When Patey Pontoons issued 8% bonds on January 1, 2024, with a face amount of $700,000, the market yield for bonds of similar riskand maturity was 9% The bonds mature December 31, 2027 (4 years). Interest is paid semiannually on June 30 and December 31.Required:1. Determine the price of the bonds at January 1, 2024.2. Prepare the journal entry to record their issuance by Patey on January 1, 2024.3. Prepare an amortization schedule that determines interest at the effective rate each period.4. Prepare the journal entry to record interest on June 30, 2024.5. What is the amount related to the bonds that Patey will report in its balance sheet at December 31, 2024?6. What is the amount related to the bonds that Patey will report in its income statement for the year ended December 31, 2024?(Ignore income taxes.)7. Prepare the appropriate journal entries at maturity on December 31, 2027.Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1)Answer is not complete.

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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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On January 1, 2024, Instaform, Incorporated, issued 14% bonds with a face amount of $50 million, dated January 1. The bonds mature in 2043 (20 years). The market yield for bonds of similar risk and maturity is 16%. Interest is paid semiannually. Required: 1-a. Determine the price of the bonds at January 1, 2024. 1-b. Prepare the journal entry to record their issuance by Instaform. 2-a. Assume the market rate was 12%. Determine the price of the bonds at January 1, 2024. 2-b. Assume the market rate was 12%. Prepare the journal entry to record their issuance by Instaform. 3. Assume Broadcourt Electronics purchased the entire issue in a private placement of the bonds. Using the data in requirement 2, prepare the journal entry to record the purchase by Broadcourt.
Prepare journal entries to record the following transactions relating to long-term bonds of Lancaster Inc. Show calculations and round to the nearest dollar. a) On June 1, 2023, Lancaster Inc. issued $400,000, 6% bonds for $391,760, including accrued interest. The bonds were dated February 1, 2023, and interest is payable semi-annually on February 1 and August 1 with the bonds maturing on February 1, 2033. The bonds are callable at 102. b) On August 1, 2023, Lancaster paid the semi-annual interest and recorded the amortization of the discount or premium, using straight-line amortization. c) On February 1, 2025, Lancaster paid the semi-annual interest and recorded amortization of the discount or premium. Assume that a reversing entry was made on January 1, 2025. d) The company then purchased $240,000 of the bonds at the call price Do not give…
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