A company issues term bonds totaling $300,000 on January 1, 2014. The bonds have a coupon...

A company issues term bonds totaling $300,000 on January 1, 2014. The bonds have a coupon rate of 5%, pay interest semi-annually on Jan 1st and July 1st of each year, and mature in 10 years. The bonds are issued at an effective market rate of 4%, which corresponds to a price of 108.176 ($324,527). The company incurred bond issue costs totaling $35,000. Given this information calculate the following for January 1, 2020:

Bonds Payable-Face Value:

Premium on Bonds Payable:

Unamortized Bond Issue Costs:

Expert Solution

On Jan 1, 2020 [after payment of Interest]:

Bonds Payable Face Value = $ 300,000
Premium on Bonds Payable = $ 10,988.03
Unamortised Bonds Cost = $ 14,000

Working for above answers

	Bonds Face Value	Cash Interest	Interest Expense	Issue Cost amortisation = 35000 / 20 payments	Premium on Bonds Payable = Interest expense – Cash Interest	Bonds Carrying Value
Issue date	$ 300,000.00			$ 35,000.00	$ 24,527.00	$ 324,527.00
01-Jul-14	$ 300,000.00	$ 7,500.00	$ 6,490.54	$ (1,750.00)	$ (1,009.46)	$ 323,517.54
01-Jan-15	$ 300,000.00	$ 7,500.00	$ 6,470.35	$ (1,750.00)	$ (1,029.65)	$ 322,487.89
01-Jul-15	$ 300,000.00	$ 7,500.00	$ 6,449.76	$ (1,750.00)	$ (1,050.24)	$ 321,437.65
01-Jan-16	$ 300,000.00	$ 7,500.00	$ 6,428.75	$ (1,750.00)	$ (1,071.25)	$ 320,366.40
01-Jul-16	$ 300,000.00	$ 7,500.00	$ 6,407.33	$ (1,750.00)	$ (1,092.67)	$ 319,273.73
01-Jan-17	$ 300,000.00	$ 7,500.00	$ 6,385.47	$ (1,750.00)	$ (1,114.53)	$ 318,159.20
01-Jul-17	$ 300,000.00	$ 7,500.00	$ 6,363.18	$ (1,750.00)	$ (1,136.82)	$ 317,022.39
01-Jan-18	$ 300,000.00	$ 7,500.00	$ 6,340.45	$ (1,750.00)	$ (1,159.55)	$ 315,862.84
01-Jul-18	$ 300,000.00	$ 7,500.00	$ 6,317.26	$ (1,750.00)	$ (1,182.74)	$ 314,680.09
01-Jan-19	$ 300,000.00	$ 7,500.00	$ 6,293.60	$ (1,750.00)	$ (1,206.40)	$ 313,473.69
01-Jul-19	$ 300,000.00	$ 7,500.00	$ 6,269.47	$ (1,750.00)	$ (1,230.53)	$ 312,243.17
01-Jan-20	$ 300,000.00	$ 7,500.00	$ 6,244.86	$ (1,750.00)	$ (1,255.14)	$ 310,988.03
				$ 14,000.00 = Answer	$ 10,988.03 = Answer

ekkarill92 answered 8 months ago

On January 1, a company issues bonds dated January 1 with a par value of $300,000....

On January 1, a company issues bonds dated January 1 with a par value of $300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 10% and the bonds are sold for $288,413. The journal entry to record the first interest payment using the effective interest method of amortization is: A) Debit Interest Expense $12,579; debit Discount on Bonds Payable $921; credit Cash...

On January 1, 2015 Sprint issues $300,000 of 12-year bonds with a coupon rate of 9.375%...

On January 1, 2015 Sprint issues $300,000 of 12-year bonds with a coupon rate of 9.375% when the market rate for similar bonds is 10%. Interest is paid semi-annually on June 30th and December 31st each year. Prepare the following journal entries: Issuance of the bonds on January 1, 2015 Record the payment of interest on both June 30, 2015 and December 31, 2015. On the balance sheet for December 31, 2015 what will be the carrying value of the bonds...

Jaguar Corporation issues term bonds with a face value of $300,000 on January 1, Year One....

Jaguar Corporation issues term bonds with a face value of $300,000 on January 1, Year One. The bonds have a stated rate of interest of 7 percent per year and a life of four years. They pay this interest annually on December 31. Because the market rate of interest at that time was 9 percent, the bonds were issued at a discount to create an effective annual rate of 9 percent. The present value of $1 in 4 periods at...

. 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...

Discount-Mart issues $10 million in bonds on January 1, 2021. The bonds have a ten-year term...

Discount-Mart issues $10 million in bonds on January 1, 2021. The bonds have a ten-year term and pay interest semiannually on June 30 and December 31 each year. Below is a partial bond amortization schedule for the bonds: Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 01/01/2021 $ 8,640,967 06/30/2021 $ 300,000 $ 345,639 $ 45,639 8,686,606 12/31/2021 300,000 347,464 47,464 8,734,070 06/30/2022 300,000 349,363 49,363 8,783,433 12/31/2022 300,000 351,337 51,337 8,834,770 What is the carrying value...

ABC Company issues bonds on January 1, Year 1. The bonds have a par value of...

ABC Company issues bonds on January 1, Year 1. The bonds have a par value of $10,000,000, a coupon rate of 10% with interest paid semi-annually on every June 30 and December 31 for 10 years, and the yield on the date of issuance is 8%. Calculate the following: a. The issuance price on January 1, Year1. b. The impact on the income statement in Year 1. (Expense or revenue and the amount.) c. The impact on the statement of...

MC Qu. 155 On January 1, a company issues... On January 1, a company issues bonds...

MC Qu. 155 On January 1, a company issues... On January 1, a company issues bonds dated January 1 with a par value of $400,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $383,793. The journal entry to record the first interest payment using straight-line amortization is: Multiple Choice Debit Interest Payable $14,000.00; credit Cash...

MC Qu. 151 On January 1, a company issues... On January 1, a company issues bonds...

MC Qu. 151 On January 1, a company issues... On January 1, a company issues bonds dated January 1 with a par value of $300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $312,177. The journal entry to record the first interest payment using the effective interest method of amortization is: Multiple Choice Debit Bond...

MC Qu. 150 On January 1, a company issues... On January 1, a company issues bonds...

MC Qu. 150 On January 1, a company issues... On January 1, a company issues bonds dated January 1 with a par value of $370,000. The bonds mature in 5 years. The contract rate is 11%, and interest is paid semiannually on June 30 and December 31. The market rate is 10% and the bonds are sold for $384,280. The journal entry to record the first interest payment using straight-line amortization is: (Rounded to the nearest dollar.) Multiple Choice: Debit...

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...

Question