Issue price of Bonds: The Bonds issuance shall be done at the price which is equal to present values of all the cash outflows to be discounted at market rate of interest. For the issuing company, there are two outflows over the lifetime off the bonds i.e. interest payments at stated rate over the lifetime at regular intervals and the repayment of par value of bonds at the end of maturity period. The Issue price of the bonds shall be taken as the sum total of present values of all outflows discounted at the market rate of interest. Bonds Issuance: The bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period. The determination of issue price of bonds when the market rate of interest is 8%.

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Answer 1

Question

Chapter 14, Problem 17E

Sub Part-1

To determine

Issue price of Bonds:

The Bonds issuance shall be done at the price which is equal to present values of all the cash outflows to be discounted at market rate of interest. For the issuing company, there are two outflows over the lifetime off the bonds i.e. interest payments at stated rate over the lifetime at regular intervals and the repayment of par value of bonds at the end of maturity period. The Issue price of the bonds shall be taken as the sum total of present values of all outflows discounted at the market rate of interest.

Bonds Issuance:

The bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

The determination of issue price of bonds when the market rate of interest is 8%.

Sub Part-2

To determine

The Journal entry for the issuance of bonds.

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Answer 2

Question

Chapter 14, Problem 17E

Sub Part-1

To determine

Issue price of Bonds:

The Bonds issuance shall be done at the price which is equal to present values of all the cash outflows to be discounted at market rate of interest. For the issuing company, there are two outflows over the lifetime off the bonds i.e. interest payments at stated rate over the lifetime at regular intervals and the repayment of par value of bonds at the end of maturity period. The Issue price of the bonds shall be taken as the sum total of present values of all outflows discounted at the market rate of interest.

Bonds Issuance:

The bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

The determination of issue price of bonds when the market rate of interest is 8%.

Sub Part-2

To determine

The Journal entry for the issuance of bonds.

Expert Solution & Answer

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Answer 3

Question

Chapter 14, Problem 17E

Sub Part-1

To determine

Issue price of Bonds:

The Bonds issuance shall be done at the price which is equal to present values of all the cash outflows to be discounted at market rate of interest. For the issuing company, there are two outflows over the lifetime off the bonds i.e. interest payments at stated rate over the lifetime at regular intervals and the repayment of par value of bonds at the end of maturity period. The Issue price of the bonds shall be taken as the sum total of present values of all outflows discounted at the market rate of interest.

Bonds Issuance:

The bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

The determination of issue price of bonds when the market rate of interest is 8%.

Sub Part-2

To determine

The Journal entry for the issuance of bonds.

Expert Solution & Answer

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Answer 4

Question

Chapter 14, Problem 17E

Sub Part-1

To determine

Issue price of Bonds:

The Bonds issuance shall be done at the price which is equal to present values of all the cash outflows to be discounted at market rate of interest. For the issuing company, there are two outflows over the lifetime off the bonds i.e. interest payments at stated rate over the lifetime at regular intervals and the repayment of par value of bonds at the end of maturity period. The Issue price of the bonds shall be taken as the sum total of present values of all outflows discounted at the market rate of interest.

Bonds Issuance:

The bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

The determination of issue price of bonds when the market rate of interest is 8%.

Sub Part-2

To determine

The Journal entry for the issuance of bonds.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 14, Problem 17E

Sub Part-1

To determine

Issue price of Bonds:

The Bonds issuance shall be done at the price which is equal to present values of all the cash outflows to be discounted at market rate of interest. For the issuing company, there are two outflows over the lifetime off the bonds i.e. interest payments at stated rate over the lifetime at regular intervals and the repayment of par value of bonds at the end of maturity period. The Issue price of the bonds shall be taken as the sum total of present values of all outflows discounted at the market rate of interest.

Bonds Issuance:

The bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

The determination of issue price of bonds when the market rate of interest is 8%.

Sub Part-2

To determine

The Journal entry for the issuance of bonds.

Answer 6

Chapter 14, Problem 17E

Sub Part-1

To determine

Issue price of Bonds:

The Bonds issuance shall be done at the price which is equal to present values of all the cash outflows to be discounted at market rate of interest. For the issuing company, there are two outflows over the lifetime off the bonds i.e. interest payments at stated rate over the lifetime at regular intervals and the repayment of par value of bonds at the end of maturity period. The Issue price of the bonds shall be taken as the sum total of present values of all outflows discounted at the market rate of interest.

Bonds Issuance:

The bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

The determination of issue price of bonds when the market rate of interest is 8%.

Answer 7

Chapter 14, Problem 17E

Sub Part-1

To determine

Issue price of Bonds:

The Bonds issuance shall be done at the price which is equal to present values of all the cash outflows to be discounted at market rate of interest. For the issuing company, there are two outflows over the lifetime off the bonds i.e. interest payments at stated rate over the lifetime at regular intervals and the repayment of par value of bonds at the end of maturity period. The Issue price of the bonds shall be taken as the sum total of present values of all outflows discounted at the market rate of interest.

Bonds Issuance:

The bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

The determination of issue price of bonds when the market rate of interest is 8%.

Answer 8

Sub Part-2

To determine

The Journal entry for the issuance of bonds.

Answer 9

Sub Part-2

To determine

The Journal entry for the issuance of bonds.

Answer 10

Expert Solution & Answer

Answer 11

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Answer 12

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Answer 13

Ch. 14 - Prob. 1QS Ch. 14 - QS 14-2 Issuing bonds at par P1 Dunphy Company...Ch. 14 - QS 14-3 Issuing bonds at par P1 Madrid Company...Ch. 14 - QS 14-4 Recording bond issuance and interest P1 P2...Ch. 14 - QS 14-5 Journalizing discount bond issuance...Ch. 14 - Prob. 6QS Ch. 14 - OS 14-6 Straight line: Bond computations...Ch. 14 - QS 14-8 Recording bond issuance and discount...Ch. 14 - QS 14-9 Straight-Line: Premium bond computations...Ch. 14 - On July 1. Aloha Co. s a call option that...

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The Journal entry for the issuance of bonds.

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