Sheridan Industries, Inc. issued $17,400,000 of 8% debertures on May 1, 2024 and received cash totaling $15,438,373. The bonds pay interest semiannually on May 1 and November 1. The maturity date on these bonds is November 1, 2028. The firm uses the effective- interest method of amortizing discounts and premiums. The bonds were sold to yield an effective rate of 10%. Calculate the total dollar amount of discount or premium amortization during the first year (5/1/24 through 4/30/25) these bonds were outstanding. (Round answers to O decimal places, e.g. 5,275.) Date 5/1/24 11/1/24 5/1/25 Total $ Cash Interest Interest Expense tA $ $ Discount Amortized $ Carrying Value of Bon

Sheridan Industries, Inc. issued $17,400,000 of 8% debertures on May 1, 2024 and received cash totaling $15,438,373. The bonds pay interest semiannually on May 1 and November 1. The maturity date on these bonds is November 1, 2028. The firm uses the effective- interest method of amortizing discounts and premiums. The bonds were sold to yield an effective rate of 10%. Calculate the total dollar amount of discount or premium amortization during the first year (5/1/24 through 4/30/25) these bonds were outstanding. (Round answers to O decimal places, e.g. 5,275.) Date 5/1/24 11/1/24 5/1/25 Total $ Cash Interest Interest Expense tA $ $ Discount Amortized $ Carrying Value of Bon

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

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Garcia Company issues 10%, 15-year bonds with a par value of $310,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 8%, which implies a selling price of 117 %. The effective interest 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 amount of bond interest expense is recorded on the first interest payment date? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What amount of bond interest expense is recorded on the first interest payment date? Bond interest expense
Montana Inc. issued $900,000 of 12-year bonds with a stated rate of 8% when the market rate was 9%. The bonds pay interest semi-annually. Assume that the bonds were issued for $883,386. Prepare an amortization table for the first three payments. Semiannual Interest Period Semiannual Interest Expense Semiannual Interest Payment Amortization of Discount Ending Carrying Value 1 2 3 PLEASE NOTE: All dollar amounts will be rounded to whole dollars using "$" and commas as needed (i.e. $12,345).
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Barnett Industries, Inc., issued $600,000 of 8% bonds on January 1, 2019. The bonds pay interest semiannually on July 1 and January 1. The maturity date on these bonds is December 31, 2028. The firm uses the effective interest method of amortizing discounts and premiums. The bonds were sold to yield an effective interest rate of 9%. Barnett incurred legal and investment banking fees of $22,000 in issuing the bonds and amortizes these costs annually on a straight-line basis. Required: 1. Calculate the selling price of the bonds. 2. Prepare journal entries for the issuance of the bonds and debt issuance costs.
On the July 1, 2021, Trials Corporation issued $17,500,000 of five-year, 12% bonds to finance its operations. The bonds were issued at a market (effective) interest rate of 10%, resulting in Trials Corporation receiving cash of $18,851,252. Interest is payable semiannualy on 12/31 and 6/30. The company uses the straight-line method to amortize the bond discount. REQUIRED: Journalize the entries to record the following: 07/01/21-issuance of the bonds 12/31/21- the first semiannual interest payment, including amortization of the bond discount. Round to the nearest dollar. 06/30/22- the second semiannual interest payment, including amortization of the bond discount. Round to the nearest dollar. Date Account Name Journal Entries Debi Credit
On January 1, 2023, ABC Company issued $60,000,000 of 20-year, 9.5% bonds when the market rate of interest was 10.25%. Interest is paid semi-annually on June 30 and December 31. Required: Using Excel compute the price at which the bond was issued. Using Excel and the effective interest method of bond amortization prepare an amortization table for the entire life of the bond issue. You are expected to do all calculations in Excel (What are the excel Formulas) Prepare ALL journal entries for the following dates: January 1, 2023, June 30, 2023, December 31, 2023, and December 31, 2042
On January 1, 2023, Toyota Corporation purchased a newly issued $1,025,000 bond. The bond matured on December 31, 2025, and paid interest at 6% every June 30 and December 31. The market interest rate was 8%. Toyota's fiscal year-end is October 31, and the company had the intention and ability to hold the bond until its maturity date. The bond will be accounted using the amortized cost model.Click here to view Table A.2 - PRESENT VALUE OF 1 - (PRESENT VALUE OF A SINGLE SUM)Click here to view Table A.4 - PRESENT VALUE OF AN ORDINARY ANNUITY OF 1 (a) Calculate the price paid for the bond using a financial calculator or Excel functions. (Round answers to 2 decimal places, e.g. 52.75.) b) Prepare an amortization schedule for the bond. (Round answers to 2 decimal places, e.g. 52.75.) c). Prepare the journal entries on the books of Toyota Corporation for each of the following dates. (Round answers to 2 decimal places, e.g. 52.75. Credit account titles are automatically indented when the…
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On January 1, 2023, Teal Corporation purchased a newly issued $1,425,000 bond. The bond matured on December 31, 2025, and paid interest at 6% every June 30 and December 31. The market interest rate was 8%. Teal's fiscal year-end is October 31, and the company had the intention and ability to hold the bond until its maturity date. The bond will be accounted using the amortized cost model. Click here to view Table A.2 - PRESENT VALUE OF 1- (PRESENT VALUE OF A SINGLE SUM) Click here to view Table A.4 - PRESENT VALUE OF AN ORDINARY ANNUITY OF 1 (a) X Your answer is incorrect. Calculate the price paid for the bond using a financial calculator or Excel functions. (Round answers to 2 decimal places, e.g. 52.75.) PV $ -1062917.95 4
Holly Industries, Inc. issued P6,000,000 of 8% debentures on May 1, 2019 and received cash totaling P5,323,577. The bonds pay interest semiannually on May 1 and November 1. The firm uses the effective-interest method of amortizing discounts and premiums. The bonds were sold to yield an effective-interest rate of 10%. Calculate the carrying amount of the bond on December 31, 2020.
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