Question

1. The University of Alaska sells three-year bonds with an $800,000 face value to private investors. The bonds are due in three years, have an 8% coupon rate and interest is paid annually. The bonds were sold to yield 6%. What proceeds does UA receive from the investor Did the bond sell for par, a premium or a discount? How much was the premium or discount? If the bond sold for a premium or discount, what is the balance in the premium or discount following the interest payment at the end of year 1? Prepare all of the necessary journal entries, beginning with the issuance of the bond, the three annual interest payments and the bond retirement at the end of year 3.

Answer 1

	Coupon Rate per period	8%
	Period	3
	Effective/Market rate per period	6%
	Bond amount	$800,000
							Amortization Schedule
							Period	Cash paid	Interest	Closing bal.
		Period	Cashflows	Present value	Calculation		0	0	$0	$842,768
		1	$64,000	$60,377	(64000/(1+0.06)^1)		1	$64,000	$50,566	$829,334
		2	$64,000	$56,960	(64000/(1+0.06)^2)		2	$64,000	$49,760	$815,094
		3	$864,000	$725,431	(864000/(1+0.06)^3)		3	$864,000	$48,906	$0
				$842,768
1.	Proceeds from bonds	$842,768
	Bonds issued at PREMIUM
	Premium amount	$42,768
2.	Account titles and explanation	Debit	Credit
	Cash	$842,768
	Premium on bonds payable		$42,768
	Bonds payable		$800,000
	(bonds issued)
	Interest expense	$50,566
	Premium on bonds payable	$13,434
	Cash		$64,000
	(interest recognised for year 1)
	Interest expense	$49,760
	Premium on bonds payable	$14,240
	Cash		$64,000
	(interest recognised for year 2)
		ekkarill92 Next > < Previous Related Solutions Arizona Corporation issues term bonds with a face value of $800,000 on January 1, Year One.... Arizona Corporation issues term bonds with a face value of $800,000 on January 1, Year One. The bonds have a stated rate of interest of 7 percent per year and a life of six years. They pay interest annually on December 31. These bonds were issued at $695,470 to create an effective annual rate of 10 percent. a. What journal entry does the company make on January 1, Year One, when the bonds are issued? b. What journal entry or... Arizona Corporation issues term bonds with a face value of $800,000 on January 1, Year One.... Arizona Corporation issues term bonds with a face value of $800,000 on January 1, Year One. The bonds have a stated rate of interest of 7 percent per year and a life of six years. They pay interest annually on December 31. These bonds were issued at $695,470 to create an effective annual rate of 10 percent. a. What journal entry does the company make on January 1, Year One, when the bonds are issued? b. What journal entry or... Reed Corp. sells $500,000 of bonds to private investors on January 1, 2020. The bonds are... Reed Corp. sells $500,000 of bonds to private investors on January 1, 2020. The bonds are due in five years, have a 8% coupon rate, and interest is paid semi-annually on June 30 and December 31. The bonds were sold to yield 6%. Required: 1 Determined the bond issue prince. 2 Prepare journal entry to record the interest payment on June 30, 2020. 3 Prepare journal entry to record the interest payment on December 31, 2020. 4 What was the... 1. Reed Corp. sells $700,000 of bonds to private investors. The bonds are due in five... 1. Reed Corp. sells $700,000 of bonds to private investors. The bonds are due in five years, have a 4% coupon rate and interest is paid semiannually. The bonds were sold to yield 6%. What proceeds does Reed receive from the investors? 2. Sykora Corp. sells $450,000 of bonds to private investors. The bonds are due in 5 years, have a 6% coupon rate and interest is paid semiannually. Sykora received $490,222 for the bonds at issuance. The effective rate... Gupta Corporation issued four-year, 12% bonds with a total face value of $800,000 on January 1,... Gupta Corporation issued four-year, 12% bonds with a total face value of $800,000 on January 1, 2018. Interest is paid semi-annually on June 30 and December 31. The market rate of interest on this date was 8%. Gupta uses the effective interest rate method. Required: Using Excel, determine the proceeds of the bond sale on 1/1/18. Using the present value of a dollar table (found in Appendix E of your text), what factor would you use to calculate the present... Bats Corporation issued $800,000 of 12% face value bonds for $851,705.70. The bonds were dated and... Bats Corporation issued $800,000 of 12% face value bonds for $851,705.70. The bonds were dated and issued on April 1, 2016, are due March 31, 2020, and pay interest semiannually on September 30 and March 31. Bats sold the bonds to yield 10%. Required: 1. Prepare a bond interest expense and premium amortization schedule using the straight-line method. 2. Prepare a bond interest expense and premium amortization schedule using the effective interest method. 3. Prepare any adjusting entries for the... Hulse Corporation retires its $800,000 face value bonds at 105 when the carrying value of the... Hulse Corporation retires its $800,000 face value bonds at 105 when the carrying value of the bonds at the redemption date is $829,960. Prepare the journal entry to record the retirement of the bond. On January 1, 2019 Maxxum PLC issued 12% bonds with a face value of £800,000 and... On January 1, 2019 Maxxum PLC issued 12% bonds with a face value of £800,000 and offering bondholders a 10% yield. The bonds are dated January 1, 2019 and mature January 1, 2024 with interest payable December 31 each year.  (100 POINTS) Instructions Prepare the journal entry at the date of the bond issuance. Prepare a schedule of interest expense and bond amortization for 2019-2021 Prepare the journal entry to record the interest payment and amortization for 2019 Prepare the journal... On June 30, 2016, Gaston Corporation sold $800,000 of 11% face value bonds for $761,150.96. On... On June 30, 2016, Gaston Corporation sold $800,000 of 11% face value bonds for $761,150.96. On December 31, 2016, Gaston sold $700,000 of this same bond issue for $734,645.28. The bonds were dated January 1, 2016, pay interest semiannually on each December 31 and June 30, and are due December 31, 2023. Required: Compute the effective yield rate on each issuance of Gaston's 11% bonds. Click here to access the tables to use with this problem. Round your answers to... On January 1, 2019 the Kiner Co. issued three-year bonds with a face value of $68,700... On January 1, 2019 the Kiner Co. issued three-year bonds with a face value of $68,700 and a stated interest rate of 15.5%. Interest is payable quarterly. The bonds were sold to yield 16%. Calculate the issues price of the bonds.  Show your final answer and show all the work to support your answer. Prepare the bond amortization table using the format covered in class. ADVERTISEMENT Subjects Accounting Advanced Math Anatomy and Physiology Biology Chemistry Civil Engineering Computer Science Economics Electrical Engineering Finance History Math Mechanical Engineering Operations Management Physics Psychology Statistics and Probability Nursing Other ADVERTISEMENT Latest Questions Explain at least three reasons why there are so many divisions / denominations in the Christian... COSC 1436 Programming Assignment : Skill Practice Assignment 3 Your skill practice assignment this week will... Waste elimination and process improvement can be applied to virtually any process. Identify a process at... Do you think the FASB should continue to require the Statement of Cash Flows or are... Here is your chance to analyze an actual co-worker conflict situation and make suggestions on how... McKinsey Machines Ltd manufactures a single product A.   It has two cost centers namely molding department... Threads: Assume a multithreaded application using user level threads mapped to a single kernel level thread... ADVERTISEMENT About @ 2020 WizEdu