Harry Gryffindor is the sole shareholder of Harry's Pottery, a wholesale/retail pottery and sculpture shop located in Hogwarts Station,MD.At the beginning of 20x9, Harry issues $270,000 of 8%, 10-year bonds.On January 1, 20x9, the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87 12.Harry pays interest on the bonds semi-annually.Harry uses the straight-line method to allocate interest expense.1. What are the Harry's cash proceeds from issuance of these bonds, presuming that the selling price is 87 12?2. How much bond interest expense will be recognized over the life of these bonds?3. How much bond interest expense will Harry record on the first interest payment date?Complete this question by entering your answers in the tabs below.Required 2How much bond interest expense will be recognized over the life of these bonds?Total Bond Interest Expense Over Life of Bonds:Amount repaid:Required 1payments ofPar value at maturityTotal repaymentsLess amount borrowed (from part 1)Total bond interest expenseRequired 3$< Required 100Required 3>

As the bond's quoted rate is less than the market rate the bond will be issued in discount and the…

Answered: 1. What are the Harry's cash proceeds…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section: Chapter Questions

Problem 3P

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Similar questions

On Jan. 1, Year 1, Foxcroft Inc. issued 100 bonds with a face value of $1,000 for $104,000. The bonds had a stated rate of 6% and paid interest semi-annually. What is the journal entry to record the first payment to the bondholders?
Eli Inc. issued $100,000 of 8% annual, 5-year bonds for $103,000. What is the total amount of interest expense over the life of the bonds?
Several years ago, Soriano Corporation sold bonds with a face value of $1,000,000 to the public at a premium. Annual cash interest of 8 percent (i.e., $80,000) was to be paid on this debt. On January 1, 2019, Padino Inc., the parent company of Soriano Corporation, purchased these bonds on the open market for $940,000. (Hint: Did Padino purchase the bonds at a discount or a premium?) On that date, the bonds had 10 years until maturity and Soriano reported the book value of Bonds Payable of $1,045,000. Assume Padino uses the equity method to internally account for its investment in Soriano. Both parties use the straight-line method of amortization. Prepare the Bonds Payable amortization table for Soriano Corporation for years 2019-2021.
On January 1 of the current year, Andy Co. paid $575,000 to purchase two-year, 8%, $625,000 face value bonds that were issued by another publicly traded corporation. Andy Co. plans to sell the bonds before the first quarter of the following year. The fair value of the bonds at the end of the current year was $660,000. At what amount should Andy Co. report the bonds in its balance sheet at the end of the current year?
On January 1, 2010, Huber Co. sold 12% bonds with a face value of $600,000. The bonds mature in five years, and interest is to be paid semiannually. The bonds were sold for $646,328 to yield 10%. Determine the total interest expense for Huber over the life of these bonds. C. $ 313,672 is the answer, how do I get here?
Seth invested $20,000 in Series EE savings bond on April 1. By December 31st, the published redemption value of the bonds had increased $20,700. How much interest income with Seth report from savings bonds in the current year absent any special election?

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