A company issues 8%, 20-year bonds with a par value of $500,000. The current market rate for the bonds is 8%. The amount of interest owed to the bondholders for each semiannual interest payment is a. $40,000. c. $20,000. e. $400,000. b. $0. d. $800,000.

A company issues 8%, 20-year bonds with a par value of $500,000. The current market rate for the bonds is 8%. The amount of interest owed to the bondholders for each semiannual interest payment is a. $40,000. c. $20,000. e. $400,000. b. $0. d. $800,000.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 9MC: On April 1 a company sells a 5-year, $60,000 bond with a 7% stated interest rate. The market...

See similar textbooks

Related questions

Q: Brussels Enterprises Issues bonds at par dated January 12019, that have a \$3,400,000 par value,…

A: Bonds are instrument issued by company acknowledging the debt raised by company . It is a liability…

Q: Chase Corporation has $7,500,000 of 5 percent, 10-year bonds dated January 1, with interest payment…

A: A bond payable's sustaining value is another word for the book value of a bond payable. Bond payable…

Q: first day of the fiscal year, a company issues a $5,000,000, 7%, five-year bond that pays semiannual…

A: Solution: When straight line Amortization is followed, the bond premium is based on total amount of…

Q: On January 1, 20x1, Pitchfork Company issued a $750,000, 8%, 5-year bond for $860,401 and incurred…

A: GIVEN On January 1, 20x1, Pitchfork Company issued a $750,000, 8%, 5-year bond for $860,401 and…

Q: Nero Solutions Co. issued an $800,000, 6%, three-year bond for $806,000. The bond pays interest…

A: As posted multiple sub parts we are answering only first three sub parts kindly repost the…

Q: On December 31, 20x0, Raymond Inc., issued ₱200,000, 8% serial bonds, to be repaid in the amount of…

A: Bond is a debt security which carries a fixed interest rate. The fixed interest rate is known as…

Q: At the beginning of current year, Samal Company Issued P5,000,000 8% serial bonds, to be repaid in…

A: The correct answer for the above mentioned question is given in the following steps for your…

Q: Adonis Corporation issued 10-year, 11% bonds with a par value of $300,000. Interest is paid…

A: Interest payment per period=Par value×Coupon rate×6 months12 months

Q: At the beginning of current year, Jackfrost Company issued 5,000 convertible bonds payable. The…

A: Compound Financial Instrument is an instrument with some option or warrant attached to it. It has…

Q: On January 1, Parson Freight Company issues 7.0%, 10-year bonds with a par value of $3,500,000. The…

A: Bonds are a form of loan or debt that is being issued by the company, on which regular interest…

Q: Morgan Company issues 9%, 20-year bonds with a par value of $750,000 that pay interest semiannually.…

A: Bonds are sources of raising long-term funds by the company. The company pays periodic interest…

Q: On January 1, 20x1, POTENT POWERFUL Co. issued 12% bonds with face amount of P4,000,000 for…

A: The face value of the bond is 4,000,000. The coupon rate on bond is 12% and the annual coupon rate…

Q: A company issued 7%, 5-year bonds with a par value of $50,000. The market rate when the bonds were…

A: Interest expense for first semiannual interest period = Issue value of bonds x market rate of…

Q: Adonis Corporation issued 10-year, 7% bonds with a par value of $220,000. Interest is paid…

A: SOLUTION- BONDS IS A FIXED INCOME INSTRUMENT THAT REPRESENT A LOAN MADE BY AN INVESTOR TO A…

Q: At the beginning of current year, Sandy Company issued 5,000 convertible bonds payable. The bonds…

A: Convertible bonds are fixed-income security or debt that earns a fixed rate of interest & can be…

Q: Bringham Company issues bonds with a par value of $590,000. The bonds mature in 5 years and pay 9%…

A: 1. Table Values are Based on: n= 10 i= 6% Cash Flow Table Value…

Q: On January 1, 20x1, SPEED Company purchased 12% bonds, having a face value of P800,000. The bonds…

A: Bond is an investment security which is issued by large organizations to raise the fund. The bond…

Q: On November 1, 20x4, Madison Corp. issued ₱800,00 of its 10-year, 8% term bonds dated October 1,…

A: Bond interest rate is the total interest expense paid on an organization's bonds due over a…

Q: Lidl Company issues 89%6, 10-year.bonds with a par value of BD100,000 that pay interest…

A: Debentures are the fixed income securities issued by a business to raise capital in form of debt…

Q: Enviro Company issues 8%, 10-year bonds with a par value of $250,000 and semiannual interest…

A: Bonds payable are one of the sources of finance and are shown as liability. If the interest rate is…

Q: Adonis Corporation issued 10-year, 9% bonds with a par value of $180,000. Interest is paid…

A: Bonds are a form of loan or debt that is being issued by the corporation, on which regular interest…

Q: Oak Branch Inc. issued $720,000 of 4%, 10-year bonds when the market rate was 3%. They received…

A: Date Cash Interest Payment $ Interest on Carrying Value (@1.5%) $ Amortization of Premium $ Carrying…

Q: White Company issued P2,000,000 face value of 10-year bonds on January 1. The bonds pay interest on…

A: A financial instrument that doesn’t affect the ownership of the common shareholders or management of…

Q: A company issued 7%, 15-year bonds with a par value of $510,000 that pay interest semiannually. The…

A: Formulas: Interest payment = Face value * Interest rate

Q: A company issues $50,000 of 4% bonds, due in 5 years, with interest payable semiannually. Calculate…

Q: A company issues 9%, 20-year bonds with a par value of $750,000. The current market rate is 9%. The…

A: Bonds are sources of raising long-term funds by the company. The company pays periodic interest…

Q: Metro Company purchased $500,000, 10%, 5-year bonds on January 1, 20x1, with interest payable on…

A: Bonds are the financial instruments that are used by an entity to borrow funds from the financial…

Q: A company issued 11%, 5-year bonds with a par value of $105.000. The market rate when the bonds were…

A: Here in this question we are require to calculate the interest amount that needs to record. When…

Q: Nest Corporation issued $100,000, 10-year mortgage bonds to Net Corporation at Par value. The bonds…

A: Price of the Bond:- Price of the Bond is the present value of the bond which helps in calculating…

Q: Brownlee Company issued $525,000, 8%, six-year bonds for 110, with interest paid annually.Assuming…

A: Carrying value: The face amount of bond, less unamortized discount, or plus unamortized premium, is…

Q: On January 1, Parson Freight Company issues 9.0 %, 10-year bonds with a par value of $3,900,000. The…

A: Bonds payable are one of the sources of finance and are shown as liability. If the interest rate is…

Q: A company issued 5-year, 9% bonds with a par value of $98,000. The company received $95,947 for the…

A: The bonds are issued at discount when market rate is higher than the coupon rate of bonds.

Q: Adonis Corporation issued 10-year, 9% bonds with a par value of $260,000. Interest is paid…

A: Amount of Interest to be paid semi annually = $260,000 x 9% x 6 months 12 months = $11,700

Q: Wookie Company issues 9%, five-year bonds, on January 1 of this year, with a par value of $109,000…

A: Number of periods = 5*2 = 10 Coupon rate= 9%/2 = 4.5% As the beginning carrying value is more than…

Q: Lidl Company issues 8%. 10-year bonds with a par value of BD100,000 that pay interest semiannually.…

A: Interest Expense is a financial charge payable by the issuer of fixed income securities or by the…

Q: per bond, at 105. Eá An entity issued 5,000 10-year bonds, face amount pond is accompanied by one…

A: Solution Given Issue price 105 Coupon rate on bond 10% Market rate of similar bond…

Q: Earnest Corporation issued $200,000, 10-year mortgage bonds to Eather Corporation at Par value. The…

Q: On January 1, 20x1, Silent Co. issued 1,000 bonds with face amount of P4,000 each for a total of…

A: Interest expense for 20x1 = ( issue value of bonds - transaction costs )x effective interest rate…

Q: TDC Company issued a 3-year,12%, 2,000 of P 1,000 face value bonds with warrants at 98 on January 1,…

A: solution : given face value of bond =2000 *1000…

Q: A company issued 9.2%, 10-year bonds with a par value of $100,000. Interest is paid semiannually.…

A: In this question we require to calculate the amount of cash that should be paid as a interest to…

Q: Garcia Company issues 10%, 15-year bonds with a par value of $240,000 and semiannual interest…

A: Bond: It can be defined as a financial instrument of indebtedness that reflects a loan made by the…

Q: Basil Corporation issues for cash $1,000,000 of 8%, 10-year bonds, interest payable annually, at a…

A: Bond premium: Bond premium is the amount by which the selling price (or issue price or market price)…

Q: b. Cheriel Inc. issued $600,000 of 9%, 10-year bonds on June 30, 2022, for $562,500. This price…

A: A bond seems to be a fixed-income investment product that reflects an investor's debt to a borrower…

Q: Morgan Company issues 9%, 20-year bonds with a par value of $750,000 that pay interest semiannually.…

A: Bonds are the debt obligations of a business on which it requires to pay regular interest to the…

Q: y 1, firm issued $500,000 of 15 year, 6 percent bonds payable for $552,325, yielding an effective…

A: Bond interest expense is the aggregate interest expense incurred during a reporting period for an…

Q: A company issued 8%, 15-year bonds with a par value of $470,000 that pay interest semiannually. The…

A: A bond is a fixed-income security that represents an investor's obligation to a borrower (typically…

Q: Enviro Company issues 8%, 10-year bonds with a par value of $250,000 and semiannual interest…

A: When business entity is in need of cash, it issues Debenture to finance from outsiders and for using…

Question

A company issues 8%, 20-year bonds with a par value of
$500,000. The current market rate for the bonds is 8%. The
amount of interest owed to the bondholders for each semiannual
interest payment is
a. $40,000. c. $20,000. e. $400,000.
b. $0. d. $800,000.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1:- Introduction

VIEW

Step 2:- Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Charleston Inc. issued $200,000 bonds with a stated rate of 10%. The bonds had a 10-year maturity date. Interest is to be paid semi-annually and the market rate of interest is 8%. If the bonds sold at 113.55, what amount was received upon issuance?
On January 1, a company issued a 5-year $100,000 bond at 6%. Interest payments on the bond of $6,000 are to be made annually. If the company received proceeds of $112,300, how would the bonds issuance be quoted? A. 1.123 B. 112.30 C. 0.890 D. 89.05
Oak Branch Inc. issued $700,000 of 5%, 10-year bonds when the market rate was 4%. They received $757,243. Interest was paid semi-annually. Prepare an amortization table for the first three years of the bonds.
Piedmont Corporation issued $200,000 of 10-year bonds at par. The bonds have a stated rate of 6% and pay interest annually. What is the journal entry to record the first interest payment to the bondholders?
Haiku Inc. issued $600,000 of 10-year bonds with a stated rate of 11% when the market rate was 12%. The bonds pay interest semi-annually. Prepare the first three years of an amortization schedule. Assume that the bonds were issued for $565,710.
A company issued bonds with a $100,000 face value, a 5-year term, a stated rate of 6%, and a market rate of 7%. Interest is paid annually. What is the amount of interest the bondholders will receive at the end of the year?
Pinetop Corporation issued $150,000 10-year bonds at par. The bonds have a stated rate of 6% and pay interest annually. What is the journal entry to record the sale of the bonds?
Diana Inc. issued $100,000 of its 9%, 5-year bonds for $96,149 when the market rate was 10%. The bonds pay interest semi-annually. Prepare an amortization table for the first three payments.
Beluga Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 3% when the market rate was 4%. Interest was paid annually. The bonds were sold at 87.5. What was the sales price of the bonds? Were they issued at a discount, a premium, or at par?
Waldron Inc. issued $400,000 bonds with a stated rate of 7% when the market rate was 5%. They are 3-year bonds with interest to be paid annually. Prepare a table to amortize the premium of the bonds. Assume that the bonds were issued for $421,844.
Irving Inc. sold bonds with a $50,000, 10% interest, and 10-year term at $52,000. What is the total amount of interest expense over the life of the bonds?
Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the market of interest was 9%. The company uses the effective-interest method of amortization. At the end of the year, the company will record ________. A. a credit to cash for $28,733 B. a debit to interest expense for $31,267 C. a debit to Discount on Bonds Payable for $1,267 D. a debit to Premium on Bonds Payable for $1.267