Burke's Boots makes custom leather boots with sales worldwide. The popular company went public five years ago and generated substantial resources from the sale of company stock at that time. This year (2021), the company is issuing $100,000,000 in 5% bonds dated January 1, 2021 to help expand operations in even more countries. The company engaged First Boston Corp. to make a market in the bonds to help get the issuance sold to the public. First Boston informed Burke's financial managers that the bonds would likely sell at a premium because the market rates went down to 4% from the time First Boston purchased the bonds until First Boston sold the bonds in the open market. First Boston charges 0.5% of the face value of the bonds as a commission for making a market for the bonds. The bonds sold on February 1, 2021, pay interest every six months (dated from the original bond debenture date), and mature on December 31, 2025 Two clients of First Boston bought the entire bond issuance. a. At what amount did the bonds sell on February 1, 2021 including all costs? Show the journal entry and all computations.

Burke's Boots makes custom leather boots with sales worldwide. The popular company went public five years ago and generated substantial resources from the sale of company stock at that time. This year (2021), the company is issuing $100,000,000 in 5% bonds dated January 1, 2021 to help expand operations in even more countries. The company engaged First Boston Corp. to make a market in the bonds to help get the issuance sold to the public. First Boston informed Burke's financial managers that the bonds would likely sell at a premium because the market rates went down to 4% from the time First Boston purchased the bonds until First Boston sold the bonds in the open market. First Boston charges 0.5% of the face value of the bonds as a commission for making a market for the bonds. The bonds sold on February 1, 2021, pay interest every six months (dated from the original bond debenture date), and mature on December 31, 2025 Two clients of First Boston bought the entire bond issuance. a. At what amount did the bonds sell on February 1, 2021 including all costs? Show the journal entry and all computations.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Please answer the following in detail : (a) Kirpalani Limited wants to expand its furniture line. The board of directors have agreed that the fastest way to raise these funds is to issue bonds. The company proceeds to issue $600,000, 10% bonds on March 1st, 2020. The bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2023. The bonds yield 12%. The company closes its books on December 31. Requirements: (Show all workings) I. Calculate the proceeds from the sale of the bond. Clearly show the amount of the premium or discount and state two reasons which support the premium or discount calculated. II. Prepare a bond amortization schedule for the bond’s life III. Prepare all the journal entries for 2020 & 2021 (b) Gassy Stores sells $400,000 of 12% bonds on June 1, 2022. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2026. The market rate of similar investments is 10%. On December 1, 2024, Gassy Stores…
(Computation of Bond Liability) Hincapie Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested construction of a new plant to meet the increasing demand for the company’s bikes. After a careful evaluation of the request, the board of directors has decided to raise funds for the new plant by issuing $2,000,000 of 11% term corporate bonds on March 1, 2017, due on March 1, 2032, with interest payable each March 1 and September 1. At the time of issuance, the market interest rate for similar financial instruments is 10%.InstructionsAs the controller of the company, determine the selling price of the bonds.
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Kirpalani Limited wants to expand its furniture line. The board of directors have agreed that the fastest way to raise these funds is to issue bonds. The company proceeds to issue $600,000, 10% bonds on March 1st, 2020. The bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2023. The bonds yield 12%. The company closes its books on December 31. Calculate the proceeds from the sale of the bond. Clearly show the amount of the premium or discount and state two reasons which support the premium or discount calculated. Prepare a bond amortization schedule for the bond's life Prepare all the journal entries for 2020 & 2021
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Help Save & Exit Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division. From time to time the company buys and sells securities. The following selected transactions relate to Amalgamated's investment activities during the last quarter of 2021 and the first month of 2022. The only securities held by Amalgamated at October 1, 2021 were $35 million of 10% bonds of Kansas Abstractors, Inc., purchased on May 1, 2021 at face value and held in Amalgamated's trading securities portfolio. The company's fiscal year ends on December 31. 2021 Oct. 18 Purchased 2 million shares of Millwork Ventures Company common stock for $55 million. Millwork has a total of 32 million shares issued. 31 Received semiannual interest of $2.1 million from the Kansas Abstractors bonds. 1 Purchased 10% bonds of Holistic Entertainment Enterprises at their $18 million face value, to be held until they mature in 2031. Semiannual interest is payable April 30…
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