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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 1 year agoRelated Solutions
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Problem 1
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You are considering investing in a 10-year bond issued by NewEnergy
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The bond
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1.c. (6 points)
What is the yield to maturity if you purchase the bond at the
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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%
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computations):
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(G) $9,023,840
(H) $8,923,840
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(J) $9,975,023
2.
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Multiple Choice
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