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.
A company issued bonds with a par value of $250,000 and a maturity of 25 years. The Bonds pay interest every six months based on a nominal interest rate of 8% per year. If on the date of issuance of the bonds the market rate (yield) is 9.25%: a. What will be the selling price of the bonds? b. Make the journal entry to recognize interest expense in the third six-month period of the bonds.
Company E issues $300,000 worth of 7.5% bonds on January 1, 20x2, which will mature on December 31, 20x3. The market rate on the date of issuance is 6%. Interest will be paid semiannually on June 30 and December 31. Calculate the purchase price of the bonds. Does the price make sense? Explain. How will the bond value appear in the newspaper? Record all journal entries necessary from the date of issue until the maturity date. Be sure to show all calculations.
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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What would be the required journal entry on the date of issuance if a company issues $100,000 five-year, 10% bond for $103,769 and the interest is to be paid semiannually? debit cash, $100,000, and credit bond payable $100,000 debit cash $103,769, and credit bond payable $100,000 and credit premium on bonds payable $3,769 debit bonds payable $103,769 and debit discount on bonds payable $3,769, and credit cash $100,000 debit cash $103,769 and debit discount on bonds payable $3,769, and credit bonds payable $100,000
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Assume Walmart issued $1,000 10-year bonds. The bonds sold for $924 and pay interest semiannually. The required rate of return (semi-annual effective rate) for the bonds is .03. What is the bond’s coupon rate, reported as an APR compounded semi-annually? Instruction: Round to three decimal places. E.g., if your answer is 0.0106465 or 1.06465%, you should type ONLY the number .011, neither 0.0106465, 0.0106, nor 1.065.
am. 106.

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