Horngren's Financial & Managerial Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (5th Edition)
5th Edition
ISBN: 9780134078908
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 12, Problem 12.3SE
Determining
Bond prices depend on the market rate of interest, stated rate of interest, and time. Determine whether the following bonds payable will be issued at face value, at a premium, or at a discount:
a. The market interest rate is 8%. Idaho issues bonds payable with a stated rate of 7.75%.
b. Austin issued 9% bonds payable when the market interest rate was 8.25%.
c. Cleveland's Cars issued 10% bonds when the marker interest rate was 10%.
d. Atlanta's Tourism issued bonds payable that pay the stated interest rate of 8.5%. At issuance, the market interest rate was 10.25%.
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Students have asked these similar questions
Suppose you take out a five-year car loan for $14000, paying an annual interest rate of 4%. You make
monthly payments of $258 for this loan.
Complete the table below as you pay off the loan.
Months
Amount still owed
4% Interest on
amount still owed
(Remember to divide
by 12 for monthly
interest)
Amount of monthly
payment that goes
toward paying off the
loan (after paying
interest)
0
14000
1
2
3
+
LO
5
6
7
8
9
10
10
11
12
What is the total amount paid in interest over this first year of the loan?
Suppose you take out a five-year car loan
for $12000, paying an annual interest rate
of 3%. You make monthly payments of $216
for this loan.
mocars
Getting started (month 0): Here is how the process works. When you buy the car, right at month 0, you owe
the full $12000. Applying the 3% interest to this (3% is "3 per $100" or "0.03 per $1"), you would owe
0.03*$12000 = $360 for the year. Since this is a monthly loan, we divide this by 12 to find the interest
payment of $30 for the month. You pay $216 for the month, so $30 of your payment goes toward interest
(and is never seen again...), and (216-30) = $186 pays down your loan.
(Month 1): You just paid down $186 off your loan, so you now owe $11814 for the car. Using a similar
process, you would owe 0.03* $11814 = $354.42 for the year, so (dividing by 12), you owe $29.54 in interest
for the month. This means that of your $216 monthly payment, $29.54 goes toward interest and $186.46
pays down your loan.
The values from above are included…
Suppose you have an investment account that earns an annual 9% interest rate, compounded monthly. It
took $500 to open the account, so your opening balance is $500. You choose to make fixed monthly
payments of $230 to the account each month.
Complete the table below to track your savings growth.
Months
Amount in account (Principal)
9% Interest
gained
(Remember to
divide by 12 for
monthly interest)
Monthly Payment
1
2
3
$500
$230
$230
$230
$230
+
$230
$230
10
6
$230
$230
8
9
$230
$230
10
$230
11
$230
12
What is the total amount gained in interest over this first year of this investment plan?
Chapter 12 Solutions
Horngren's Financial & Managerial Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (5th Edition)
Ch. 12 - Flipco signed a 10-year note payable on January 1,...Ch. 12 - Daniels's bonds payable carry a stated interest...Ch. 12 - A bond that matures in installments at regular...Ch. 12 - Prob. 4QCCh. 12 - Nicholas Smith Fitness Gym has 700,000 of 20-year...Ch. 12 - Prob. 6QCCh. 12 - Prob. 7QCCh. 12 - The debt to equity ratio is calculated as a. Total...Ch. 12 - Mike Gordon wishes to have 80,000 in five years....Ch. 12 - Prob. 10BQC
Ch. 12 - Prob. 1RQCh. 12 - What is an amortization schedule?Ch. 12 - What is a mortgage payable?Ch. 12 - What is a bond payable?Ch. 12 - What is the difference between the stated interest...Ch. 12 - When does a discount on bonds payable occur?Ch. 12 - When does a premium on bonds payable occur?Ch. 12 - When a bond is issued, what is its present value?Ch. 12 - Why would a company choose to issue bonds instead...Ch. 12 - Prob. 10RQCh. 12 - Prob. 11RQCh. 12 - What is the normal balance of the account Discount...Ch. 12 - Prob. 13RQCh. 12 - Prob. 14RQCh. 12 - Prob. 15RQCh. 12 - Prob. 16RQCh. 12 - Prob. 17RQCh. 12 - Prob. 18ARQCh. 12 - Prob. 19ARQCh. 12 - Prob. 20ARQCh. 12 - Prob. 21BRQCh. 12 - Prob. 12.1SECh. 12 - Prob. 12.2SECh. 12 - Determining bond prices Bond prices depend on the...Ch. 12 - Prob. 12.4SECh. 12 - Determining bond amounts Quick Drive-Ins borrowed...Ch. 12 - Prob. 12.6SECh. 12 - Prob. 12.7SECh. 12 - Prob. 12.8SECh. 12 - Prob. 12.9SECh. 12 - Prob. 12.10SECh. 12 - Prob. 12.11SECh. 12 - Computing the debt to equity ratio Richards...Ch. 12 - Prob. 12.13SECh. 12 - Prob. 12.14SECh. 12 - Prob. 12.15SECh. 12 - Prob. 12.16SECh. 12 - Accounting for long-term notes payable...Ch. 12 - Prob. 12.18ECh. 12 - Prob. 12.19ECh. 12 - Prob. 12.20ECh. 12 - Prob. 12.21ECh. 12 - Prob. 12.22ECh. 12 - Prob. 12.23ECh. 12 - Prob. 12.24ECh. 12 - Prob. 12.25ECh. 12 - Prob. 12.26ECh. 12 - Prob. 12.27ECh. 12 - Prob. 12.28ECh. 12 - Prob. 12.29ECh. 12 - Prob. 12.30ECh. 12 - Journalizing liability transactions and reporting...Ch. 12 - Analyzing, journalizing, and reporting bond...Ch. 12 - Analyzing and journalizing bond transactions On...Ch. 12 - Analyzing and journalizing bond transactions On...Ch. 12 - Prob. 12.35APCh. 12 - Prob. 12.36APCh. 12 - A Determining the present value of bonds payable...Ch. 12 - Prob. 12.38BPCh. 12 - Prob. 12.39BPCh. 12 - Analyzing and journalizing bond transactions On...Ch. 12 - Analyzing and journalizing bond transactions On...Ch. 12 - Prob. 12.42BPCh. 12 - Prob. 12.43BPCh. 12 - Prob. 12.44BPCh. 12 - Prob. 12.45CPCh. 12 - The following questions are not related....Ch. 12 - Raffle's Kids, a nonprofit organization that...Ch. 12 - Bill and Edna had been married two years and had...Ch. 12 - Prob. 12.1CTFSC
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