What does the selling price 117 1/4 mean? How do you interpret this number?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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What does the selling price 117 1/4 mean? How do you interpret this number?
![Garcia Company issues 10%, 15-year bonds with a par value of $280,000 and semiannual interest payments. On the
issue date, the annual market rate for these bonds is 8%, which implies a selling price of 117 14. The effective interest
method is used to allocate interest expense.
1. Using the implied selling price of 117 V4, 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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff13622a2-0b82-48fb-aeaf-28985a842310%2F36fd6281-62a8-4a73-9da0-4ad00cc702b8%2F06s1i4u_processed.png&w=3840&q=75)
Transcribed Image Text:Garcia Company issues 10%, 15-year bonds with a par value of $280,000 and semiannual interest payments. On the
issue date, the annual market rate for these bonds is 8%, which implies a selling price of 117 14. The effective interest
method is used to allocate interest expense.
1. Using the implied selling price of 117 V4, 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?
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