7Quatro Company issues bonds dated January 1, 2021, with a par value of $700,000. The bonds' annual contract rate is 13%, andinterest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date ofissuance is 12%, and the bonds are sold for $717,237.1. What is the amount of the premium on these bonds at issuance?2. How much total bond interest expense will be recognized over the life of these bonds?3. Prepare a straight-line amortization table for these bonds.Complete this question by entering your answers in the tabs below.Required 1SemiannualInterest Period-End01/01/202106/30/202112/31/202106/30/202212/31/202206/30/202312/31/2023Required 2 Required 3Prepare a straight-line amortization table for these bonds.Note: Round your intermediate calculations to the nearest dollar amount.UnamortizedPremiumX Answer is complete but not entirely correct.$2,8732,873 X2,873 x2,873 x2,873 x14,3640$CarryingValue717,237717,237 X717,237 X717,237717,237714,364700,000

The bonds payable are treated as long term liabilities. The bonds are issued to raise money from the…

Answered: Quatro Company issues bonds dated…

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

See similar textbooks

Similar questions

On June 30, 2021, the market interest rate is 5%. Champs Corporation issues $600,000 of 10%, 30-year bonds payable. The bonds pay interest on June 30 and December 31. The company amortizes bond premium using the effective-interest method. Read the requirements. Requirement 1. Use the PV function in Excel to calculate the issue price of the bonds. (Round your answer to the nearest whole dollar.) The issue price of the bonds is Requirements 1. 2. 3. Use the PV function in Excel to calculate the issue price of the bonds. Prepare a bond amortization table for the first four semiannual interest periods. Record the issuance of bonds payable on June 30, 2021; the payment of interest on December 31, 2021; and the payment of interest on June 30, 2022. Print Done X
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.
Enviro Company issues 8%, 10-year bonds with a par value of $200,000 and semiannual interest payments. On the Issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87 12. The straight-line method is used to allocate interest expense. 1. What are the issuer's cash proceeds from Issuance of these bonds? 2. What total amount of bond Interest expense will be recognized over the life of these bonds? 3. What is the amount of bond Interest expense recorded on the first interest payment date? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Answer is complete but not entirely correct. Required 3 What total amount of bond interest expense will be recognized over the life of these bonds? Note: Round final answers to the nearest whole dollar amount. payments of Par value at maturity Total Bond Interest Expense Over Life of Bonds: Amount repaid: 20 $ 168,000 $ 3,360,000 200,000 3,560,000 Total repayments Less amount…
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.
Garcia Company issues 11.50%, 15-year bonds with a par value of $450,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 15.50%, which implies a selling price of 80 1/2. The effective interest method is used to allocate interest expense. What are the issuer's cash proceeds from issuance of these bonds? What total amount of bond interest expense will be recognized over the life of these bonds? What amount of bond interest expense is recorded on the first interest payment date?
Stanford issues bonds dated January 1, 2021, with a par value of $253,000. The bonds' annual contract rate is 6%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 8%, and the bonds are sold for $239,733. 1. What is the amount of the discount on these bonds at issuance?2. How much total bond interest expense will be recognized over the life of these bonds?3. Prepare an effective interest amortization table for these bonds.
Quatro Company issues bonds dated January 1, 2021, with a par value of $760,000. The bonds' annual contract rate is 10%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 8 %, and the bonds are sold for $799, 828. What is the amount of the premium on these bonds at issuance? How much total bond interest expense will be recognized over the life of these bonds? Prepare an effective interest amortization table for these bonds
Tano Company issues bonds with a par value of $180,000 on January 1 of the current year. The bonds' annual contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 10%, and the bonds are sold for $170,864. Par value Contract rate Term Market rate Proceeds Payments per year Required: 1. What is the amount of the discount on these bonds at issuance? Discount Total repaid Less amount borrowed Total bond interest expense $9,136 2. How much total bond interest expense will be recognized over the life of these bonds? Total Bond Interest Expense Over Life of Bonds: Amount repaid: GUEUNEO (0) 2 payments of Par value at maturity (2) (3) (4) (5) (6) Amount of semi-annual discount amortization $180,000 896 3. Prepare a straight-line amortization table for these bonds. Semiannual Period-End 3 years 10% $170,864 2 1/1/2024 6/30/2024 12/31/2024 6/30/2025 12/31/2025 6/30/2026 12/31/2026 $5,400…
NoleCo issues bonds on January 1, 20X1. The bonds mature ten years from this date and pay interest semi-annually on June 30 and December 31 each year. The face value of the bonds is $800,000 and the coupon/stated rate is 10%. The market rate on the issue date is 11%. The bonds were issued for $752,198.Required: Complete the three parts below.Part A: The interest expense that NoleCo should recognize on June 30, 20X1 is:$40,000$44,000$37,610$42,112$41,371Part B: The interest expense that NoleCo should recognize on December 31, 20X1 is:$41,295$41,446$40,000$42,206$44,000Part C: The carrying value of these bonds on December 31, 20X1 (after the interest payment on that date) is:$800,000$753,569$755,015$752,198$756,516
30
Mindsetta Music Inc. issued bonds on March 1, 2020, with a par value of $420,000. The bonds mature in 15 years and pay 14.00% annual interest in two semiannual payments. On the issue date, the annual market rate of interest for the bonds turned out to be 16%. (Table attached for reference) 1. What is the semiannual interest payment for these bonds? 2. How many semiannual interest payments will be made on these bonds over their life? 3. Are the bonds issued at discount, premium, or par? 4. Estimate the market value of the binds as the date they were issued 5. Journal entry: Record the sales of bonds at discount on the original issue date
Virginia Vista Company has 4%, 10-year bonds payable that mature on June 30, 2028. The bonds are issued on June 30, 2018, and Virginia Vista pays interest each June 30 and December 31. Read the requirements. Requirement 1. Will the bonds be issued at face value, at a premium, or at a discount if the market interest rate on the date of issuance is 2%? If the market interest rate is 6%? If the market interest rate is 2%, the bonds will be issued at If the market interest rate is 6%, the bonds will be issued at Requirement 2. Virginia Vista issued $400,000 of the bonds at 89. Round all calculations to the nearest dollar. a. Record issuance of the bonds on June 30, 2018. (Record debits first, then credits. Select explanations on the last line of the journal entry. Round your answers to the nearest whole dollar.) Date Accounts and Explanation Debit Credit 2018 (a) Jun. 30 b. Record the payment of interest and amortization of the discount on December 31, 2018. Use the straight-line…

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS