Question
In: Accounting
On January 1, 2018, Pharoah Corporation issued $2,400,000 of 5-year, 9% bonds at 96. The bonds...
On January 1, 2018, Pharoah Corporation issued $2,400,000 of 5-year, 9% bonds at 96. The bonds pay interest annually on January 1. By January 1, 2020, the market rate of interest for bonds of risk similar to those of Pharoah Corporation had risen. As a result, the market value of these bonds was $2,130,000 on January 1, 2020—below their carrying value. Joanna Pharoah, president of the company, suggests repurchasing all of these bonds in the open market at the $2,130,000 price. To do so, the company will have to issue $2,130,000 (face value) of new 10-year, 11% bonds at par. The president asks you, as controller, “What is the feasibility of my proposed repurchase plan?”
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Grouper Corporation sold $2,400,000, 9%, 5-year bonds on January 1, 2022. The bonds were dated January...
Grouper Corporation sold $2,400,000, 9%, 5-year bonds on January
1, 2022. The bonds were dated January 1, 2022, and pay interest on
January 1. Grouper Corporation uses the straight-line method to
amortize bond premium or discount. (a) Prepare all the necessary
journal entries to record the issuance of the bonds and bond
interest expense for 2022, assuming that the bonds sold at 103.
(Credit account titles are automatically indented when amount is
entered. Do not indent manually.) Date Account Titles...
January 1, 2018: Nexxon corporation issued 20 year, 9% bonds with a face value of $2,000,0000....
January 1, 2018: Nexxon corporation issued 20 year, 9% bonds
with a face value of $2,000,0000. the bonds were sold to yield 10%.
Interest is payable semi-annually on january 1 and July 1.
Effective rate amortization is to be used.
1. what is the issue price of the bonds?
2. Using EXCEL, prepare an amortization table for the entire
bond term.
3. Record the bond issuance on 1/1/18
4. assume the company prepares financial statements
semi-annually on June 30 and...
On January 1, 2016, Knorr Corporation issued $1,100,000 of 9%, 5-year bonds dated January 1, 2016....
On January 1, 2016, Knorr Corporation issued $1,100,000 of 9%,
5-year bonds dated January 1, 2016. The bonds pay interest annually
on December 31. The bonds were issued to yield 10%. Bond issue
costs associated with the bonds totaled $20,058.17.
Required: Prepare the journal entries to record the
following:
January 1, 2016 Sold the bonds at an effective rate of 10%
December 31, 2016 First interest payment using the effective
interest method
December 31, 2016 Amortization of bond issue costs...
On January 1, 2016, Knorr Corporation issued $1,100,000 of 9%, 5-year bonds dated January 1, 2016....
On January 1, 2016, Knorr Corporation issued $1,100,000 of 9%,
5-year bonds dated January 1, 2016. The bonds pay interest annually
on December 31. The bonds were issued to yield 10%. Bond issue
costs associated with the bonds totaled $20,058.17. Do not round
answers.
Required: Prepare the journal entries to record the following:
January 1, 2016 Sold the bonds at an effective rate of 10% December
31, 2016 First interest payment using the effective interest method
December 31, 2016 Amortization...
On january 1, 2016, Knorr Corporation issued $1,000,000 or 9%, 5-year bonds dated January 1, 2016....
On january 1, 2016, Knorr Corporation issued
$1,000,000 or 9%, 5-year bonds dated January 1, 2016. The bonds pay
interest on December 31. The bonds were issued to yield 10%. Bond
issue costs associated with the bonds totaled $18,000.
Prepare the journal entries to record the
following:
January 1, 2016: Sold the bonds at an effective
rate of 10%
December 21, 2016: First interest payment using the effective
interest method
December 31, 2016: Amortization of bond issue costs using the...
On March 1, 2018, Greenway Corporation issued 5% bonds dated January 1, 2018 with a par...
On March 1, 2018, Greenway Corporation issued 5%
bonds dated January 1, 2018 with a par value of $1,000,000. The
bonds were sold for the present value of the bonds on March 1, 2018
plus two-month accrued interest. The bonds mature on December 31,
2023. Interest is paid semiannually on Jun 30 and December 31.
Greenway's fiscal year ends on December 31 each year. The effective
interest rate is 7%.
Required:
a. Determine the present value the bonds on...
Venezuela Inc. issued $2,000,000 5-year bonds at 9%. These bonds were issued on January 1, 2017...
Venezuela Inc. issued $2,000,000 5-year bonds at 9%. These
bonds were issued on January 1, 2017 and pay interest on January 1
and July 1. The YTM of the bond is 11%, i.e. the effective interest
rate for the company is 11%.
a. Calculate the value of the bonds and prepare the journal
entry to record the issuance of the bonds on January 1, 2017.
b. Prepare a bond amortization schedule up to and including
January 1, 2022.
c. Assume...
Venezuela Inc. issued $2,000,000 5-year bonds at 9%. These bonds were issued on January 1, 2017...
Venezuela Inc. issued $2,000,000 5-year bonds at 9%. These bonds
were issued on January 1, 2017 and pay interest on January 1 and
July 1. The YTM of the bond is 11%, i.e. the effective interest
rate for the company is 11%.
a. Calculate the value of the bonds and prepare the journal
entry to record the issuance of the bonds on January 1, 2017.
b. Prepare a bond amortization schedule up to and including
January 1, 2022.
c. Assume...
Venezuela Inc. issued $2,000,000 5-year bonds at 9%. These bonds were issued on January 1, 2017...
Venezuela Inc. issued $2,000,000 5-year bonds at 9%.
These bonds were issued on January 1, 2017 and pay interest on
January 1 and July 1. The YTM of the bond is 11%, i.e. the
effective interest rate for the company is 11%.
a. Calculate the value of the bonds and prepare the
journal entry to record the issuance of the bonds on January 1,
2017.
b. Prepare a bond amortization schedule up to and
including January 1, 2022. c. Assume...
Patrick Corporation issued 5% bonds on January 1, 2018, with a face amount of $1,000,000, the...
Patrick Corporation
issued 5% bonds on January 1, 2018, with a face amount of
$1,000,000, the market rate for bonds of similar risk and maturity
was 4%. The bonds mature in 20 years and pay interest semi
annually on June 30 and December 31.
Create an Excel spreadsheet to
answer the following requirements and submit a printout of your
Excel formulas as well as a handwritten copy of your solutions to
the requirements listed below.
Required:
Determine the price of...
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