Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 14, Problem 14.3BE
Determining the price of bonds
• LO14–2
A company issued 6%, 15-year bonds with a face amount of $75 million. The market yield for bonds of similar risk and maturity is 6%. Interest is paid semiannually. At what price did the bonds sell?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
PB2. LO 13.1 Charleston Inc. issued $200,000 bonds with a stated rate of 10%. The bonds had a 10-year maturity date.
Interest is to be paid semi-annually and the market rate of interest is 8%. If the bonds sold at 113.55, what amount was
received upon issuance?
ch14 Q.15
The issue price of the bonds?
cash?
discound on bonds payable?
bonds payable?
S14-4 Pricing bonds
Bond prices depend on the market rate of interest, stated rate of interest
and time.
Requirements
1. Compute the price of the following 8% bonds of Country Telecom.
a. $100,000 issued at 75.25
c. $100,000 issued at 94.50
b. $100,000 issued at 103.50
d. $100,000 issued at 103.25
2. Which bond will Country Telecom have to pay the most to retire at maturity:
Explain your answer.
Chapter 14 Solutions
Intermediate Accounting
Ch. 14 - How is periodic interest determined for...Ch. 14 - As a general rule, how should long-term...Ch. 14 - How are bonds and notes the same? How do they...Ch. 14 - What information is contained in a bond indenture?...Ch. 14 - On January 1, 2018, Brandon Electronics issued 85...Ch. 14 - How is the price determined for a bond (or bond...Ch. 14 - A zero-coupon bond pays no interest. Explain.Ch. 14 - Prob. 14.8QCh. 14 - Compare the two commonly used methods of...Ch. 14 - Prob. 14.10Q
Ch. 14 - When a notes stated rate of interest is...Ch. 14 - How does an installment note differ from a note...Ch. 14 - Prob. 14.13QCh. 14 - Prob. 14.14QCh. 14 - Air Supply issued 6 million of 9%, 10-year...Ch. 14 - Both convertible bonds and bonds issued with...Ch. 14 - Prob. 14.17QCh. 14 - Cordova Tools has bonds outstanding during a year...Ch. 14 - If a company prepares its financial statements...Ch. 14 - (Based on Appendix 14A) Why will bonds always sell...Ch. 14 - Prob. 14.21QCh. 14 - Prob. 14.22QCh. 14 - Prob. 14.23QCh. 14 - Bank loan; accrued interest LO132 On October 1,...Ch. 14 - Non-interest-bearing note; accrued interest LO132...Ch. 14 - Determining the price of bonds LO142 A company...Ch. 14 - Determining the price of bonds LO142 A company...Ch. 14 - Effective interest on bonds LO142 On January 1, a...Ch. 14 - Effective interest on bonds LO142 On January 1, a...Ch. 14 - Straight-line interest on bonds LO142 On January...Ch. 14 - Investment in bonds LO142 On January 1, a company...Ch. 14 - Note issued for cash; borrower and lender LO143...Ch. 14 - Note with unrealistic interest rate LO143 On...Ch. 14 - Installment note LO143 On January 1, a company...Ch. 14 - Prob. 14.12BECh. 14 - Bonds with detachable warrants LO145 Hoffman...Ch. 14 - Convertible bonds LO145 Hoffman Corporation...Ch. 14 - Reporting bonds at fair value LO146 AI Tool and...Ch. 14 - Bond valuation LO142 Your investment department...Ch. 14 - Determine the price of bonds in various situations...Ch. 14 - Determine the price of bonds; issuance; effective...Ch. 14 - Investor; effective interest LO142 (Note: This is...Ch. 14 - Bonds; issuance; effective interest; financial...Ch. 14 - Bonds; issuance; effective interest LO142 The...Ch. 14 - Prob. 14.7ECh. 14 - Investor; straight-line method LO142 (Note: This...Ch. 14 - Issuance of bonds; effective interest;...Ch. 14 - Issuance of bonds; effective interest;...Ch. 14 - Bonds; effective interest; adjusting entry LO142...Ch. 14 - Prob. 14.12ECh. 14 - Issuance of bonds; effective interest LO142...Ch. 14 - Prob. 14.14ECh. 14 - Error correction; accrued interest on bonds LO142...Ch. 14 - Error in amortization schedule LO143 Wilkins Food...Ch. 14 - Prob. 14.17ECh. 14 - Note with unrealistic interest rate; lender;...Ch. 14 - Prob. 14.19ECh. 14 - Prob. 14.20ECh. 14 - Installment note LO143 LCD Industries purchased a...Ch. 14 - Prob. 14.22ECh. 14 - Early extinguishment LO145 The balance sheet of...Ch. 14 - Convertible bonds LO145 On January 1, 2018, Gless...Ch. 14 - Prob. 14.25ECh. 14 - Convertible bonds; induced conversion LO145 On...Ch. 14 - Prob. 14.27ECh. 14 - Bonds with detachable warrants LO145 On August 1,...Ch. 14 - Reporting bonds at fair value LO146 (Note: This...Ch. 14 - Reporting bonds at fair value LO146 On January 1,...Ch. 14 - Reporting bonds at fair value; calculate fair...Ch. 14 - Prob. 14.32ECh. 14 - Troubled debt restructuring; debt settled ...Ch. 14 - Prob. 14.34ECh. 14 - Troubled debt restructuring; modification of...Ch. 14 - Prob. 14.36ECh. 14 - Determining the price of bonds; discount and...Ch. 14 - Effective interest; financial statement effects ...Ch. 14 - Prob. 14.3PCh. 14 - Bond amortization schedule LO142 On January 1,...Ch. 14 - Issuer and investor; effective interest;...Ch. 14 - Prob. 14.6PCh. 14 - Prob. 14.7PCh. 14 - Bonds; effective interest; partial period...Ch. 14 - Zero-co upon bonds LO142 On January 1, 2018,...Ch. 14 - Prob. 14.10PCh. 14 - Prob. 14.11PCh. 14 - Prob. 14.12PCh. 14 - Note and installment note with unrealistic...Ch. 14 - Prob. 14.14PCh. 14 - Early extinguishment; effective interest LO145...Ch. 14 - Prob. 14.16PCh. 14 - Prob. 14.17PCh. 14 - Early extinguishment LO145 The long-term...Ch. 14 - Convertible bonds; induced conversion; bonds with...Ch. 14 - Convertible bonds; zero coupon; potentially...Ch. 14 - Prob. 14.21PCh. 14 - Determine bond price; record interest; report...Ch. 14 - Report bonds at fair value; quarterly reporting ...Ch. 14 - Prob. 14.24PCh. 14 - Prob. 14.25PCh. 14 - Troubled debt restructuring Appendix B At January...Ch. 14 - Prob. 14.1BYPCh. 14 - Real World Case 142 Zero-coupon debt; HP Inc. ...Ch. 14 - Prob. 14.4BYPCh. 14 - Prob. 14.5BYPCh. 14 - Prob. 14.6BYPCh. 14 - Prob. 14.8BYPCh. 14 - Prob. 14.9BYPCh. 14 - Research Case 1410 FASB codification research;...Ch. 14 - Prob. 14.11BYP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- L12arrow_forwardC20 fx A В C On January 1, Ruiz Company issued bonds as follows: 3 4 Face Amount: $500,000 5 Number of Years: 15 Stated Interest Rate: 7% 7 Interest payments per year 2 8. 9. Required: 10 1) Calculate the bond selling price given the two market interest rates below. 11 Use formulas that reference data from this worksheet and from the appropriate future or present value tables (found by clicking the tabs at the bottor 12 this worksheet). 13 Note: Rounding is not required. 14 15 a) Annual Market Rate 9% 16 Semiannual Interest Payment: $17,500 17 PV of Face Amount: 18 PV of Interest Payments: 19 Bond Selling Price: 0.00 20 21 b) Annual Market Rate 6.00% 22 Semiannual Interest Payment: $17,500 23 PV of Face Amount: 24 PV of Interest Payments: 25 Bond Selling Price: %3D 26 A Future Value of Annuity of $1 A Present Value of Annuity of $1 A Graded Worksheet IIarrow_forwardUse the following to answer questions 11 – 15 AL issues 4.0%, 20-year bonds with a face amount of $1,000,000 for $986,529.23. The market interest rate for bonds of similar risk and maturity is 4.1%. Interest is paid annually. 11. $. Determine the interest payment. 12. $ (rounded to nearest dollar). Determine interest expense for the first interest payment. What will happen to interest expense each interest payment? (Increase, decrease, remain constant) 13. What will happen to the bond liability (carrying value) each interest payment? (Increase, decrease, remain constant). 14. How much will the company pay out $ when the bonds mature in 20 years (assume all interest payments have already been paid)? 15.arrow_forward
- 1 med chp 14 excel pleae show formulas used to find price of bonds in excelarrow_forwardLO 13.3 Pinetop Corporation issued $150,000 10-year bonds at par. The bonds have a stated rate of 6% and pay interest annually. What is the journal entry to record the sale of the bonds?arrow_forwardA-1arrow_forward
- es Exercise 14-2 (Algo) Determine the price of bonds in various situations [LO14-2] Determine the price of a $1.7 million bond issue under each of the following independent assumptions: 1. Maturity 15 years, interest paid annually, stated rate 10%, effective (market) rate 12%. 2. Maturity 15 years, interest paid semiannually, stated rate 10%, effective (market) rate 10%. 3. Maturity 15 years, interest paid semiannually, stated rate 12%, effective (market) rate 10%. 4. Maturity 10 years, interest paid semiannually, stated rate 12%, effective (market) rate 10%. 5. Maturity 10 years, interest paid semiannually, stated rate 12%, effective (market) rate 12%. Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1.) Complete this question by entering your answers in the tabs below. Required 3 Required 4 Maturity 15 years, interest paid semiannually, stated rate 12%, effective (market) rate 10%. Note: Round your answer to the…arrow_forwardWhat the answerarrow_forwardQ#9 On June 30, 2021, Singleton Computers issued 5% stated rate bonds with a face amount of $280 million. The bonds mature on June 30, 2036 (15 years). The market rate of interest for similar bond issues was 4% (2.0% semiannual rate). Interest is paid semiannually (2.5%) on June 30 and December 31, beginning on December 31, 2021. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)Required:1. Determine the price of the bonds on June 30, 2021.2. Calculate the interest expense Singleton reports in 2021 for these bonds using the effective interest method. 1. Table values are based on: n = i = Cash Flow Amount Present Value Interest Principal Price of bondsarrow_forward
- A4arrow_forwardQS 14-19A (Algo) Computing bond price C2 Compute the selling price of 10%, 10-year bonds with a par value of $290,000 and semiannual interest payments. The annual market rate for these bonds is 12%. Use present value Table B.1 and Table B.3 in Appendix B. (Round all table values to 4 decimal places, and use the rounded table values in calculations.) Answer is complete but not entirely correct. Cash Flow $290,000 par (maturity) value $14,500 interest payment Price of Bond Table Value 0.3118 11.4699 $ S Present Value 90,442 166,314 256,756arrow_forwardExercise 5-22 (Algo) Price of a bond; interest expense [LO5-9, 5-10] On June 30, 2024, Single Computers issued 7% stated rate bonds with a face amount of $200 million. The bonds mature on June 30, 2039 (15 years). The market rate of interest for similar bond issues was 6% (3.0 % semiannual rate). Interest is paid semiannually (3.5%) on June 30 and December 31, beginning on December 31, 2024. 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) Required: 1. Determine the price of the bonds on June 30, 2024. 2. Calculate the interest expense Single reports in 2024 for these bonds using the effective interest method. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the interest expense Single reports in 2024 for these bonds using the effective interest method. Note: Enter all the values as positive value. Round your final answers to nearest whole dollar amount, not in…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Financial Accounting - Long-term Liabilities - Bonds; Author: Finance & Accounting Videos by Prof Coram;https://www.youtube.com/watch?v=_1fwsJIGMos;License: Standard Youtube License