P10-5 (Algo) Recording a Bond Issued at a Discount and Determining How the Issuance Affects Ratios LO10-3, 10-4, 10-6 [The following information applies to the questions displayed below.] On January 1 of this year, Cunningham Corporation issued bonds with a face value of $219,000 and a coupon rate of 6 percent. The bonds mature in 30 years and pay interest annually every December 31. When the bonds were sold, the annual market rate of interest was 8 percent. The company uses the effective-interest amortization method. By December 31 of this year, the annual market rate of interest had increased to 10 percent. (FV of $1. PV of $1. FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.) P10-5 Part 3 3. Determine whether the company's debt-to-equity ratio and times interest earned ratio increase, decrease, or stay the same when (a) the bonds are issued, and (b) interest expense is recorded and cash is paid to investors for interest. (Select "NE" if there is no effect.) Date Issue date Interest payment date Debt-to-Equity Times Interest Earned

P10-5 (Algo) Recording a Bond Issued at a Discount and Determining How the Issuance Affects Ratios LO10-3, 10-4, 10-6 [The following information applies to the questions displayed below.] On January 1 of this year, Cunningham Corporation issued bonds with a face value of $219,000 and a coupon rate of 6 percent. The bonds mature in 30 years and pay interest annually every December 31. When the bonds were sold, the annual market rate of interest was 8 percent. The company uses the effective-interest amortization method. By December 31 of this year, the annual market rate of interest had increased to 10 percent. (FV of $1. PV of $1. FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.) P10-5 Part 3 3. Determine whether the company's debt-to-equity ratio and times interest earned ratio increase, decrease, or stay the same when (a) the bonds are issued, and (b) interest expense is recorded and cash is paid to investors for interest. (Select "NE" if there is no effect.) Date Issue date Interest payment date Debt-to-Equity Times Interest Earned

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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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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Bonds sold at Premium: Use the following information for Problems #4 - #6: Summatra Corporation issued $1,200,000 of five year 8% term bonds on January 1, 2012 with interest payable twice annually (each July 1 and January 1). The market rate of interest for such bonds is 6%. Record the journal entry on Summatra's for issuance of the bonds:
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When the market rate of interest was 12%, Halprin Corporation issued $317,000, 11%, 10-year bonds that pay interest annually. The selling price of this bond issue was? Use the present value tables in Exhibit 8 and Exhibit 10. Oa. $299,088 Ob. $316,999 Oc. $1,879,166 Od. $1,802,347 ( Previous Next > 3:27 PM earch 53°F Sunny a. 12/14/2021 114 144 pause 1 shift alt ctrl USE YOUR SMARTPHONE FOR Revlews Videos Features
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