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.When the market rate of interest is higher than stated rate of interest, then the bonds shall be issued at discount, which shall be kept as unamortized expenses in balance sheet to be amortized as an expenses over the period of bonds. However, when the market rate of interest is equal to stated rate of interest then the bonds are issued at par value. The determination of issue price of bonds when the market rate of interest is 8%.

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Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 14, Problem 7APSA

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.When the market rate of interest is higher than stated rate of interest, then the bonds shall be issued at discount, which shall be kept as unamortized expenses in balance sheet to be amortized as an expenses over the period of bonds.

However, when the market rate of interest is equal to stated rate of interest then the bonds are issued at par value.

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

To determine

The Journal entry for the issuance of bonds.

To determine

The determination of issue price of bonds when the market rate of interest is 10%.

To determine

The Journal entry for the issuance of bonds.

To determine

The determination of issue price of bonds when the market rate of interest is 12%.

To determine

The Journal entry for the issuance of bonds.

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Answer 2

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Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 14, Problem 7APSA

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.When the market rate of interest is higher than stated rate of interest, then the bonds shall be issued at discount, which shall be kept as unamortized expenses in balance sheet to be amortized as an expenses over the period of bonds.

However, when the market rate of interest is equal to stated rate of interest then the bonds are issued at par value.

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

To determine

The Journal entry for the issuance of bonds.

To determine

The determination of issue price of bonds when the market rate of interest is 10%.

To determine

The Journal entry for the issuance of bonds.

To determine

The determination of issue price of bonds when the market rate of interest is 12%.

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 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 14, Problem 7APSA

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.When the market rate of interest is higher than stated rate of interest, then the bonds shall be issued at discount, which shall be kept as unamortized expenses in balance sheet to be amortized as an expenses over the period of bonds.

However, when the market rate of interest is equal to stated rate of interest then the bonds are issued at par value.

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

To determine

The Journal entry for the issuance of bonds.

To determine

The determination of issue price of bonds when the market rate of interest is 10%.

To determine

The Journal entry for the issuance of bonds.

To determine

The determination of issue price of bonds when the market rate of interest is 12%.

To determine

The Journal entry for the issuance of bonds.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 14, Problem 7APSA

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.When the market rate of interest is higher than stated rate of interest, then the bonds shall be issued at discount, which shall be kept as unamortized expenses in balance sheet to be amortized as an expenses over the period of bonds.

However, when the market rate of interest is equal to stated rate of interest then the bonds are issued at par value.

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

To determine

The Journal entry for the issuance of bonds.

To determine

The determination of issue price of bonds when the market rate of interest is 10%.

To determine

The Journal entry for the issuance of bonds.

To determine

The determination of issue price of bonds when the market rate of interest is 12%.

To determine

The Journal entry for the issuance of bonds.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 14, Problem 7APSA

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.When the market rate of interest is higher than stated rate of interest, then the bonds shall be issued at discount, which shall be kept as unamortized expenses in balance sheet to be amortized as an expenses over the period of bonds.

However, when the market rate of interest is equal to stated rate of interest then the bonds are issued at par value.

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

To determine

The Journal entry for the issuance of bonds.

To determine

The determination of issue price of bonds when the market rate of interest is 10%.

To determine

The Journal entry for the issuance of bonds.

To determine

The determination of issue price of bonds when the market rate of interest is 12%.

To determine

The Journal entry for the issuance of bonds.

Answer 6

Chapter 14, Problem 7APSA

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.When the market rate of interest is higher than stated rate of interest, then the bonds shall be issued at discount, which shall be kept as unamortized expenses in balance sheet to be amortized as an expenses over the period of bonds.

However, when the market rate of interest is equal to stated rate of interest then the bonds are issued at par value.

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

Answer 7

Chapter 14, Problem 7APSA

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.When the market rate of interest is higher than stated rate of interest, then the bonds shall be issued at discount, which shall be kept as unamortized expenses in balance sheet to be amortized as an expenses over the period of bonds.

However, when the market rate of interest is equal to stated rate of interest then the bonds are issued at par value.

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

Answer 8

To determine

The Journal entry for the issuance of bonds.

Answer 9

To determine

The Journal entry for the issuance of bonds.

Answer 10

To determine

The determination of issue price of bonds when the market rate of interest is 10%.

Answer 11

To determine

The determination of issue price of bonds when the market rate of interest is 10%.

Answer 12

To determine

The Journal entry for the issuance of bonds.

Answer 13

To determine

The Journal entry for the issuance of bonds.

Answer 14

To determine

The determination of issue price of bonds when the market rate of interest is 12%.

Answer 15

To determine

The determination of issue price of bonds when the market rate of interest is 12%.

Answer 16

To determine

The Journal entry for the issuance of bonds.

Answer 17

To determine

The Journal entry for the issuance of bonds.

Answer 18

Expert Solution & Answer

Answer 19

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Answer 20

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Answer 21

Ch. 14 - Prob. 1DQ Ch. 14 - Prob. 2DQ Ch. 14 - Prob. 3DQ Ch. 14 - Prob. 4DQ Ch. 14 - Prob. 5DQ Ch. 14 - Prob. 6DQ Ch. 14 - Prob. 7DQ Ch. 14 - Explain the concept of accrued interest on bonds...Ch. 14 - Prob. 9DQ Ch. 14 - Prob. 10DQ

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The Journal entry for the issuance of bonds.

The determination of issue price of bonds when the market rate of interest is 10%.

The Journal entry for the issuance of bonds.

The determination of issue price of bonds when the market rate of interest is 12%.

The Journal entry for the issuance of bonds.

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