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PROBLEM II Part I On April 1, 2019, Berry Corporation issued an $8,000,000, 10-year, 6% bond...
PROBLEM II
Part I
On April 1, 2019, Berry Corporation issued an $8,000,000, 10-year, 6% bond at 94 because the market rate of interest on that date was 8%. Interest is payable semi-annually.
REQUIRED:
Make the necessary journal entries for the following dates:
Apr. 1, 2019: The day the bond was issued.
Sept. 30, 2019: The first interest payment under the straight-line method of bond discount amortization.
Sept. 30, 2019: The first interest payment under the effective interest method of bond discount amortization.
Dec. 31, 2019: The necessary adjusting entry under the straight-line method.
Dec. 31, 2019, The closing entry under the straight-line method of amortization.
Part II
Let’s say that on April 1, 2019, Berry Corporation issued an $8,000,000, 10-year, 8% bond at 105 because the market rate was 6%. Interest is payable semi-annually.
REQUIRED:
Make the necessary journal entries for the following dates:
Apr. 1, 2019: The day the bond was issued.
Sept. 30, 2019: The first interest payment under the straight-line method of bond discount amortization.
Sept. 30, 2019: The first interest payment under the effective interest method of bond discount amortization.
Dec. 31, 2019: The necessary adjusting entry under the straight-line method.
Dec. 31, 2019, The closing entry under the straight-line method of amortization.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Problem 1 Part 1 - Corporation On April 1, 2019, a corporation with a December 31...
Problem 1
Part 1 - Corporation
On April 1, 2019, a corporation with a December 31 taxation year
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but interest is compounded annually at the rate of 10%. Currently,
the corporation’s marginal tax rate is 28%. However, in 2020, the
marginal tax rate will decrease to 25%.
Part 2 Individual
An individual makes the identical investment on April 1, 2019.
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Effective ammortization is to be used.
What accounts related to this bond would be shown on the
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Current Liabilities:
Long-term Liabilities:
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Problem 1:
You are considering investing in a 10-year bond issued by NewEnergy
Inc. This bond has $1000 face value, 4% coupon rate.
The bond
pays coupons semi-annually and is currently selling at $920. The
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1.c. (6 points)
What is the yield to maturity if you purchase the bond at the
current price of $920? (Use RATE function)
N=
FV=
PMT=
PV=
PMT Type=
Periodic Discount Rate=
Yield to Maturity...
Problem 1: You are considering investing in a 10-year bond issued by NewEnergy Inc. This bond...
Problem 1:
You are considering investing in a 10-year bond issued by NewEnergy
Inc. This bond has $1000 face value, 4% coupon rate.
The bond
pays coupons semi-annually and is currently selling at $920. The
bond can be called at a $1,040 in 3 years.
Draw a chart to show the relationship between bond yield and
bond price.
Yield versu Price Data
Yield
Price
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
12%
13%
14%
15%
On January 1, 2019, Schultz Corporation issued a $100,000, 6% bond payable (7% market rate). The...
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Requirements (hint: use the table from problem 1 for
computations):
a. Give the journal entry to record the issuance of the bonds.
b. Give the journal entry to record the interest payment on
December 31, 2019, assuming straight-line amortization.
c. Give the journal entry to record the interest...
1. On January 1, 2011, Michael’s Incorporated issued $8,000,000 of 10-year bonds at a 11% stated...
1. On January 1, 2011, Michael’s Incorporated issued $8,000,000
of 10-year bonds at a 11% stated
interest rate to be paid annually. Calculate the issuance price
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(Choose the best answer).
(F) $8,000,000
(G) $9,023,840
(H) $8,923,840
(I) $11,376,000
(J) $9,975,023
2.
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Multiple Choice
Debit Bond Interest Expense $12,020; debit Discount on Bonds
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Debit Bond...
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1. Journalize the issuance of bond payable on January 1
2. Journalize the payment of semi-annual interest and
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