Question

In: Accounting

A company issues $10,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2013. Interest is...

A company issues $10,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2013. Interest is paid on June 30 and December 31. The proceeds from the bonds are $9,802,072. Using straight-line amortization, what is the carrying value of the bonds on December 31, 2015?

Solutions

Expert Solution

Amortization table

Year

Period

Cash payment

Interest expense

Discount on Bonds payable

Carrying Value of Bond

Issued

$        197,927.74

$   9,802,072.26

2013

June 30

$             390,000.00

$            392,082.89

$             2,082.89

$   9,804,155.15

Dec 31

$             390,000.00

$            392,166.21

$             2,166.21

$   9,806,321.36

2014

June 30

$             390,000.00

$           392,252.85

$             2,252.85

$   9,808,574.21

Dec 31

$             390,000.00

$            392,342.97

$             2,342.97

$   9,810,917.18

2015

June 30

$             390,000.00

$            392,436.69

$             2,436.69

$   9,813,353.87

Dec 31

$             390,000.00

$            392,534.15

$             2,534.15

$   9,815,888.02

Answer – carrying value of bond on December 31 2015= $   9,815,888.02    or $   9,815,888

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

A company issues $15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 20X9. Interest is...
A company issues $15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 20X9. Interest is paid on July 1and January 1. The proceeds from the bond issue amount to $14,703,109. The company uses the effective interest method for amortization and has fiscal year end of December 31. Prepare the journal entries for the following dates: 01/01/20X9 and 12/31/20X9 .
A company issues $25750000, 7.8%, 20-year bonds to yield 8% on January 1, 2016. Interest is...
A company issues $25750000, 7.8%, 20-year bonds to yield 8% on January 1, 2016. Interest is paid on June 30 and December 31. The proceeds from the bonds are $25240330. Using straight-line amortization, what is the carrying value of the bonds on December 31, 2018?
A company issues $15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2017. Interest is...
A company issues $15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2017. Interest is paid on June 30 and December 31. The proceeds from the bonds are $14,703,108. Using effective-interest amortization, how much interest expense will be recognized in 2017? a. $585,000 b. $1,170,000 c. $1,176,373 d. $1,176,249 (please show work)
A company issues $15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2017. Interest is...
A company issues $15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2017. Interest is paid on June 30 and December 31. The proceeds from the bonds are $14,703,108. a) Using effective-interest amortization, how much interest expense will be recognized in 2017? b) Using effective-interest amortization, what will the carrying value of the bonds be on the December 31, 2017 balance sheet? c) Using straight-line amortization, what is the carrying value of the bonds on December 31, 2018? d)...
A company issues bonds with a par value of $10,000,000 on January 1, 2013. The bonds...
A company issues bonds with a par value of $10,000,000 on January 1, 2013. The bonds have an annual coupon rate of 5%, pay interest semi-annually, and will mature in 5 years. If the market rate of interest on the bonds is 6% per year, then what is the interest expense that the company will report for the year ending December 31, 2015? [Note: the company uses the effective interest method of amortization.]
A company issues $17,200,000, 5.8%, 20-year bonds to yield 6% on January 1, Year 7. Interest...
A company issues $17,200,000, 5.8%, 20-year bonds to yield 6% on January 1, Year 7. Interest is paid on June 30 and December 31. The proceeds from the bonds are $16,802,426. Using straight-line amortization, what is the interest expense in Year 8 and what is the carrying value of the bonds on December 31, Year 9? Record journal entries as well
A company issues $15900000, 5.8%, 20-year bonds to yield 6% on January 1, 2016. Interest is...
A company issues $15900000, 5.8%, 20-year bonds to yield 6% on January 1, 2016. Interest is paid on June 30 and December 31. The proceeds from the bonds are $15532475. Using straight-line amortization, what is the carrying value of the bonds on December 31, 2018 a. $15592634 b. $15795428 c. $15565336 d. $15587604
A company issues $16400000, 9.8%, 20-year bonds to yield 10% on January 1, 2017. Interest is...
A company issues $16400000, 9.8%, 20-year bonds to yield 10% on January 1, 2017. Interest is paid on June 30 and December 31. The proceeds from the bonds are $16118591. What is interest expense for 2018, using straight-line amortization?
A company issues $24950000, 5.8%, 20-year bonds to yield 6% on January 1, 2019. Interest is...
A company issues $24950000, 5.8%, 20-year bonds to yield 6% on January 1, 2019. Interest is paid on June 30 and December 31. The proceeds from the bonds are $24373285. Using straight-line amortization, what is the carrying value of the bonds on December 31, 2021? (Round answer to 0 decimal place, e.g. 52.) $24459792 $24468179 $24806169 $24425679
A company issues $5,000,000, 6%, 10-year bonds to yield 8% on January 1, 2017. Interest is...
A company issues $5,000,000, 6%, 10-year bonds to yield 8% on January 1, 2017. Interest is paid on June 30 and December 31. The proceeds from the bonds are $4,320,500. Using straight-line amortization, what will: a) The carrying value of the bonds be on the December 31, 2018 balance sheet? b) How much interest expense will be recognized in 2018? Using effective interest amortization, what will: c) The carrying value of the bonds be on the December 31, 2017 balance...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT