Assume that Raghad company has decided to recall its' bond. The recall cost was BD 10,000. The recall expenses represe 3000. The carrying value of the bond was BD 7.200. Calculate the gain or loss of recalling the bond before maturity date. Answer:
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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?On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%. The bonds paid interest semi-annually. Assuming the bonds sold at 58.55, what was the selling price of the bonds? Explain why the cash received from selling this bond is different from the $200,000 face value of the bond.Gingko Inc. issued bonds with a face value of $100,000, a rate of 7%, and a 10-yearterm for $103,000. From this information, we know that the market rate of interest was ________. A. more than 7% B. less than 7% C. equal to 7% D. equal to 1.3%
- Bats Corporation issued 800,000 of 12% face value bonds for 851,705.70. The bonds were dated and issued on April 1, 2019, are due March 31, 2023, and pay interest semiannually on September 30 and March 31. Bats sold the bonds to yield 10%. Required: 1. Prepare a bond interest expense and premium amortization schedule using the straight-line method. 2. Prepare a bond interest expense and premium amortization schedule using the effective interest method. 3. Prepare any adjusting entries for the end of the fiscal year, December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. Assume the company retires the bonds on June 30, 2020, at 103 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight-line method of amortization b. effective interest method of amortizationOn September 30, Franz Corporation notices a decline in value of its investment in held-to-maturity bonds. On that date, the carrying value of the bonds is 38,500 and the fair value is 22,980. Franz evaluation of this investment reveals that expected credit losses are 10,000. Prepare the journal entry to record the impairment.The Smart Company sold Rs. 500,000 of 8 percent, 20-year bonds on April 1, 2011, at 105. The semiannual interest payment dates are March 31 and September 30. The market interest rate is 7.5 percent. The company's fiscal year ends September 30. Use the effective interest method to calculate the amortization. With regard to the bond issue on April 1, 2011: How much cash is received? How much is Bonds Payable? What is the difference between a and b called and how much is it? With regard to the bond interest payment on September 30, 2011: How much cash is paid in interest? How much is the amortization? How much is interest expense? With regard to the bond interest payment on March 31, 2012: How much cash is paid in interest? How much is the amortization? How much is interest expense?
- A bond originally purchased for $1,000 is listed in the financial press with a quoted price of 96.5. What does this state about the bond? The company’s bonds payable liability is now 96.5% of the original liability. The bond face value and interest are now 96.5% of the original issue price. The face value of the bond is now 96.5% of the original issue or $965. The current selling price of the bond is 96.5% of the face value, which is $965.Pharoah Corporation issued $5180000 of bonds at face value on January 1, 2024. Pharoah chose the fair value option for these bonds. At Decmber 31, 2024, the value of the bonds is now $4662000 because the market interest rates have increased. The entry on Pharoah's books would include: No entry would be made; a credit to Premium on Bond Payable at $518000; a debit to Bonds Payable of $518000; a debit to Unrealized Holding Gain of $518000On July 1, 2000, Car issued 9% bonds in the face amount of P1,000,000, which mature on July 1, 2010. The bonds were issued for P939,000 to yield 10% resulting in a bond discount of P61,000. Car uses the interest method of amortizing bond discount. Interest is payable annually on June 30. At June 30, 2002, Car’s unamortized bond discount should be: P52,810 P51,000 P48,800 P43,000
- Bonds with a face value of P5.0 million, carrying a stated interest rate of 12%; payable semiannually on March 1 and September 1, were issued on July 1. The total proceeds from the issue amounted to P5,200,000. The best explanation for the excess amount received over face value is that a. the bonds were sold at a premium. b. the bonds were sold at a higher effective interest rate. c. the bonds were issued at face value plus accrued interest. d. no explanation is possible without knowing the maturity date of the bond issue.Eros Corp. decided to go into the market to repurchase bonds before their due date. The bonds had a maturity value of $3,500,000. On the date of retirement, the balance on the Discount on Bonds Payable account was $54,700. If Eros purchased the bonds on the open market at a price of 99 to retire the bond, what is the gain or loss on the early extinguishment of the debt?Curri, Incorporated sold its 5% bonds with a maturity value of $1,000,000 on August 1, 2021. Investors in the market purchased the bonds for $1,044,915 a price which would earn them a 4% yield on their investment. The difference between the stated and market rates was attributed to revised inflation expectations. The bonds mature on August 1, 2026 and pay interest semi-annually on August 1 and February 1. The bonds are callable at any time after August 1, 2023. Required: C) Assume that Curri was unable to make the required interest payment on February 1, 2023. (NOTE: This assumption should not change your responses to items A) and B) above). The bondholders agreed to accept $800,000 of 2% bonds from Curri in full satisfaction of all claims relating to the 5% bonds. The 2% bonds mature on August 1, 2027 and require interest to be paid quarterly. On February 2, 2023 the 2% bonds were trading in the bond market at 77. How should Curri report the February 1, 2023 swap of the 2% bonds for…