On danary 1.201 Engneers Creat Unon (ECU) ued 7%, 20-y bondi pyle with face value of 100.000. The bonde pay intereat on June 0 and Decamber 31Raad he eaurementRaquirement t.fhe martat interet rni% when ECUes t bond, wi the bonde be pried at tace valun, ate premium, or ata dscoun ErptanThe 7% bende ied when te martet ret rale i wbe piced atThey wein metet, o investors il payto qure them.Requirement a. he market rat rae % when ECU ues bonds w the borde te end e val a premum or aladaunEaplainThe bonds isued when the market interest rale is wil be priced alV They arein this manet, esti will payvto sogue themn4 ms hnt tranartinne Ama tn atn am amartued usna he straianine anortuaten malhed Racnd deti tst men credta. Select aclanabona.on t O Requirements1. If the market interest rate is 5% when ECU issues its bonds, will the bonds be priced at facevalue, at a premium, or at a discount? Explain.If the market interest rate is 9% when ECU issues its bonds, will the bonds be priced at facevalue, at a premium, or at a discount? Explain.3. The issue price of the bonds is 94. Journalize the following bond transactions:2.a.Issuance of the bonds on January 1, 2018.b. Payment of interest and amortization on June 30, 2018.c. Payment of interest and amortization on December 31, 2018.d. Retirement of the bond at maturity on December 31, 2037, assuming the last interestpayment has already been recorded.

When the market interest rate is less than the stated interest rate of the bond then, the bond is…

On daay 1. 201 Engneers Cret Unon (ECU) ued , 20y bedi payl wih t valus 100.000. The bods pay intereet on e0 and Deceter 31 Had he ument Requirement t. f he martat interest when ECUe t bond, wi the bonde te ped e valu t e premm, ort a dscour Erplain The 7% bends ed when te market inerest rale i % will te piced al They ie in manet o invets py qure therm. Requrement , he maret rt r whe ECUe tond w thes bonde te end a e va a preu oral adaun aplan The P bonds ised when the martel interest ale iswite pnced al They are in the manet, o ta wl pay to sque them

On daay 1. 201 Engneers Cret Unon (ECU) ued , 20y bedi payl wih t valus 100.000. The bods pay intereet on e0 and Deceter 31 Had he ument Requirement t. f he martat interest when ECUe t bond, wi the bonde te ped e valu t e premm, ort a dscour Erplain The 7% bends ed when te market inerest rale i % will te piced al They ie in manet o invets py qure therm. Requrement , he maret rt r whe ECUe tond w thes bonde te end a e va a preu oral adaun aplan The P bonds ised when the martel interest ale iswite pnced al They are in the manet, o ta wl pay to sque them

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 12E: On October 1, 2019, Ball Company issued 9% bonds dated October 1, 2019, with a face amount of...

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On October 1, 2019, Ball Company issued 9% bonds dated October 1, 2019, with a face amount of 200,000. The bonds mature in 10 years. Interest is paid semiannually on March 31 and September 30. The proceeds from the bond issuance were 205,294.53 to yield 8.6%. Ball Company has a December 31 fiscal year-end and does not use reversing entries. Required: 1. Prepare journal entries to record the issuance of the bonds and the interest payments for 2019 and 2020 using the effective interest method. 2. Prepare journal entries to record the issuance of the bonds and the interest payments for 2019 and 2020 using the straight-line method.
On October 1 a company sells a 3-year, $2,500,000 bond with an 8% stated interest rate. Interest is paid quarterly and the bond is sold at 89.35. On October 1 the company would collect ________. A. $200,000 B. $558,438 C. $2,233,750 D. $6,701,250
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 amortization
On April 1 a company sells a 5-year, $60,000 bond with a 7% stated interest rate. The market interest on that day was also 7%. If interest is paid quarterly, the company makes interest payments of ________. A. $1,050 B. $3,150 C. $4,200 D. $5,250
A $100,000, 5% bond is redeemable at 110% at the end of 15 years, anddividendsarepayableannually. Findthepricetoyield(.06,m=2).
On 1 January 20X3, XYZ bought a $200,000 5% bond at nominal value. Interest is received in arrears. The bond will be redeemed at a premium of $26,225 over nominal value on 31 December 20X5. The effective rate of interest is 9%. The fair value of the bond was as follows: 31 Dec 20X3: $212,000 31 Dec 20X4: $215,000 Required: Show your calculations how the bond will be accounted for at the years ended 31 December 20X3 and 20X4 if: a) XYZ's business model is to trade bonds in the short term. Assume that XYZ sold this bond for its fair value of on 1 January 20X4. b) XYZ’s business model is to hold bonds until the redemption date. c) XYZ's business model is to hold bonds until redemption but also to sell them if investments with higher returns become available.
Assume that H Company purchases $18,000 of U.S. Treasury bonds at their face amount on September 14, 20Y9, plus accrued interest for 45 days. The bonds have an interest rate of 6% payable on July 31 and January 31.What is the amount of accrued interest on September 14, the purchase date? Group of answer choices $18,000 $1,080 $540 $135
Ma3. Dino Company purchased a bond with a face value of $100,000 with a stated interest rate of 6% that pays interest semi-annually on June 30 and December 31. The bond was purchased on January 1, 20X1 and matures in 5 years. It was purchased at 91.889 when interest rates in the market were 8%. Record journal entries that the company would record during 20X1 if the company accounts for this investment under the amortized cost model. Indicate the amounts that would appear on the year-end statement of financial position with regard to this investment. Assume that market interest rate fell to 2% by January 1, 20X3. On that date the bond investment was sold. Record the journal entry that would be made at that time.
For bond A with C = $40, n= 4, y= 0.04, P=$1,000 and M= $1,000, calculate Macaulay Duration
Action Company sells bond investments classified as trading securities for $99,000. The face amount is $100,000; unamortized discount is $2,000. What must be included in the journal entry to record the sale?
Kevin, Inc. issues P 3,000,000, 9%, bonds for P 2,817,000. The market interest rate for these bonds is 10%. Interest is payable annually on December 31. The company uses effective-interest method in amortization. At the end of the second year, Kevin, Inc should report unamortized bond discount of: a. P 164,700b. P 171,300c. P 158,430d. P 154,830
27.On October 1, Dennis Company purchase P200,000 face value 12% bonds for 98 plus accrued interest and brokerage fees and classified them as amortized cost assets. Interest is paid semiannually on January 1 and July 1. Brokerage fees for this transaction were P700. At what amount should this acquisition of bonds be recorded? 196,000 196,700 202,000 202,700