The Cinci Company issues $100,000, 10% bonds at 103 on April 1, 2020. The bonds are...

The Cinci Company issues $100,000, 10% bonds at 103 on April 1, 2020. The bonds are dated January 1, 2020 and mature six years from that date. Straight-line amortization is used. Interest is paid annually each December 31. Compute the bond carrying value as of December 31, 2023.

Answer

$_______________

Expert Solution

Answer:
Total amortization period = 6 Years = 6 x 12 = 72 months
Number of months of Amortization = 9 months in 2020 + ( 3 x 12 months ) till 2023 = 45 months

Premium on bonds payable = Issue Price (-) Face Value = ($ 100,000 x 103% ) (-) $ 100,000 = $ 103,000 (-) $ 100,000 = $ 3,000

Unamortized premium = Premium on bonds payable (-) Amortized premium = $ 3,000 (-) [ $ 3,000 x 45 / 72] = $ 3,000 (-) $ 1,875 = $ 1,125

Carrying value on December 31,2023 = $ 100,000 + $ 1,125	$ 101,125

ekkarill92 answered 2 years ago

Assume that National, Inc. issues $100,000 of 8% bonds on January 1, 2020. The bonds are...

Assume that National, Inc. issues $100,000 of 8% bonds on January 1, 2020. The bonds are due in five years, with interest payable annually. What will the purchaser of the bonds receive? : A: six $8,000 interest payments, plus the $100,000 principal at maturity B : five $8,000 interest payments, plus the $100,000 principal at maturity C : five equal payments of $108,000 D : five increasing payments based on principal plus interest

The Free Group issues $100,000 of 6% bonds on January 1, 2020 for $107,795. The bonds...

The Free Group issues $100,000 of 6% bonds on January 1, 2020 for $107,795. The bonds will mature on December 31, 2029 (10 years). The market yield for bonds of similar risk and maturity is 5%. Interest is paid semiannually on July 1 and January 1. a. Free Group has a calendar year-end and issues financial statements as of December 31. Prepare the journal entry to record the issuance of the bonds on 1/1/2020 and any other journal entry(ies) required...

2. Capital Company issued $600,000, 10%, 20-year bonds on January 1, 2020, at 103. Interest is...

2. Capital Company issued $600,000, 10%, 20-year bonds on January 1, 2020, at 103. Interest is payable semiannually on July 1 and January 1. The effective interest rate is 8%. Capital uses the straight-line method of amortization and has a calendar year end. Instructions: Prepare all journal entries made in 2020 related to the bond issue.

Tano Company issues bonds with a par value of $100,000 on January 1, 2019. The bonds’...

Tano Company issues bonds with a par value of $100,000 on January 1, 2019. The bonds’ annual contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 10%, and the bonds are sold for $94,923. 1. What is the amount of the discount on these bonds at issuance? 2. How much total bond interest expense will be recognized over...

On January 1, Year 1, Camdenton Corporation issues $100,000 of 5% bonds maturing in 10 years...

On January 1, Year 1, Camdenton Corporation issues $100,000 of 5% bonds maturing in 10 years when the market rate of interest is 4%. Interest is paid semiannually on June 30 and December 31. When using the PV function in Excel to compute the issue price of the bonds, the applicable interest payment (“PMT”) is: a. 2500 b. 4000 c. 5000

Shawn issues $100,000 10 % par value bonds for $96,156. The bonds have a 4 year...

Shawn issues $100,000 10 % par value bonds for $96,156. The bonds have a 4 year life with semiannual interest payments. Record the entry on the issue date, the first interest payment, and the entry to retire the bonds. What will be the total interest payments for this bond?

. Collins Company issues term bonds with a face value of $100,000 on January 1, Year...

. Collins Company issues term bonds with a face value of $100,000 on January 1, Year One. The bonds have an annual stated rate of interest of 4 percent and a life of ten years. They pay interest semiannually on June 30 and December 31. The bonds were issued to yield an effective annual interest rate of 6 percent. The present value of $1 in 10 periods at a 4 percent interest rate is $0.67556, in 10 periods at 6...

A company XYZ needs 1 million € worth of funds. It issues bonds worth 100,000 €....

A company XYZ needs 1 million € worth of funds. It issues bonds worth 100,000 €. Each bond has a par value of 1000 € and a coupon rate of 5% each year for 10 years. The current market price of the bond is 850 €. Remaining amount company raises by selling shares. The required rate of return on its shares is 8% and the marginal tax rate is equal to 20%. Calculate the WACC? part b): BB industries’ share...

Assume that on April 1, 2016?, Pacific?, Corp., issues 7 percent, 10-year bonds payable with a...

Assume that on April 1, 2016?, Pacific?, Corp., issues 7 percent, 10-year bonds payable with a maturity value of $100,000. The bonds pay interest on March31 and September 30?, and Pacific amortizes any premium or discount by the? straight-line method. Pacific?'s fiscal? year-end is December 31. 1. If the market interest rate is 6 percent when Pacific?, Corp., issues its? bonds, will the bonds be priced at? par, at a? premium, or at a? discount? Explain. 2. If the market...

On January 1, 2012, Corporation A issued $18,000,000 of 10% ten-year bonds at 103. The bonds...

On January 1, 2012, Corporation A issued $18,000,000 of 10% ten-year bonds at 103. The bonds are callable at the option of Corporation A at 105. Corporation A has recorded amortization of the bond premium on the straight line method. On December 31, 2018, when the fair value of the bonds was 96, Corporation A repurchased $4,000,000 if the bonds in the open market at 96. Corporation A has recorded interest and amortization for 2018. What amount of gain/loss(ignoring income...

Question