Question
In: Accounting
On June 30, 2018, Singleton Computers issued 6% stated rate bonds with a face amount of...
On June 30, 2018, Singleton Computers issued 6% stated rate bonds with a face amount of $200 million. The bonds mature on June 30, 2033 (15 years). The market rate of interest for similar bond issues was 5% (2.5% semiannual rate). Interest is paid semiannually (3%) on June 30 and December 31, beginning on December 31, 2018. (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, 2018. 2. Calculate the interest expense Singleton reports in 2018 for these bonds using the effective interest method.
Required 1
Determine the price of the bonds on June 30, 2018. (Enter your answers in whole dollars. Round percentage answers to one decimal place. Round your final answers to nearest whole dollar amount.)
|
||||||||||||||||||||||
Required 2
Calculate the interest expense Singleton reports in 2018 for these bonds using the effective interest method. (Enter your answers in whole dollars. Round your final answers to nearest whole dollar amount.)
|
||||||||||||||||
Solutions
Expert Solution
| Face Value of Bonds | 200,000,000 |
| Stated rate of interest | 6% |
| Market rate of interest | 5% |
| Interest Semi annually @3% | 6,000,000 |
| Annuity factor at 2.5% for 30 Periods | 20.93029 |
| Present value factor at 2.5% for 30 Periods | 0.47674 |
| Present value of Interest | $ 125,581,740.00 |
| Present value of Maturity amount | $ 95,348,000.00 |
| Issue price | $ 220,929,740.00 |
| Table values are based on: | ||
| n = | 30 | 20.93029 |
| i = | 2.50% | 0.47674 |
| Cash Flow | Amount | Present Value |
| Interest | $6,000,000 | $125,581,740 |
| Principal | $200,000,000 | $95,348,000 |
| Price of bonds | $220,929,740 | |
| Period-End | Cash Interest Paid | Bond Interest Expense | Premium Amortization | Carrying Value |
| 06/30/2018 | $ 220,929,740 | |||
| 12/31/2018 | 6000000 | $5,523,244 | $ 476,757 | $ 220,452,984 |
| Interest expense of 2018: ($220,929,740*2.5%)= $ 5523,244 | ||||
ekkarill92 answered 11 months agoRelated Solutions
On June 30, 2018, Singleton Computers issued 8% stated rate bonds with a face amount of...
On June 30, 2018, Singleton Computers issued 8% stated rate
bonds with a face amount of $200 million. The bonds mature on June
30, 2033 (15 years). The market rate of interest for similar bond
issues was 7% (3.5% semiannual rate). Interest is paid semiannually
(4.0%) on June 30 and December 31, beginning on December 31, 2018.
(FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of
$1) (Use appropriate factor(s) from...
On June 30, 2018, Singleton Computers issued 5% stated rate bonds with a face amount of...
On June 30, 2018, Singleton Computers issued 5% stated rate
bonds with a face amount of $320 million. The bonds mature on June
30, 2033 (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, 2018.
(FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of
$1) (Use appropriate factor(s) from...
On June 30, 2013, Singleton Computers issued 6% stated rate bonds with a face amount of...
On June 30, 2013, Singleton Computers issued 6% stated rate
bonds with a face amount of $200 million. the bonds matured on June
30, 2033 (15 years). The Market rate of interest for similar bond
issues was 5% (2.5% semi-annual rate). Interest paid semiannually
(3%) on June 30 and December 31, beginning on December 31,
2018.
Required:
1. Determine the price of the the bonds on June 20, 2018.
2.Calculate the interest expense Singleton reports in 2018 for
these bonds....
On June 30, 2021, Singleton Computers issued 7% stated rate bonds with a face amount of...
On June 30, 2021, Singleton Computers issued 7% stated rate
bonds with a face amount of $200 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
(3.5%) 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...
On June 30, 2021, Singleton Computers issued 4% stated rate bonds with a face amount of...
On June 30, 2021, Singleton Computers issued 4% stated rate
bonds with a face amount of $100 million. The bonds mature on June
30, 2036 (15 years). The market rate of interest for similar bond
issues was 5% (2.5% semiannual rate). Interest is paid semiannually
(2.0%) 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...
On january 1, 2017, A company issued 12% stated rate bonds with a face amount of...
On january 1, 2017, A company issued 12% stated rate bonds with a face amount of $200 million. The bonds mature on january 1, 2027 and market rate was 14%.
Please answer the following:
1.n=
2.i=
3.Total present value of interest payment=
4.Total present value of principal=
5.Total price of bonds=
Victor Company issued bonds with a $250,000 face value and a 6%stated rate of interest...
Victor Company issued bonds with a $250,000 face value and a 6%
stated rate of interest on January 1, Year 1. The bonds carried a
5-year term and sold for 95. Victor uses the straight-line method
of amortization. Interest is payable on December 31 of each
year.The carrying value of the bond liability on the December 31,
Year 3 balance sheet was:Multiple Choice $241,000. $242,500. $237,500. $245,000.
On December 31, 2021, Interlink Communications issued 5% stated rate bonds with a face amount of...
On December 31, 2021, Interlink Communications issued 5% stated
rate bonds with a face amount of $118 million. The bonds mature on
December 31, 2051. Interest is payable annually on each December
31, beginning in 2022. (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.) Determine the price of the bonds on December 31,
2021, assuming that the market rate of interest for...
When Patey Pontoons issued a 6% bonds on January 1, 2018, with a face amount of...
When Patey Pontoons issued a 6% bonds on January 1, 2018, with a
face amount of 760,000, the market yield for bonds of similiar risk
and maturity was 11%. The bonds mature December 31, 2021 (4 years).
Interest is paid semiannually on June 30 and December 31.
1. Determine the price of the bonds at January 1, 2018
2. prepare the journal entry to record their issuance by Patey
on January 1, 2018
3. Prepare an amortization schedule that determines...
When Patey Pontoons issued 6% bonds on January 1, 2018, with a face amount of $680,000,...
When Patey Pontoons issued 6% bonds on January 1, 2018, with a
face amount of $680,000, the market yield for bonds of similar risk
and maturity was 11%. The bonds mature December 31, 2021 (4 years).
Interest is paid semiannually on June 30 and December 31. (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...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Note: The answers to the following questions should be typed in the block of comments in...
- Python Describe the procedure for setting up the display of an image in a window.
- what are the fundamental similarity and differences between gap and dgap?
- Maria Gonzales is a 57-year-old operating room nurse who works full-time at a local hospital. She...
- Use the bond term's below to answer the question Maturity 7 years Coupon Rate 4% Face...
- What experience have you had with Organization Development or with Change Management? Describe the organization, the...
- 1. Renfro Rentals has issued bonds that have a 12% coupon rate, payable semiannually. The bonds...
ADVERTISEMENT