White & Decker Corporation's 2019 financial statements included the following information in the long-term debt disclosure note: ($ in millions) 2019 Zero-coupon subordinated debentures, due 2033: $360 The disclosure note stated the debenture bonds were issued late in 2013 and have a maturity value of $610 million. The maturity value indicates the amount that White & Decker will pay bondholders in 2033. Each individual bond has a maturity value (face amount) of $1.110. Zero-coupon bonds pay no cash interest during the term to maturity. The company is "accreting" (gradually increasing) the issue price to maturity value using the bonds' effective interest rate computed on an annual basis. (FV of $1, PV of $1, EVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the effective interest rate on the bonds. 2. Determine the issue price in tate 2013 of a single, $1,110 maturity-value bond, (For all requirements, round your answers to 2 decimal places.) Eltective interest rate Issue price

White & Decker Corporation's 2019 financial statements included the following information in the long-term debt disclosure note: ($ in millions) 2019 Zero-coupon subordinated debentures, due 2033: $360 The disclosure note stated the debenture bonds were issued late in 2013 and have a maturity value of $610 million. The maturity value indicates the amount that White & Decker will pay bondholders in 2033. Each individual bond has a maturity value (face amount) of $1.110. Zero-coupon bonds pay no cash interest during the term to maturity. The company is "accreting" (gradually increasing) the issue price to maturity value using the bonds' effective interest rate computed on an annual basis. (FV of $1, PV of $1, EVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the effective interest rate on the bonds. 2. Determine the issue price in tate 2013 of a single, $1,110 maturity-value bond, (For all requirements, round your answers to 2 decimal places.) Eltective interest rate Issue price

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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On January 1, 2016, Instaform, Inc., issued 10% bonds with a face amount of $50 million, dated January 1. The bonds mature in 2035 (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, 2016, 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, 2016, 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.