1)
a)
• Bonds are long term negotiable instruments of debt issued by corporate entities to secure funds from the public.
• These funds are used to either fund long term capital expenditure or similar long term investment opportunities.
• Bonds represent steady income for the investor in the form of periodic interest payments by the entity issuing the bond. Bonds are issued at par, at premium or at a discount.
• Bond Price is the maximum price that an investor will pay for a bond. It is calculated as the present value of the bond.
Price of $100000, 8% bond issued at 75.25.
b)
Bond Price
• Bonds are long term negotiable instruments of debt issued by corporate entities to secure funds from the public.
• These funds are used to either fund long term capital expenditure or similar long term investment opportunities.
• Bonds represent steady income for the investor in the form of periodic interest payments by the entity issuing the bond. Bonds are issued at par, at premium or at a discount.
• Bond Price is the maximum price that an investor will pay for a bond. It is calculated as the present value of the bond.
Price of $100000, 8% bond issued at 103.50
c)
Bond Price
• Bonds are long term negotiable instruments of debt issued by corporate entities to secure funds from the public.
• These funds are used to either fund long term capital expenditure or similar long term investment opportunities.
• Bonds represent steady income for the investor in the form of periodic interest payments by the entity issuing the bond. Bonds are issued at par, at premium or at a discount.
• Bond Price is the maximum price that an investor will pay for a bond. It is calculated as the present value of the bond.
Price of $100000, 8% bond issued at 94.50
d)
Bond Price
• Bonds are long term negotiable instruments of debt issued by corporate entities to secure funds from the public.
• These funds are used to either fund long term capital expenditure or similar long term investment opportunities.
• Bonds represent steady income for the investor in the form of periodic interest payments by the entity issuing the bond. Bonds are issued at par, at premium or at a discount.
• Bond Price is the maximum price that an investor will pay for a bond. It is calculated as the present value of the bond.
Price of $100000, 8% bond issued at 103.25
2)
Retirement of Bonds
• When a bond is issued at a discount or at premium or at face value, the amount to be repaid as the principal amount is the face value of the bonds.
• When a bond is issued at a discount, the difference between the issue price and the face value is the cost to be borne by the company.
• Bonds are issued at a discount when the stated rate of interest is less than the market rate of interest.
Which of the bonds will have maximum
Want to see the full answer?
Check out a sample textbook solution
Chapter 14 Solutions
ACCOUNTING PRINCIPLES V1 6/17 >C<
- On November 30, Sullivan Enterprises had Accounts Receivable of $145,600. During the month of December, the company received total payments of $175,000 from credit customers. The Accounts Receivable on December 31 was $98,200. What was the number of credit sales during December?arrow_forwardPaterson Manufacturing uses both standards and budgets. For the year, estimated production of Product Z is 620,000 units. The total estimated cost for materials and labor are $1,512,000 and $1,984,000, respectively. Compute the estimates for: (a) a standard cost per unit (b) a budgeted cost for total production (Round standard costs to 2 decimal places, e.g., $1.25.)arrow_forwardQuestion: Gujri Place Clock Shop sold a grandfather clock for $2,250 subject to a 9% sales tax. The entry in the general journal will include a credit to Sales for a) $2,250.00 b) $2,092.50 c) $2,452.50. choose the correct optionarrow_forward
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education