On January 1, a company issues bonds:Par Value: $2,000,000Bond Term, in years: 10Interest Payments: 2x/yearStated Interest Rate: 8%Market Interest Rate: 6% How much will the bond sell for? What dollar amount will be booked to Bonds Payable on the date of sale? How much is Interest Expense on the FIRST interest payment?How much is the amortization of the Bond Premium on the FIRST interest payment? How much is the Interest Expense on the SECOND interest payment? How much is the Amortization of thePremium on the SECOND interest payment?

The bond selling price is calculated by adding the present value of the bond's face value and the…

Answered: On January 1, a company issues bonds:…

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 June 30, 2021, Allen Corporation issued $4 million of its 8% bonds for $3.5 million. The bonds were priced to yield 9.4%. The bonds are dated June 30, 2021. Interest is payable semiannually on December 31 and July 1. If the effective interest method is used, by how much should the bond discount be reduced for the six months ended December 31, 2021? A. $4,800. B. $4,500. C. $3,500. D. $9,000.
Fill in the Blank Question Î A company issues $100,000 of 5%, 10-year bonds dated January 1. The bonds pay interest semiannually on June 30 and December 31 each year. If the bonds are sold at par value, the issuer records the sale with a debit to in the amount of $
Beluga Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 3% when the market rate was 4%. Interest was paid annually. The bonds were sold at 87.5. What was the sales price of the bonds? Were they issued at a discount, a premium, or at par?
What is the market value of each of the following bond issues? (Note: Round to the nearest dollar.) All three bonds were sold on January 1, 2021 10% bonds of $1,000,000 sold on bond issue date ; 10-year life; interest payable 3 times per year on April 1st, August 1st and December 1st; effective rate is 12% 9% bonds of $200,000 sold on bond issue date; five-year life; interest payable semiannually on May 1st and November 1st; effective rate is 8% For the two above bonds, you are to calculate the price of the bond on the day of sale. You are to create an effective interest table for each bond. You are to journalize the sale of the bond, and journalize interest payment #3. 3. 8% bonds of $150,000 sold 30 months after bond issue date; 15-year life; interest payable annually; effective rate is 10%. You are to calculate what the bond will sell for after 30 months.
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am. 106.
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A corporation issues $3,000,000 of 8%, 10-year bonds, interest payable semiannually. At the time the bonds are issued, the market rate is 12%. Determine the present value of bonds at issuance using the present value table below. Show computations in good form. Present Value of Principal: PV of annuity: PV of Bond Payable=
1. On January 1, a company issues bonds dated January 1 with a par value of $300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $312,177. The journal entry to record the issuance of the bond is: Debit Cash $312,177; credit Discount on Bonds Payable $12,177; credit Bonds Payable $300,000. Debit Cash $300,000; debit Premium on Bonds Payable $12,177; credit Bonds Payable $312,177. Debit Bonds Payable $300,000; debit Interest Expense $12,177; credit Cash $312,177. Debit Cash $312,177; credit Premium on Bonds Payable $12,177; credit Bonds Payable $300,000. Debit Cash $312,177; credit Bonds Payable $312,177.

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