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.
Ya.4 On January 1, 2019, Bradley, Inc., issued 12% bonds with a face amount of $66 million, dated January 1. The bonds mature in 2040 (20 years). The market yield for bonds of similar risk and maturity is 12%. Interest is paid semiannually. Instructions 1. Determine the price of the bonds at January 1, 2019, and prepare the journal entry to record their issuance by Bradley. 2. Assume the market rate was 8,5%. Determine the price of the bonds at January 1, 2018, and prepare the journal entry to record their issuance by Bradley.
Bombay Corporation issued 8% bonds on January 1, 2021, with a face value of $700,000, the market yield for bonds of similar risk and maturity was 10%. The bonds mature December 2023 (3 years). Interest is paid semiannually on June 30 and December 31. Required: 1. Determine the price of the bonds on January 31, 2021. 2. Prepare the journal entry to record their issuance by Bombay on January 1, 2021. (See the below template) 3. Prepare an amortization schedule that shows the effective interest rate each period. 4. Prepare the journal entry to record interest on June 30, 2022. Date Cash Payment Effective Interest Increase in balance. Discount Reduction Outstanding Balan
The Gorman Group issued $930,000 of 11% bonds on June 30, 2021, for $1,009,794. The bonds were dated on June 30 and mature on June 30, 2041 (20 years). The market yield for bonds of similar risk and maturity is 10%. Interest is paid semiannually on December 31 and June 30. Required: 1.to3. Prepare the journal entries to record their issuance by The Gorman Group on Jun 30, 2021, interest on December 31, 2021, and interest on June 30, 2022 (at the effective rate). Record the issuance of the bond on June 30, 2021. Record the interest on December 31, 2021 (at the effective rate). Record the interest on June 30, 2022 (at the effective rate).
Agee Technology, Inc., issued 9% bonds, dated January 1, with a face amount of $400 million on July 1, 2021, at a price of $380 million. For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. Prepare the journal entry to record interest at the effective interest rate at December 31. What would be the amount(s) related to the bonds that Agee would report in its statement of cash flows for the year ended December 31, 2021, if it uses the direct method?
When Patey Pontoons issued 10% bonds on January 1, 2024, with a face amount of $880,000, the market yield for bonds of similar risk and maturity was 11%. 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. (EV of $1. PV of $1. EVA of $1. PVA of $1.…
When Patey Pontoons issued 10% bonds on January 1, 2024, with a face amount of $880,000, the market yield for bonds of similar risk and maturity was 11%. 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. (EV of $1. PV of $1. EVA of $1. PVA of $1.…
A company issues 8%, two-year bonds on December 31, 2018, with a par value of $10,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 96.0% or $9,600. (a) Prepare an amortization table for these bonds; use the straight-line method to amortize the discount. Then prepare journal entries to record; (b) The issuance of bonds on December 31, 2018; (c) The first interest payments on each June 30 and December 31; and (d) The maturity of the bond on December 31, 2020.
Pretzelmania, Inc., issues 7%, 15-year bonds with a face amount of $70,000 for $63,948 on January 1, 2021. The market interest rate for bonds of similar risk and maturity is 8%. Interest is paid semiannually on June 30 and December 31. Required: 1. & 2. Record the bond issue and first interest payment on June 30, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Round your intermediate computations and final answers to the nearest whole dollar amount.)
On February 1, 2021, Sanford & Son issued 12% bonds dated February 1, 2021, with a face amount of $110,000. The bonds sold for $128,876 and mature in 20 years. The effective interest rate for these bonds was 10%. Interest is paid semiannually on July 31 and January 31. Sanford & Son's fiscal year is the calendar year. Required:1. Prepare the journal entry to record the bond issuance on February 1, 2021.2. Prepare the entry to record interest on July 31, 2021, using the straight-line method.3. Prepare the necessary journal entry on December 31, 2021.4. Prepare the necessary journal entry on January 31, 2022.
Quatro issues bonds dated January 1, 2021, with a par value of $900,000. 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 there was bonds Issuance costs of $29, 850 1. What is the price of these bonds at issuance? 2. Prepare the journal entries to record how much total bond interest expense will be recognized over the life of these bonds and the Bond issuance costs 3 Prepare an amortization table for these bonds using the effective interest method.
On January 1, 2021, Instaform, Inc., issued 10% bonds with a face amount of $50 million, dated January 1. The bonds mature in 2040 (20 years). The market yield for bonds of similar risk and maturity is 12%. Interest is paid semiannually.Required:1. Determine the price of the bonds at January 1, 2021, and prepare the journal entry to record their issuance by Instaform.2. Assume the market rate was 9%. Determine the price of the bonds at January 1, 2021, and 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.

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