Question
In: Accounting
On June 30, 2017, Mitty Inc. issues $5,000,000 face value bonds with a coupon rate of...
On June 30, 2017, Mitty Inc. issues $5,000,000 face value bonds
with a coupon rate of 5% issued to yield 7%. The bonds pay interest
semi-annually on June 30 and December 31 and mature 20 years from
the date of issuance. Mitty Inc uses the effect-interest rate
method for recording bond amortization. Please show all work.
Required: Prepare the journal entry for the bonds at the date of
issuance.
Required: Prepare the journal entry at June 30, 2018.
Solutions
Expert Solution
Calculation of issue price and the amount of discount amortization
ekkarill92 answered 2 years agoRelated Solutions
6/30/y1, $5,000,000 face value bonds, with an 8% coupon rate, are issued to yield 5%. These...
6/30/y1, $5,000,000 face value bonds, with an 8% coupon rate,
are issued to yield 5%. These are 20- year bonds, and they pay
interest on June 30 and December 31. These bonds were issued for
$6,882,706. Please record the following, using the effective
interest approach: 6/30/y1 issuance of the bonds. 12/31/y1 payment
of interest. 6/30/y2 payment of interest. 12/31/y2 payment of
interest.
6/30/y1, $5,000,000 face value bonds, with an 8% coupon rate, are issued to yield 5%. These...
6/30/y1, $5,000,000 face value bonds, with an 8%
coupon rate, are issued to yield 5%. These are 20-
year bonds, and they pay interest on June 30 and
December 31. These bonds were issued for $6,882,706.
Please record the following, using the effective interest
approach:
6/30/y1 issuance of the bonds.
12/31/y1 payment of interest.
6/30/y2 payment of interest.
12/31/y2 payment of interest.
Your company issues bonds with a face value of $1,000 with an annual coupon rate of...
Your company issues bonds with a face value of $1,000 with an
annual coupon rate of 8%. Interest payments are made semi-annually
on June 30 and December 31. The duration of the bond is 10 years.
The market rate on similar bonds is 12 percent. What is the value
of the bond? Make the journal entry to issue the bond. Calculate
interest expense and make the first interest payment entry.
Calculate the interest expense of the 12th interest payment.
Caven Buffet Industries issues bonds with a 7% coupon rate and $1000 face value. Interest is...
Caven Buffet Industries issues bonds with a 7% coupon rate and
$1000 face value. Interest is paid semi-anually and the bond has 18
years to maturity. However, the bond does not pay the first two
coupon payments and instead makes these payments at maturity. If
investors require a 15% return, What is the bond's value?
A) $1,161.81
B) $3,034.73
C) $698.80
D) $448.48
Can you please show the work?
On June 30, 2017, Pearl Company issued $4,300,000 face value of 13%, 20-year bonds at $4,623,487,...
On June 30, 2017, Pearl Company issued $4,300,000 face value of
13%, 20-year bonds at $4,623,487, a yield of 12%. Pearl uses the
effective-interest method to amortize bond premium or discount. The
bonds pay semiannual interest on June 30 and December 31.
Prepare the journal entries to record the following
transactions. (Round answer to 0 decimal places, e.g.
38,548. If no entry is required, select "No Entry" for the account
titles and enter 0 for the amounts. Credit account titles...
On June 30, 2017, Novak Company issued $4,400,000 face value of 13%, 20-year bonds at $4,731,010,...
On June 30, 2017, Novak Company issued $4,400,000 face value of
13%, 20-year bonds at $4,731,010, a yield of 12%. Novak uses the
effective-interest method to amortize bond premium or discount. The
bonds pay semiannual interest on June 30 and December 31.
(1) What amount of interest expense is reported
for 2018? (Round answer to 0 decimal places, e.g.
38,548.)
(2) Will the bond interest expense reported in
2018 be the same as, greater than, or less than the amount...
On June 30, 2017, Crane Company issued $3,800,000 face value of 13%, 20-year bonds at $4,085,872,...
On June 30, 2017, Crane Company issued $3,800,000 face value of
13%, 20-year bonds at $4,085,872, a yield of 12%. Crane uses the
effective-interest method to amortize bond premium or discount. The
bonds pay semiannual interest on June 30 and December 31. Prepare
the journal entries to record the following transactions. (Round
answer to 0 decimal places, e.g. 38,548. If no entry is required,
select "No Entry" for the account titles and enter 0 for the
amounts. Credit account titles...
On June 30, 2017, Bramble Company issued $3,300,000 face value of 13%, 20-year bonds at $3,548,257,...
On June 30, 2017, Bramble Company issued $3,300,000 face value
of 13%, 20-year bonds at $3,548,257, a yield of 12%. Bramble uses
the effective-interest method to amortize bond premium or discount.
The bonds pay semiannual interest on June 30 and December 31.
Prepare the journal entries to record the following
transactions. (Round answer to 0 decimal places, e.g. 38,548. If no
entry is required, select "No Entry" for the account titles and
enter 0 for the amounts. Credit account titles...
On June 30, 2017, Mischa Auer Company issued $4,200,000 face value of 13%, 20-year bonds at...
On June 30, 2017,
Mischa Auer Company issued $4,200,000 face value of 13%, 20-year
bonds at $4,515,964, a yield of 12%. Auer uses the
effective-interest method to amortize bond premium or discount. The
bonds pay semiannual interest on June 30 and December 31.
Instructions
(Round answers to the
nearest cent.)
(a) Prepare the journal entries to
record the following transactions.
1.The issuance of the bonds on June 30,
2017.
2.The payment of interest and the amortization
of the premium on December...
Borland, Inc. issues 25-year semi-annual bonds that have a face value of $1,000 and a coupon...
Borland, Inc. issues 25-year semi-annual bonds that have a face
value of $1,000 and a coupon rate of 7.5%. The current market price
for the bonds is $950.00. If your required rate of
return is 8.5%, what is the value of one of these bonds to you?
(Your answer should be with +/- $0.02 of the following
answers.)
Group of answer choices
$977.95
$978.09
$950
$897.03
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