Determining Bond Selling PriceCalculate the bond selling price for the following three separate scenarios.a. 33M Corp. authorized and issued $100,000, 6%, 20-year bonds payable on January 1. Calculate the selling price of the bonds if the bonds pay cashinterest semiannually on July 1 and January 1, and the market rate on similar bonds is 8%.b. 33M Corp. authorized and issued $250,000, 7%, 10-year bonds payable on January 1. Calculate the selling price of the bonds if the bonds pay cashinterest semiannually on July 1 and January 1, and the market rate on similar bonds is 6%.c. 33M Corp. issued $75,000, 5%, 10-year bonds payable on March 31 of Year 1. The bonds were authorized on January 1 of Year 1. Calculate the sellingprice of the bonds (including interest) if the bonds pay cash interest annually on January 1, and the market rate on similar bonds is 6%.Note: Round answers to the nearest whole dollar.a. $80,207b. $268,597C. $ 69,479 *

In part c the bonds were issued on March 31, but the authorized date of the same was Jan 01.Hence,…

Answered: Calculate the bond selling price for…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 15MCQ

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On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
The following data relate to a $2,000,000, 8% bond issued for a selected semiannual interest period: Bond carrying amount at beginning of period $2,125,000Interest paid during period 160,000 Interest expense allocable to the period 148,750 (a) Were the bonds issued at a discount or at a premium? (b) What is the unamortized amount of the discount or premium account at the beginningof the period? (c) What account was debited to amortize the discount or premium?
The notes to the Thorson Ltd.financial statements reported the following data on December 31, Year 1 (end of the fiscal year): Thorson amortizes bond discounts using the effective-interest method and pays all interestamounts at December 31. Requirements1. Assume the market interest rate is 6% on January 1 of year 1, the date the bonds are issued.a. Using the PV function in Excel, what is the issue price of the bonds?b. What is the maturity value of the bonds?c. What is Thorson’s annual cash interest payment on the bonds?d. What is the carrying amount of the bonds at December 31, year 1?2. Prepare an amortization table through the maturity date for the bonds using Excel. (Roundall amounts to the nearest dollar.) How much is Thorson’s interest expense on the bonds forthe year ended December 31, Year 4?3. Show how Thorson would report these bonds and notes at December 31, Year 4.
Assume bonds payable are amortized using the straight-line amortization method unless stated otherwise. Determining bond prices Bond prices depend on the market rate of interest, stated rate of interest, and time. Determine whether the following bonds payable will be issued at face value, at a premium, or at a discount: The market interest rate is 8%. Idaho issues bonds payable with a stated rate of 7.75%. Austin issued 9% bonds payable when the market interest rate was 8.25%. Cleveland’s Cars issued 10% bonds when the market interest rate was 10%. Atlanta’s Tourism issued bonds payable that pay the stated interest rate of 8.5%. At issuance, the market interest rate was 10.25%.
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 2a. Journalize the entry to record the first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the straight-line method.Compute the price of $42,601,480 received for the bonds by using the present value tables
On January 1, when the market interest rate was 9 percent, Seton Corporation completed a$200,000, 8 percent bond issue for $187,163. The bonds pay interest each December 31 andmature in 10 years. Seton amortizes the bond discount using the straight-line method.Required:1. Prepare the journal entry to record the bond issuance.2. Prepare the journal entry to record the first interest payment on December 31.3. Prepare a bond discount amortization schedule for these bonds. Round calculations to thenearest dollar.
On January 2, current year, Kalahari Limited issued $1,000,000, 10-year bonds for $1,150,000. The bonds pay interest on June 30 and December 31. The stated rate is 10% and the market rate is 8%. The company plans to use the effective interest method of amortizing bond discounts and premiums. The semiannual cash payment on the bonds is
On March 31, 20x7, KEEPU issued for P1,774,000, P2,000,000 face amount of its 10%, P1,000 bonds. The bonds were issued to yield 12%. The bonds are dated July 1, 20x7 and mature on July 1, 20x10. Interest is payable annually on July 1. KEEPU uses the interest method to amortize bond discount. Determine the interest expense of the Bonds on December 31, 20x8. Determine the carrying value of the Bonds on December 31, 20x7.
On January of the current year, Banek Inc issued $350,000 of 8% nine year bonds for $309,086, which implies a market (yield) rate of 10%. Semiannual interest is payable on June 30 and December 31 each year. Show computation to confirm the bond issue price Indicate the financial statement effects using the template for (1) bond issuance, (2) semiannually interest payment and discount amortization on June 30 of the current year, and (3) semiannual interest payment and discount amortization on December 31 of the current year.
Mitchell Inc. issued 600 of its 6%, $1,000 bonds on January 1 of Year 1. The bonds pay cash interest semiannually each June 30 and December 31 and were issued to yield 5%. The bonds mature in five years on December 31, and the company uses the effective interest method to amortize bond discounts or premiums. Required a. Determine the selling price of the bonds.
Present entries to record the selected transactions described below: a. Issued $2,750,000 of 10-year, 8% bonds at 97. If an amount box does not require an entry, leave it blank. b. Amortized bond discount for a full year, using the straight-line method. If an amount box does not require an entry, leave it blank. c. Called bonds at 98. Assume the bonds were carried at $2,692,250 at the time of the redemption. If an amount box does not require an entry, leave it blank.
On January 1, Nic Inc. issued $100,000 of ten-year, 10% bonds that pay interest semiannually on June 30 and 31st. The bonds are sold to yield 8%. A. Using the information provided in this problem, as well as your time value of money tables to calculate the issue price of the bond. B. Was the bond issued at a premium or a discount, explain your answer.

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