Question
In: Accounting
A bond payable is dated January 1, 2016, and is issued on that date. The face...
A bond payable is dated January 1, 2016, and is issued on that date. The face value of the bond is $120,000, and the face rate of interest is 6%. The bond pays interest semiannually. The bond will mature in five years.
Required:
a.) What will be the issue price of the bond if the market rate of interest is 6% at the time of issuance?
b.) What will be the issue price of the bond if the market rate of interest is 10% at the time of issuance?
Solutions
ekkarill92 answered 2 years agoRelated Solutions
The Bradford Company issued 12% bonds dated January 1, 2016, with a face amount of $20,000,000...
The Bradford Company issued 12% bonds dated January 1, 2016,
with a face amount of $20,000,000 on January 1, 2016. The bonds
mature on December 31, 2025 (10 years). For bonds of similar risk
and maturity the market yield is 10%. Interest is paid semiannually
on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of
$1)
Required:
A. Determine the price of the bonds at January 1, 2016.
B. Prepare the journal entry...
On October 1, 2016, Ball Company issued 10% bonds dated October 1, 2016, with a face...
On October 1, 2016, Ball Company issued 10% bonds dated October
1, 2016, with a face amount of $350,000. The bonds mature in 8
years. Interest is paid semiannually on March 31 and September 30.
The proceeds from the bond issuance were $355,751.07 to yield
9.70%. Ball Company has a December 31 fiscal year-end and does not
use reversing entries.
Required:
1.
Prepare journal entries to record the issuance of the bonds and
the interest payments for 2016 and 2017...
On October 1, 2016, Ball Company issued 7% bonds dated October 1, 2016, with a face...
On October 1, 2016, Ball Company issued 7% bonds dated October
1, 2016, with a face amount of $310,000. The bonds mature in 12
years. Interest is paid semiannually on March 31 and September 30.
The proceeds from the bond issuance were $320,168.62 to yield
6.60%. Ball Company has a December 31 fiscal year-end and does not
use reversing entries.
Required:
1.
Prepare journal entries to record the issuance of the bonds and
the interest payments for 2016 and 2017...
On October 1, 2016, Ball Company issued 10% bonds dated October 1, 2016, with a face...
On October 1, 2016, Ball Company issued 10% bonds dated October
1, 2016, with a face amount of $350,000. The bonds mature in 8
years. Interest is paid semiannually on March 31 and September 30.
The proceeds from the bond issuance were $355,751.07 to yield
9.70%. Ball Company has a December 31 fiscal year-end and does not
use reversing entries.
Required:
1.
Prepare journal entries to record the issuance of the bonds and
the interest payments for 2016 and 2017...
On October 1, 2016, Ball Company issued 6% bonds dated October 1, 2016, with a face...
On October 1, 2016, Ball Company issued 6% bonds dated October
1, 2016, with a face amount of $210,000. The bonds mature in 9
years. Interest is paid semiannually on March 31 and September 30.
The proceeds from the bond issuance were $218,888.62 to yield
5.40%. Ball Company has a December 31 fiscal year-end and does not
use reversing entries.
Required:
1.
Prepare journal entries to
record the issuance of the bonds and the interest payments for 2016
and 2017...
On January 1, 2016, BSC Corp issued a 10-year, $10,000,000, 7% bond. The interest is payable...
On January 1, 2016, BSC Corp issued a 10-year, $10,000,000, 7%
bond. The interest is payable semi-annually. The market rate of
interest for companies similar to BSC is 5%. BSC uses the
effective-interest amortization method.
The bond liability on BSC’s balance as of December 31, 2016 (the
first year of the bond) is closest to:
A. $11,435,336
B. $11,305,500
C. $11,497,889
D. $11,558,916
Based on the same information provided above, BSC’s interest
expense for December 31, 2017 (the second year...
On January 1, 2018, Entity A issued 8% bonds dated January 1, 2018, with a face...
On January 1, 2018, Entity A issued 8% bonds dated January 1,
2018, with a face amount of $10 million. The bonds mature in 2022
(5 years). For bonds of similar risk and maturity, the market yield
is 10%. Interest is paid semiannually on June 30 and December
31.
A. What was the issue price of the bonds?
B. Prepare the journal entry to record the bond issuance.
C. Prepare the journal entry to record interest on June 30,
2018,...
On January 1, 2018, Entity A issued 8% bonds dated January 1, 2018, with a face...
On January 1, 2018, Entity A issued 8% bonds dated January 1,
2018, with a face amount of $10 million. The bonds mature in 2022
(5 years). For bonds of similar risk and maturity, the market yield
is 10%. Interest is paid semiannually on June 30 and December 31.
A. Prepare a partial balance sheet showing the bonds at December
31, assuming that Entity A had used the effective interest method
from the inception. B. Why might a company utilize...
On January 1, 2016, Knorr Corporation issued $1,100,000 of 9%, 5-year bonds dated January 1, 2016....
On January 1, 2016, Knorr Corporation issued $1,100,000 of 9%,
5-year bonds dated January 1, 2016. The bonds pay interest annually
on December 31. The bonds were issued to yield 10%. Bond issue
costs associated with the bonds totaled $20,058.17.
Required: Prepare the journal entries to record the
following:
January 1, 2016 Sold the bonds at an effective rate of 10%
December 31, 2016 First interest payment using the effective
interest method
December 31, 2016 Amortization of bond issue costs...
On January 1, 2016, Knorr Corporation issued $1,100,000 of 9%, 5-year bonds dated January 1, 2016....
On January 1, 2016, Knorr Corporation issued $1,100,000 of 9%,
5-year bonds dated January 1, 2016. The bonds pay interest annually
on December 31. The bonds were issued to yield 10%. Bond issue
costs associated with the bonds totaled $20,058.17. Do not round
answers.
Required: Prepare the journal entries to record the following:
January 1, 2016 Sold the bonds at an effective rate of 10% December
31, 2016 First interest payment using the effective interest method
December 31, 2016 Amortization...
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