Sarasota Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested constructionof a new plant to meet the increasing demand for the company's bikes. After a careful evaluation of the request, the board of directorshas decided to raise funds for the new plant by issuing $3,294,900 of 12% term corporate bonds on March 1, 2025, due on March 1,2040, with interest payable each March 1 and September 1. At the time of issuance, the market interest rate for similar financialinstruments is 10%.Click here to view factor tables.As the controller of the company, determine the selling price of the bonds. (Round factor values to 5 decimal places, eg 1.25124 and finalanswer to 0 decimal places, e.g. 458,581.)Selling price of the bonds $

Bond refers tp the debt instrument which is issued through the companies or the governments in order…

Answered: 'Sarasota Inc. manufactures cycling…

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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Coronado Co. is building a new hockey arena at a cost of $2,420,000. It received a downpayment of $510,000 from local businesses to support the project, and now needs to borrow $1,910,000 to complete the project. It therefore decides to issue $1,910,000 of 10.0%, 10-year bonds. These bonds were issued on January 1, 2024, and pay interest annually on each January 1. The bonds yield 9%. Click here to view factor table. (a) Your answer is partially correct. Prepare the journal entry to record the issuance of the bonds on January 1, 2024. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places, e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Date January 1, 2024 Account Titles and Explanation Cash Premium on Bonds Payable…
! Required information [The following information applies to the questions displayed below.] On January 1, 2024, Water World issues $26 million of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Water World intends to use the funds to build the world's largest water avalanche and the "tornado"- a giant outdoor vortex in which riders spin in progressively smaller and faster circles until they drop through a small tunnel at the bottom. 3-a. If the market rate is 8%, calculate the issue price. (FV of $1, PV of $1. FVA of $1, and PVA of $1) 3-b. Will the bonds issue at face amount, a discount, or a premium? Complete this question by entering your answers in the tabs below. Req 3a Req 3b If the market rate is 8%, calculate the issue price. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Note: Use tables, Excel, or a financial calculator. Enter your answers in dollars not in millions (i.e., $5.5 million should be entered as 5,500,000).…
Pina Co. is building a new hockey arena at a cost of $2,510, 000. It received a downpayment of $490,000 from local businesses to support the project, and now needs to borrow $ 2,020,000 to complete the project. It therefore decides to issue $2,020,000 of 10.0 %, 10- year bonds. These bonds were issued on January 1, 2024, and pay interest annually on each January 1. The bonds yield 9% . Assume that on July 1, 2027, Pina Co. redeems half of the bonds at a cost of $1,079, 300 plus accrued interest. Prepare the journal entry to record this redemption.
Geneva County authorized the issuance of bonds and contracted with the Chessie Construction Company (CCC) to build a new convention center. During 2016, 2017, and 2018, the county engaged in the transactions that follow. All were recorded in the county’s capital projects fund. a. In 2016, the county issued $350 million in bonds (and recorded them as bond proceeds, an account comparable to revenues.) b. The county approved the contract proposal from CCC for $350 million and encumbered the entire amount. c. CCC billed the county for $115 for construction to date. d. The county paid CCC the amount due in full. e. In 2017, CCC billed the county for additional construction to date of $190 million. f. The county paid the amount due in full. g. In 2018, CCC completed construction of the convention center and billed the county an additional $50 million. The county approved the additional costs, even though the total cost of the center was now $355 million, $5 million more than the contract…
Riverbed Co. is building a new music arena at a cost of $5,652,000. It received a down payment of $642,000 from local businesses to support the project, and now needs to borrow $5,010,000 to complete the project. It therefore decides to issue $5,010,000 of 7%, 20- year bonds. These bonds were issued on January 1, 2024, and pay interest annually on each January 1. The bonds yield 9%. Prepare the journal entry to record the issuance of the bonds on January 1, 2024. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal place e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Date Account Titles and Explanation January 1,2024 Cash Discount on Bonds Payable Bonds Payable Debit 4095316 914684 Credit 5010000 Prepare a bond amortization…
Voters of Valdez School District, a public school district, approved construction of a new high school at a cost not to exceed $20 million. The district will finance the construction by issuing $20 million of 6 percent term bonds payable in 20 years. Because the site had already been prepared, the school district began construction immediately but the bonds would not be issued for nearly a year. Shortly before the fiscal year-end, the school district borrowed $5 million from a local bank due in one year with interest at 6.2 percent. The note will be repaid from bond proceeds. The school district secured a financing agreement with the bank to convert the debt to a 10-year debt if the school district is unable to sell the bonds by the due date. At year-end, how should the $5 million note be displayed in the government-wide financial statements? A.) Notes payable-long term $5 million; B.) Notes payable-short term $5 million; C.) Nothing D.) None of above
Katarina Witt, Inc. manufactures skating equipment. Recently the Vice President of Operations of the company has requested construction of a new plant to meet the increasing needs for the company’s skates. After a careful evaluation of the request, the board of directors have decided to raise funds for the new plant by issuing $2,000,000 of 11% term corporate bonds on January 1, 2008, due on January 1, 2018, with interest payable each January 1 and July 1. At the time of issuance, the market interest rate for similar financial instruments is 10%. As the controller of the company, determine the selling price of the bonds: Please avoid images in solution thnx
Novak Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested construction of a new plant to meet the increasing demand for the company's bikes. After a careful evaluation of the request, the board of directors has decided to raise funds for the new plant by issuing $3,492,700 of 10% term corporate bonds on March 1, 2025, due on March 1, 2040, with interest payable each March 1 and September 1. At the time of issuance, the market interest rate for similar financial instruments is 8%. Click here to view factor tables. As the controller of the company, determine the selling price of the bonds. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) Selling price of the bonds $
The Drug-Free Center, a growing nonprofit, is currently considering the construction of a new wing to extend its treatment building. After consulting with a law firm that specializes in municipal bonds, the nonprofit has decided to issue a tax-exempt municipal bond, taking advantage of the potential lower financing costs. The initial consideration of the bond issue is $50 million, and the bond issuance cost is estimated to be $1 million, including all professional services of the bond counsel and financial adviser, in addition to the underwriting firm. The full term of the bond issue is twenty years, in consideration of the economic life of the facility before the major renovation is needed. The interest rate is 6 percent, based on the market rate for tax-exempt municipal bonds for similar projects at the time. The city authority has agreed to issue the bond based on a signed inducement. You are the nonprofit's financial manager and are asked to create a bond structure and payment…

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