On July 1, 2017, Mirage Company issued $250 million of bonds with an 8% coupon interest...

On July 1, 2017, Mirage Company issued $250 million of bonds with an 8% coupon interest rate. The bonds mature in 10 years and pay interest semiannually on June 30 and December 31 of each year. The market rate of interest on July 1, 2017, for bonds of this risk class was 8%. Mirage closes its books on December 31. Ignore income taxes. Use (PV of 1, PVAD of 1, and PVOA of 1) (Use the appropriate factor(s) from the tables provided.)

Required: At what price were the bonds issued? On July 1, 2019, the market interest rate for bonds of this risk class is 6%. What is the fair value of the bonds on this date? Suppose that 50% of the bonds were repurchased for cash on July 1, 2019, at the market price. What journal entry would the company make to record this partial retirement?

Solutions

Expert Solution

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

The Vaughn Company issued $320,000 of 8% bonds on January 1, 2017. The bonds are due...

The Vaughn Company issued $320,000 of 8% bonds on January 1, 2017. The bonds are due January 1, 2022, with interest payable each July 1 and January 1. The bonds are issued at face value. Prepare Vaughn’s journal entries for (a) the January issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically...

McGee Company issued $400,000 of 8%, 10-year bonds on January 1, 2017. Interest is payable semiannually...

McGee Company issued $400,000 of 8%, 10-year bonds on January 1, 2017. Interest is payable semiannually on July 1 and January 1. Mcgee Company uses the effective interest method of amortization for bond premium or discount. Assume an effective yield of 6% in Pricing the bond. Prepare the journal entries to record the following (round to the nearest dollar.) The issuance of the bonds. The payment of interest and related amortization July 1. The accrual of interest and the related...

On July 1, 2002, Enjoy Toys Company issued $10 million in 10-year, 12% debenture bonds. Interest...

On July 1, 2002, Enjoy Toys Company issued $10 million in 10-year, 12% debenture bonds. Interest is payable semiannually on January 1 and July 1. Bond discounts and premiums are amortized by the straight-line method at each interest payment date and at year-end. The company’s fiscal year ends at December 31. Required 1. July 1, 2002 to record the issuance of bonds at par value. 2. Make the necessary entries at December 31, 2002, under each of the following assumptions:...

On July 1, 2017, Global Satellites Corporation issued $1,800,000 of 10-year, 8% bonds to yield a...

On July 1, 2017, Global Satellites Corporation issued $1,800,000 of 10-year, 8% bonds to yield a market interest rate of 7%. The bonds pay semi-annual interest on July 1 and January 1. Global has a December 31 year end. When the bonds were issued, Global received $1,927,919 Click here to view the factor table. Part 1 Prepare an amortization table through January 1, 2019 (three interest periods) for this bond issue. (Round all amounts to the nearest dollar, e.g. 5,275.)...

cullumber products issued $3.06 million of 8% 5-year bonds on january 1 2017. the bonds were...

cullumber products issued $3.06 million of 8% 5-year bonds on january 1 2017. the bonds were dated janjary 1 and pay interest annually. there is no collateral secured against the bonds and cullumber products may buy back the bonds at any time.the market interest rate was 9% for these bonds.cullumber has a calender year end. calculate the price of the bonds

On January 1, 2017, Albany Company issued 8% bonds dated January 1, 2017, with a face...

On January 1, 2017, Albany Company issued 8% bonds dated January 1, 2017, with a face amount of $10 million. The bonds mature January 1, 2027 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. Required: Determine the price of the bonds at January 1, 2017. You must show all of the steps to receive full credit. Prepare the journal entry to record...

Volker Inc. issued $2,500,000 of convertible 10-year bonds on July 1, 2017. The bonds provide for 12% interest payable semiannually on January 1 and July 1.

EXCEL (Entries for Conversion, Amortization, and Interest of Bonds) Volker Inc. issued $2,500,000 of convertible 10-year bonds on July 1, 2017. The bonds provide for 12% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $54,000, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8 shares of Volker Inc.’s $100 par value common stock for each $1,000 of bonds. On August 1, 2018,...

Cutler Inc. issued $20 million of 8 year 10% callable bonds dated July 1, 2018. The...

Cutler Inc. issued $20 million of 8 year 10% callable bonds dated July 1, 2018. The bonds were issued at 95. The bonds are callable at 10 Burroughs uses straight-line amortization. Record the following transactions. Record the issuance on July 1. Record the first payment of interest on December 31. Record the second payment of interest on June 30. Was the effective interest rate greater than, less than, or equal to 10%? Record the bonds called on July 1, 2019.

Cutler Inc. issued $20 million of 8 year 10% callable bonds dated July 1, 2018. The...

James Inc. issued $20 million of 8 year 10% callable bonds dated July 1, 2018. The...

James Inc. issued $20 million of 8 year 10% callable bonds dated July 1, 2018. The bonds were issued at 95. The bonds are callable at 10 James uses straight-line amortization. Record the following transactions. Record the issuance on July 1. Record the first payment of interest on December 31. Record the second payment of interest on June 30. Was the effective interest rate greater than, less than, or equal to 10%? Record the bonds called on July 1, 2019.

Subjects