On January 1, 2016 Nick issued a $100,000 bond that matures in 20 years and pays...

On January 1, 2016 Nick issued a $100,000 bond that matures in 20 years and pays 8% interest (stated or coupon rate) a year. (Payment date is December 31.) The market (yield) rate is 6%.

Record the entry Nick has to make on January 2 when he issues the Bonds Payable.

Date	Accounts	Debit(s)	Credit(s)
12/31/16

Assume the bond was sold @ 104.

3. Complete the first two years of the following table:

Year	Interest Expense	Book
1/1/16
1
2

4. Complete the entries at the end of the year for the first two years. Please use the table above.

Date	Accounts	Debit(s)	Credit(s)
12/31/16

Date	Accounts	Debit(s)	Credit(s)
12/31/17

Expert Solution

ekkarill92 answered 2 years ago

A bond matures in 20 years and pays an 8 percent annual coupon. The bond has...

A bond matures in 20 years and pays an 8 percent annual coupon. The bond has a face value of $1000 and currently sells for $900. What is the bond's current yield and yield to maturity?

Consider the following bonds: Bond A matures in 20 years and pays a 9.0 percent annual...

Consider the following bonds: Bond A matures in 20 years and pays a 9.0 percent annual coupon. Bond B matures in 10 years and pays a 9.0 percent annual coupon. The YTM on both bonds is 12.00 percent. If the market required return on both bonds falls to 8 percent, which bond will realize the biggest dollar change in market value? Why? What will be the market value of Bond A in 2 years, if the YTM stays constant? Jones...

A bond your company issued has par of $1000 and matures in 6 years. It pays annual...

A bond your company issued has par of $1000 and matures in 6 years. It pays annual coupons of $40 each. Annual interest rates are now 3%. What is the value of the bond? Premium bond or discount bond? What is the Macauley’s Duration of the Bond? If you were to immunize this Bond, which you have booked as a liability, and you were going to use 1-year Zeroes and Perpetuities to match interest-rate change sensitivity risk, how much of each would...

Coke-Colas bond is issued, has par of $1000 and matures in 6 years. It pays annual...

Coke-Colas bond is issued, has par of $1000 and matures in 6 years. It pays annual coupons of $50 each. Annual interest rates are now 3%. A. What is the value of the bond B. Premium bond or discount bond C. What is the Macauley’s Duration of the Bond D. You immunize this Bond, which you have booked as a liability, and you were going to use 1-year Zeroes and Perpetuities to match interest-rate change sensitivity risk, how much of...

On January 2, 2019 Shane Creamer issued a $2,000,000 bond that matures in 5 years and...

On January 2, 2019 Shane Creamer issued a $2,000,000 bond that matures in 5 years and pays 10% interest (stated or coupon rate) a year. (Payment date is December 31.) The market (yield) rate is 6%. a. Record the entry Shane has to make on January 2 when he issues the Bonds Payable B. Interest Expense Year Ending C. Interest Exp. Year Ending

1. Starlight Corporation issued a 8% $1,000,000 bond on January 1, 2014. The bond matures on...

1. Starlight Corporation issued a 8% $1,000,000 bond on January 1, 2014. The bond matures on January 1, 2019. Interest on the bond is payable semi-annually on July 1 and January 1 of each year. From the sale of the bond, the company received proceeds of $922,779. The required effective interest rate on the bond was 10%. Instructions (a) Calculate the discount on the bond. (b) Prepare a bond amortization schedule for the 5 years. Be sure to clearly show...

A bond matures in 10 years, pays $ 80 each year, and pays $ 1,000 at...

A bond matures in 10 years, pays $ 80 each year, and pays $ 1,000 at maturity. Assume that the market interest is 10%. What is the present value of the bond?

Company A issues a bond with a $100,000 face value. The bond matures in three years....

Company A issues a bond with a $100,000 face value. The bond matures in three years. The stated interest rate is 9% and the market interest rate is 12%. Interest payments are made every 6 months. Record the journal entry for the issuance of the bond.

A bond issued with a face value of $1,000 pays a 3% coupon rate and matures...

A bond issued with a face value of $1,000 pays a 3% coupon rate and matures in seven years. If an investor wants a yield of 4%, what is the investor willing to pay for the bond?

Risk premiums In January 2016, Anheuser-Busch issued an outstanding bond that pays a 3.2% coupon rate,...

Risk premiums In January 2016, Anheuser-Busch issued an outstanding bond that pays a 3.2% coupon rate, matures in January 2023, and has a yield to maturity of 2.72%. In January 2017, Santander Holdings issued an outstanding bond that pays a 3.576% coupon rate, matures in January 2023, and has a yield to maturity of 3.346%. a. Does the Anheuser-Busch bond sell at a premium, at par, or at a discount? How do you know? What about the Santander bond? b....

Question