,700,000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Table values are: Present value of 1 for 10 periods at 10% 0.386 Present value of 1 for 10 periods at 12% 0.322 Present value of 1 for 20 periods at 5% 0.377 Present value of 1 for 20 periods at 6% 0.312 Present value of annuity for 10 periods at 10% 6.145 Present value of annuity for 10 periods at 12% 5.650 Present value of annuity for 20 periods at 5% 12.462 Present value of annuity for 20 periods at 6% 11.470 Calculate the issue price of the bonds. Issue price of bond$
On January 1, 2020, Bonita Industries issued eight-year bonds with a face value of $5950000 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% 0.467 Present value of 1 for 8 periods at 12% 0.404 Present value of 1 for 16 periods at 5% 0.458 Present value of 1 for 16 periods at 6% 0.394 Present value of annuity for 8 periods at 10% 5.335 Present value of annuity for 8 periods at 12% 4.968 Present value of annuity for 16 periods at 5% 10.838 Present value of annuity for 16 periods at 6% 10.106 The present value of the principal is O $2403800. O $2778650. O $2344300. O $2725100. MacBook Air
1. On January 1, 2024, Lansing Group issued $1,000,000 of 6% bonds, dated January 1. Interest is payable semiannually on June 30 and December 31. The bonds mature in five years. The market yield for bonds of similar risk and maturity is 8%. INSTRUCTIONS: 1. Determine the price of these bonds that are issued to yield the 8% market rate using the Time Value of Money Tables. Include the table and relevant components for each factor used. 2. Record the issuance of these bonds by Lansing Group. 3. Prepare an amortization schedule that determines interest at the effective rate through the maturity date of the bonds. 4. Prepare the entries to record the interest on June 30, 2024, and December 31, 2024. 5. Assume that Lansing Group retires the bonds on January 1, 2026, paying $1,027,544. Prepare the entry to record the retirement.
On January 1, 2025, Cullumber Co. issued five-year bonds with a face value of $510,000 and a stated interest rate of 10% payable semiannually 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 tables 0.74726 0.62092 0.74409 0.61391 4.21236 3.79079 8.53020 7.72173 Calculate 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.)
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 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 June 1, 2024, Ivanhoe Bottle Company sold $3,240,000 in long-term bonds for $2,841,822. The bonds will mature in 10 years and have a stated interest rate of 8% and a yield rate of 10 %. The bonds pay interest annually on May 31 of each year. The bonds are to be accounted for under the effective - interest method. (a) Construct a bond amortization table for this problem to indicate the amount of interest expense and discount amortization at each May 31. Include only 531 the first four years. (Round answers to 0 decimal places, e.g. 25,000.) \table[[Date, Credit Cash, Debit Interest Expense,Credit Bond Discount Carrying Amount of Bonds], [6/1/24,,,], [₁₁/25,,,], [¸₁/27,,,], [28 ,,,]] 5 31 5 31

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