Madrid Company plans to issue 7% bonds on January 1, 2017, with a par value of...

Madrid Company plans to issue 7% bonds on January 1, 2017, with a par value of $5,100,000. The company sells $4,590,000 of the bonds at par on January 1, 2017. The remaining $510,000 sells at par on July 1, 2017. The bonds pay interest semiannually as of June 30 and December 31.

1. Record the entry for the first interest payment on June 30, 2017.

Expert Solution

Interest expense = $4,590,000 X 7% X 6/12 = $160,650

Date	Account Titles and Explanation	Debit	Credit
June 30, 2017	Interest expense	$160,650	-
	Cash	-	$160,650
	(To record semiannual interest paid)

ekkarill92 answered 2 years ago

QS 10-16 Issuing bonds at par LO P1 Madrid Company plans to issue 12% bonds on...

QS 10-16 Issuing bonds at par LO P1 Madrid Company plans to issue 12% bonds on January 1, 2017, with a par value of $5,000,000. The company sells $4,500,000 of the bonds at par on January 1, 2017. The remaining $500,000 sells at par on July 1, 2017. The bonds pay interest semiannually as of June 30 and December 31. 1. Record the entry for the first interest payment on June 30, 2017. 2. Record the entry for the...

On January 1, 2017, Brussels enterprises issue bonds at par dated January 1, 2017, that have...

On January 1, 2017, Brussels enterprises issue bonds at par dated January 1, 2017, that have $3,300,000 par value, mature in 4 years and pay 10% interest semiannually on June 30 and December 31 1) Record the entry for the issuance of bonds for cash on January wa1, 2017 2) record the entry for the first semiannual interest payment on June 30, 2017 3) Record the entry for the second semiannual interest payment on December 31, 2017 4) record the...

Tano issues bonds with a par value of $95,000 on January 1, 2017. The bonds’ annual...

Tano issues bonds with a par value of $95,000 on January 1, 2017. The bonds’ annual contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 10%, and the bonds are sold for $90,177. 1. What is the amount of the discount on these bonds at issuance? 2. How much total bond interest expense will be recognized over...

(45) Costly Corporation plans a new issue of bonds with a par value of $1000, a...

(45) Costly Corporation plans a new issue of bonds with a par value of $1000, a maturity of 16 years, and an annual coupon rate of 19.0%. Flotation costs associated with a new debt issue would equal 7.0% of the market value of the bonds. Currently, the appropriate discount rate for bonds of firms similar to Costly is 23.0%. The firm's marginal tax rate is 30%. What will the firm's true cost of debt be for this new bond issue?

Costly Corporation plans a new issue of bonds with a par value of $1000, a maturity...

Costly Corporation plans a new issue of bonds with a par value of $1000, a maturity of 28 years, and an annual coupon rate of 10.0%. Flotation costs associated with a new debt issue would equal 8.0% of the market value of the bonds. Currently, the appropriate discount rate for bonds of firms similar to Costly is 6.0%. The firm's marginal tax rate is 50%. What will the firm's true cost of debt be for this new bond issue?

Quatro Co. issues bonds dated January 1, 2017, with a par value of $880,000. The bonds’...

Quatro Co. issues bonds dated January 1, 2017, with a par value of $880,000. The bonds’ annual contract rate is 13%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 12%, and the bonds are sold for $901,670. 1. What is the amount of the premium on these bonds at issuance? 2. How much total bond interest expense will be recognized over...

Quatro Co. issues bonds dated January 1, 2017, with a par value of $740,000. The bonds’...

Quatro Co. issues bonds dated January 1, 2017, with a par value of $740,000. The bonds’ annual contract rate is 13%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 12%, and the bonds are sold for $758,222. 1. What is the amount of the premium on these bonds at issuance? 2. How much total bond interest expense will be recognized...

Quatro Co. issues bonds dated January 1, 2017, with a par value of $760,000. The bonds’...

Quatro Co. issues bonds dated January 1, 2017, with a par value of $760,000. The bonds’ annual contract rate is 10%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 8%, and the bonds are sold for $799,828. 1. What is the amount of the premium on these bonds at issuance? 2. How much total bond interest expense will be recognized over...

Stanford issues bonds dated January 1, 2017, with a par value of $260,000. The bonds’ annual...

Stanford issues bonds dated January 1, 2017, with a par value of $260,000. The bonds’ annual contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 12%, and the bonds are sold for $240,832. 1. What is the amount of the discount on these bonds at issuance? 2. How much total bond interest expense will be recognized over...

Quatro Co. issues bonds dated January 1, 2017, with a par value of $890,000. The bonds’...

Quatro Co. issues bonds dated January 1, 2017, with a par value of $890,000. The bonds’ annual contract rate is 12%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 10%, and the bonds are sold for $935,160. 1. What is the amount of the premium on these bonds at issuance? 2. How much total bond interest expense will be recognized over...

Question