Question
In: Accounting
Garcia Company issues 10%, 15-year bonds with a par value of $250,000 and semiannual interest payments....
Garcia Company issues 10%, 15-year bonds with a par value of
$250,000 and semiannual interest payments. On the issue date, the
annual market rate for these bonds is 8%, which implies a selling
price of 117 1⁄4. The effective interest method is used to allocate
interest expense.
1. Using the implied selling price of 117 1⁄4,
what are the issuer's cash proceeds from issuance of these
bonds?
2. What total amount of bond interest expense will
be recognized over the life of these bonds?
3. What amount of bond interest expense is
recorded on the first interest payment date?
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Enviro Company issues 10.00%, 10-year bonds with a par value of
$420,000 and semiannual interest payments. On the issue date, the
annual market rate for these bonds is 7.00%, which implies a
selling price of 127.625. The straight-line method is used to
allocate interest expense.
1. Using the implied selling price of 127.625.
what are the issuer’s cash proceeds from issuance of these
bonds?
2. What total amount of bond interest expense will
be recognized over the life of these bonds?
3. What is the amount of bond interest expense
recorded on the first interest payment date?
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Enviro Company issues 10%, 10-year bonds with a par value of $250,000 and semiannual interest payments....
Enviro Company issues 10%, 10-year bonds with a par value of
$250,000 and semiannual interest payments. On the issue date, the
annual market rate for these bonds is 12%, which implies a selling
price of 88 1/2.
1. Prepare the journal entries for the issuance of the bonds.
Assume the bonds are issued for cash on January 1, 2017.
2. Confirm that the bonds’ selling price is approximately
correct. Use present value Table B.1 and Table B.3 in Appendix B....
Enviro Company issues 6.50%, 10-year bonds with a par value of $350,000 and semiannual interest payments....
Enviro Company issues 6.50%, 10-year bonds with a par value of
$350,000 and semiannual interest payments. On the issue date, the
annual market rate for these bonds is 3.50%, which implies a
selling price of 125 7/8. The straight-line method is used to
allocate interest expense.
1. Using the implied selling price of 125 7/8.
what are the issuer’s cash proceeds from issuance of these
bonds?
2. What total amount of bond interest expense
will be recognized over the...
Enviro Company issues 8%, 10-year bonds with a par value of $310,000 and semiannual interest payments....
Enviro Company issues 8%, 10-year bonds with a par value of
$310,000 and semiannual interest payments. On the issue date, the
annual market rate for these bonds is 10%, which implies a selling
price of 87 1⁄2. The straight-line method is used to allocate
interest expense. 1. Using the implied selling price of 87 ½, what
are the issuer's cash proceeds from issuance of these bonds? 2.
What total amount of bond interest expense will be recognized over
the life...
Marwick Corporation issues 8%, 5 year bonds with a par value of $1,150,000 and semiannual interest...
Marwick Corporation issues 8%, 5 year bonds with a par value of
$1,150,000 and semiannual interest payments. On the issue date, the
annual market rate for these bonds is 6%. What is the bond's issue
(selling) price, assuming the following Present Value
factors:
n=
i=
Present Value of an
Annuity
Present value
of $1
5
8
%
3.9927
0.6806
10
4
%
8.1109
0.6756
5
6
%
4.2124
0.7473
10
3
%
8.5302
0.7441
Multiple Choice
$1,248,104
$757,611
$1,150,000
$939,244...
Matthew Company issued 10-year, 7% bonds (paying semiannual interest) with a par value of $100,000. The...
Matthew Company issued 10-year, 7% bonds (paying semiannual
interest) with a par value of $100,000. The market rate of interest
when the bonds were issued was 6%. Compute the price of the bonds
when they were issued. **How do i answer this NOT using a financial
calculator**
The following information is used to answer Bonds: $3,000,000 Par Value Semiannual Interest Payments Three-Year Life...
The following information is used to answer
Bonds: $3,000,000 Par Value
Semiannual Interest Payments
Three-Year Life
Annual Contract Rate: 12%
Annual Market Rate: 10%
Question:
What is the semi-annual cash payment to the
bondholder?
A. $150,000
B. $160,000
C. $170,000
D. $180,000
What is the total amount of interest expense over the
life of the bond?
A. $927,729.24
B. $945,756.32
C. $955,798.51
D. $963,877.98
Softbyte Inc.
Balance Sheet
December 31, 2017
Assets
Cash
$500,000
Accounts
Receivable
700,000 ...
The following information is used to answer: Bonds: $1,000,000 Par Value Semiannual Interest Payments, Three-Year Life...
The following information is used to
answer:
Bonds: $1,000,000 Par Value
Semiannual Interest Payments,
Three-Year Life
Annual Contract Rate: 6%
Annual Market Rate: 8%
What is the semi-annual cash payment to the
bondholder?
A. 25,000
B. 30,000
C. 35,000
D. 40,000
What is the interest expense for the second semi-annual
payment under the effective interest method?
A. 37,903.15
B. 38,219.27
C. 38,548.04
D. 38,889.96
Softbyte Inc.
Balance Sheet
December 31, 2017
Assets
Cash
$500,000
Accounts
Receivable
700,000 ...
The following information is used to answer: Bonds: $1,000,000 Par Value Semiannual Interest Payments, Three-Year Life...
The following information is used to
answer:
Bonds: $1,000,000 Par Value
Semiannual Interest Payments,
Three-Year Life
Annual Contract Rate: 6%
Annual Market Rate: 8%
What is the price of the bond?
A. 963,544.12
B. 952,877.65
C. 947,578.63
D. 925,587.96
What is the amount of the bond discount?
A. 52,421.37
B. 50,865.35
C. 47,822.45
D. 45,647.24
Softbyte Inc.
Balance Sheet
December 31, 2017
Assets
Cash
$500,000
Accounts
Receivable
700,000
Inventory
300,000
Property, Plant & Equipment
900,000...
Compute the selling price of 10%, 10-year bonds with a par value of $360,000 and semiannual...
Compute the selling price of 10%, 10-year bonds with a par value
of $360,000 and semiannual interest payments. The annual market
rate for these bonds is 12%. Use present value Table B.1 and Table
B.3 in Appendix B. (Round all table values to 4 decimal
places, and use the rounded table values in
calculations.)
cash flow
table value
present value
$360,000 par (maturity) date
18,000 interest payment
Price of Bond
Compute the selling price of 9.00%, 15-year bonds with a par value of $270,000 and semiannual...
Compute the selling price of 9.00%, 15-year bonds with a par
value of $270,000 and semiannual interest payments. The annual
market rate for these bonds is 6.00%. Use present value Table B.1
and Table B.3 in Appendix B. (Round all table values to 4
decimal places, and use the rounded table values in calculations.
Round your other final answers to nearest whole dollar
amount.)
cash flow
table value
present value
$270,000 par (maturity) value
$12,150 interest payment
Price of...
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