Question

In: Accounting

Apollo Corporation issued $560,000 of 7%, 12-year bonds payable on March 31, 2016. The market interest...

Apollo Corporation issued $560,000 of 7%, 12-year bonds payable on March 31, 2016. The market interest rate at the date of issuance was 10%, and the Apollo Corporation bonds pay interest semiannually. Apollo Corporation's year-end is March 31. Calculate the issue price of the bonds using the PV function in Microsoft® Excel®. Prepare an effective-interest amortization table for the bonds through the first three interest payments. Round amounts to the nearest dollar. Record Apollo Corporation's issuance of the bonds on March 31, 2016, and payment of the first semiannual interest amount and amortization of the bond discount on September 30, 2016. Note. Explanations are not required. Show all calculations for your solution. * I need help on calculations* Can you direct me on how to calculate the issue price on an excel worksheet ?

Semiannual Interest : 560000 *.07 *6/12 = 19600

semiannual months : 12* 2 = 24

semiannual yield : 10*6/12 = 5%

Issue Price : [PVA 5%,24*interest ]+[PVF 5%,24*face value]

       =[13.79864*19600]   +[.31007*560000]

        =270453.34+ 173639.2

             = $ 444093 rounded **how do I enter on excel worksheet?

Solutions

Expert Solution

Issue Price f Bonds:
Present value of Interest for 24 periods at 5 % Annuity factor i.e. 13.7986 270453
Present value of fce value received at the end of 24 periods at PVF i.e.0.31007 173640
Issue Price f Bonds: 444093
Note: Semi Annual Interest: 560,000*7%*6/12 = 19600
Amortization table:
Date Book value Interest Exp Cash Interest Discount Discount Book value of Bonds
Bonds In beg at 5% at 3.5% Amortized Unamortized at the end
Mar 31 2016 444093 115907 444093
Sep 30 2016 444093 22205 19600 2605 113302 446698
Mar 31 2017 446698 22335 19,600 2,735 110,567 449,433
Sep 30 2017 449433 22472 19,600 2,872 107,695 452,305
Journal Entries:
For issuance:
Mar 31,2016 Cash Account Dr. 444093
Discount on Bonds payable Dr. 115907
     Bonds payable 560,000
(for issuance of bonds)
For Interest payment:
Sep 30,2016 Interest expense Dr. 22205
     Cash Account 19600
      Discount on bonds payable 2605

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

GIT Inc Issued 60,000 of 5%, 12 year bonds payable on March 31, 20x0. The market...
GIT Inc Issued 60,000 of 5%, 12 year bonds payable on March 31, 20x0. The market interest rate at the date of issuance was 8%, and the GIT bonds pay interest semi annually. 1. Prepare an effective interest ammortization table for the bonds through the first three interest payments. 2. Record GIT, Incs issuance of the bonds on March 31, 20x0, and payment of the first semi annual interest amount and amortization of the bond discount on Sept 30, 20x0.
Blossom Company issued $466,500, 7%, 15-year bonds on December 31, 2016, for $447,840. Interest is payable...
Blossom Company issued $466,500, 7%, 15-year bonds on December 31, 2016, for $447,840. Interest is payable annually on December 31. Blossom uses the straight-line method to amortize bond premium or discount. Prepare the journal entries to record the following events. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) The issuance of the bonds. (b) The payment of interest and the discount amortization on December 31, 2017. (c) The redemption of the bonds at...
On January 1 of this year, Olive Corporation issued bonds. Interest is payable once a year...
On January 1 of this year, Olive Corporation issued bonds. Interest is payable once a year on December 31. The bonds mature at the end of four years. Olive uses the effective-interest amortization method. The partially completed amortization schedule below pertains to the bonds: Date Cash Interest Amortization Balance January 1, Year 1 $ 46,831 End of Year 1 $2,162 $ 1,967 $ 195 46,636 End of Year 2 ? ? ? 46,433 End of Year 3 ? ? 212...
On January 1 of this year, Olive Corporation issued bonds. Interest is payable once a year...
On January 1 of this year, Olive Corporation issued bonds. Interest is payable once a year on December 31. The bonds mature at the end of four years. Olive uses the effective-interest amortization method. The partially completed amortization schedule below pertains to the bonds: Date Cash Interest Amortization Balance January 1, Year 1 $ 46,831 End of Year 1 $ 2,162 $ 1,967 $ 195 46,636 End of Year 2 ? ? ? 46,433 End of Year 3 ? ?...
Wildhorse Corporation issues $560,000 of 9% bonds, due in 9 years, with interest payable semiannually. At...
Wildhorse Corporation issues $560,000 of 9% bonds, due in 9 years, with interest payable semiannually. At the time of issue, the market rate for such bonds is 10%. Compute the issue price of the bonds. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.) Issue price of the bonds
Bonds Issued at a Discount (Effective Interest) Sicily Corporation issued $1,000,000 in 8% bonds (payable on...
Bonds Issued at a Discount (Effective Interest) Sicily Corporation issued $1,000,000 in 8% bonds (payable on December 31, 2029) on January 1, 2020, for $940,000. Interest is paid on June 30 and December 31. The market rate of interest is 11%. Required: Prepare the amortization table through December 31, 2021, using the effective interest rate method. If an amount box does not require an entry, leave it blank and if the answer is zero, enter "0". If required, round your...
Bonds Issued at a Discount (Effective Interest) Sicily Corporation issued $1,550,000 in 10% bonds (payable on...
Bonds Issued at a Discount (Effective Interest) Sicily Corporation issued $1,550,000 in 10% bonds (payable on December 31, 2029) on January 1, 2020, for $1,457,000. Interest is paid on June 30 and December 31. The market rate of interest is 11%. Required: Prepare the amortization table through December 31, 2021, using the effective interest rate method. If an amount box does not require an entry, leave it blank and if the answer is zero, enter "0". If required, round your...
Corp3 issued $750,000 of 5-year bonds with 7% interest payable semiannually at a time when the...
Corp3 issued $750,000 of 5-year bonds with 7% interest payable semiannually at a time when the market rate of interest was 10%. What will be the bonds’ carrying value after the company makes its 7th interest payment? Note—Answer this question without creating an amortization schedule
On January 01, 2017, ASU Corporation issued $100,000 face-value bonds, with 7% interest payable at the...
On January 01, 2017, ASU Corporation issued $100,000 face-value bonds, with 7% interest payable at the end of year, that are due in 5 years. The current market interest rate for the bonds of the same rating is 5%. Using the tables given, compute the selling price of the bonds as of January 01, 2017. Complete the following amortization table using effective-interest method. Prepare journal entries on each of the following dates. 01/01/2017 12/31/2017 12/31/2021                                 
On January 1, 2016, BSC Corp issued a 10-year, $10,000,000, 7% bond. The interest is payable...
On January 1, 2016, BSC Corp issued a 10-year, $10,000,000, 7% bond. The interest is payable semi-annually. The market rate of interest for companies similar to BSC is 5%. BSC uses the effective-interest amortization method. The bond liability on BSC’s balance as of December 31, 2016 (the first year of the bond) is closest to: A. $11,435,336 B. $11,305,500 C. $11,497,889 D. $11,558,916 Based on the same information provided above, BSC’s interest expense for December 31, 2017 (the second year...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT