Question
In: Accounting
On January 1, 2021, Splash City issues $460,000 of 8% bonds, due in 15 years, with...
On January 1, 2021, Splash City issues $460,000 of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. The market interest rate on the issue date is 9% and the bonds issued at $422,536.
2. If the market interest rate drops to 6% on December 31, 2022, it will cost $542,233 to retire the bonds. Record the retirement of the
Solutions
Expert Solution
Bond is a fixed income security in which issuer promises pay a series of interest payment and repay the principle on maturity the investor. The effective interest rate is also called as market rate. It is the investor's yield maturity. When the effective interest rate is higher as compared bond coupon rate then, the bonds were issued at a discount. The Discount is then amortised over the period of bond by using effective interest rate method. The discount given on bond issuance is amortised over the life of the bond. If the bond is redeemed before maturity then unamortised discount amount is credited at the time of redemption and the profit/(loss) on redemption of bond is recognised.
ekkarill92 answered 1 year agoRelated Solutions
22. On January 1, 2018, Splash City issues $490,000 of 8% bonds, due in 15 years,...
22.
On January 1, 2018, Splash City issues $490,000 of 8% bonds, due
in 15 years, with interest payable semiannually on June 30 and
December 31 each year.
Assuming the market interest rate on the issue date is 7%, the
bonds will issue at $535,061.
Required:
1. Complete the first three rows of an amortization
table.
Date
Cash Paid
Interest Expense
Decrease in Carrying Value
Carrying Value
1/1/18
6/30/18
12/31/18
2. Record the bond issue on January 1, 2018,
and...
On January 1, 2021, Splash City issues $300,000 of 7% bonds, due in 10 years, with...
On January 1, 2021, Splash City issues $300,000 of 7% bonds, due
in 10 years, with interest payable semiannually on June 30 and
December 31 each year.
Assuming the market interest rate on the issue date is 8%, the
bonds will issue at $279,615.
2. Record the bond issue on January 1, 2021,
and the first two semiannual interest payments on June 30, 2021,
and December 31, 2021.
Record the bond issue.
Date
General Journal
Debit
Credit
January 01, 2021...
On January 1, 2018, Splash City issues $360,000 of 7% bonds, due in 10 years, with...
On January 1, 2018, Splash City issues $360,000 of 7% bonds, due in
10 years, with interest payable semiannually on June 30 and
December 31 each year.
Assuming the market interest rate on the issue date is 6%, the
bonds will issue at $386,781.
Required:
1. Complete
the first three rows of an amortization table.
Date
Cash Paid
Interest Expense
Decrease in Carrying Value
Carrying Value
1/1/18
6/30/18
12/31/18
On January 1, 2018, Splash City issues $390,000 of 7% bonds, due in 10 years, with...
On January 1, 2018, Splash City issues $390,000 of 7% bonds, due
in 10 years, with interest payable semiannually on June 30 and
December 31 each year.
Assuming the market interest rate on the issue date is 8%, the
bonds will issue at $363,500.
Date
Cash Paid
Interest Expense
Increase in Carrying Value
Carrying Value
1/1/18
6/30/18
12/31/18
2. Record the bond issue on January 1, 2018, and
the first two semiannual interest payments on June 30, 2018, and
December...
On January 1, 2018, Splash City issues $470,000 of 9% bonds, due in 20 years, with...
On January 1, 2018, Splash City issues $470,000 of 9% bonds, due
in 20 years, with interest payable semiannually on June 30 and
December 31 each year.
Assuming the market interest rate on the issue date is 10%, the
bonds will issue at $429,678.
Complete the first three rows of an amortization table.
Date
Cash
Paid
Interest
Expense
Increase
in Carrying Value
Carrying
1/1/18
6/30/18
12/31/18
On January 1, 2018, Splash City issues $470,000 of 9% bonds, due in 20 years, with...
On January 1, 2018,
Splash City issues $470,000 of 9% bonds, due in 20 years, with
interest payable semiannually on June 30 and December 31 each
year.
Assuming the market interest rate on the issue date is 10%, the
bonds will issue at $429,678.
2.
Record the bond issue on January 1, 2018, and the first two
semiannual interest payments on June 30, 2018, and December 31,
2018
Date
General Journal
Debit
Credit
January 01, 2018
On January 1, 2018, Splash City issues $500,000 of 9% bonds, due in 20 years, with...
On
January 1, 2018, Splash City issues $500,000 of 9% bonds, due in 20
years, with interest payable semiannually on June 30 and December
31 each year.
Required:
Assuming the market interest rate
on the issue date is 8%, the bonds will issue at $549,482.
1. Complete the first three rows
of an amortization table.
2. Record the bond issue on
January 1, 2018, and the first two semiannual interest payments on
June 30, 2018, and December 31, 2018.
On January 1, 2018, Splash City issues $500,000 of 9% bonds, due in 20 years, with...
On
January 1, 2018, Splash City issues $500,000 of 9% bonds, due in 20
years, with interest payable semiannually on June 30 and December
31 each year.
Required:
Assuming the market interest rate on the issue date is 10%,
the bonds will issue at $457,102.
1. Complete the first three rows of an amortization
table.
2. Record the bond issue on January 1, 2018, and the first two
semiannual interest payments on June 30, 2018, and December 31,
2018.
On January 1, 2021, Frontier World issues $39.8 million of 8% bonds, due in 15 years,...
On January 1, 2021, Frontier World issues $39.8 million of 8%
bonds, due in 15 years, with interest payable semiannually on June
30 and December 31 each year. The proceeds will be used to build a
new ride that combines a roller coaster, a water ride, a dark
tunnel, and the great smell of outdoor barbeque, all in one
ride.
3-a. If the market rate is 9%, calculate the
issue price. (FV of $1, PV of $1, FVA of $1,...
Question 9: On January 1, 2018, Splash City issues $450,000 of 7% bonds, due in 10...
Question 9:
On January 1, 2018, Splash City issues $450,000 of 7% bonds, due
in 10 years, with interest payable semiannually on June 30 and
December 31 each year.
Assuming the market interest rate on the issue date is 8%, the
bonds will issue at $419,423.
Required:
1. Complete the first three rows of an
amortization table.
Date
Cash paid
interest expense
increase in
carrying value
carrying value
1/1/18
6/30/18
12/31/18
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