2. What is the gain or loss from extinguishment of bonds?a. 700,000 gainb. 700,000 lossc. 300,000 gaind. 300,000 loss3. What is the total payment to the bondholders onDecember 31, 2020?a. 4,200,000b. 4,440,000c. 4,240,000d. 4,040,000 On December 31, 2020, Tamia Company showed thefollowing balances:4,000,000Bonds payable -6%Discount on bonds payableShare premium – issuanceShare premium- conversion privilege500,0005,000,000700,000The interest is payable annually every December 31. Theconvertible bonds are not converted but fully paidDecember 31, 2020.On such date, the quoted price of the convertible bonds withconversion option is 105 which is the payment to thebondholders plus interest.However, the quoted price of the bonds without theconversion privilege is 95.

Bonds are a form of loan or debt that is being issued by the company for raising funds, on which…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Given the information below, which bond(s) will be issued at a premium? Bond 1 Bond 2 Bond 3 Bond 4 Stated Rate of Return 5% 10 % 15% 12% Market Rate of Return 5% 8% 12% 14% Bond 1. Bond 2. Bond 4. Bonds 2 and 3.
- 3 S14-5 Determining bond amounts Savvy Drive-Ins borrowed money by issuing $3,500,000 of 9% bonds payable at 99.5. Interest is paid semiannually. Requirements 1. How much cash did Savvy receive when it issued the bonds payable? 2. How much must Savvy pay back at maturity? 3. How much cash interest will Savvy pay each six months? S14 6
40. Help me selecting the right answer. Thank you
A $10,000 bond quoted at 106 would sell for: A. $10,106. B. $106. C. $10,000. D. $10,600.
Ex. 2 Calculate the combined default risk for company A and B from a combined bond issue of A and B: Company A B Which of the 2 company increased the most its default risk, A or B ? By how much? Bond issue (mn) 80 115 Default options 2% 3%
TI209 JADMANE BO Sources Trade and other payables Short-term borrowings Mortgage Long-term borrowings Share capital Retained earnings Amounts $200,000 250,000 500,000 250,000 300,000 800,000 The before-tax bank charges are 11.0% for the short-term borrowings, 10.0% for the long-term borrowings, and 10.5% on the mortgage. The shareholders expect to earn 16%. Assume that the company's income tax rate is 50%. 40% Questions financing 1. Calculate the company's after-tax cost of borrowing. 2. Calculate the company's weighted average cost of capital.
On January 1, 2021, Shay Company issues $290,000 of 11%, 20-year bonds. The bonds sell for $282,750. Six years later, on January 1, 2027, Shay retires these bonds by buying them on the open market for $303,050. All interest is accounted for and paid through December 31, 2026, the day before the purchase. The straight-line method is used to amortize any bond discount. 1. What is the amount of the discount on the bonds at issuance? 2. How much amortization of the discount is recorded on the bonds for the entire period from January 1, 2021, through December 31, 2026? 3. What is the carrying (book) value of the bonds as of the close of business on December 31, 2026? 4. Prepare the journal entry to record the bond retirement. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Req 4 1. What is the amount of the discount on the bonds at issuance? 2. How much amortization of the discount is recorded on the bonds for the entire period from January 1, 2021,…
What is assumed the be the face value aka par value aka principal aka loan amount of a bond? It's also assumed to be a bond's FV. 10% $0 $100 $1,000
Question 12 Gulf Company issued bonds with a par value of $500,000 for cash of $530,000. What is the account's name and type representing the difference between par value and issue price? OA A bond premium; a contra asset account O B. A bond discount; a contra equity account. OCA bond premium; an adjunct account. O D. A bond discount; a contra liability account.
11. A $25,000 bond paying 6.25% matures on September 27, 2029. An investor desiring a yield rate of 7.75% compounded semi-annually purchases the bond on January 10, 2017. a. What is the purchase price of the bond? b. What is the accrued interest? c. What was the quoted price of the bond? d. What was the market quotation of the bond? I old
Instructions Present Value Tables Chart of Accounts Journal Final Questions Instructions Campbell Inc. produces and sells outdoor equipment. On July 1, Year 1, Campbell Inc. issued $60,400,000 of 10-year, 12% bonds at a market (effective) interest rate of 11%, receiving cash of $64,009,069. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.* 2. Journalize the entries to record the following:* a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.) b. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.) 3. Determine the total interest expense for Year 1. 4. Will the bond proceeds always be…
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2. What is the gain or loss from extinguishment of bonds? a. 700,000 gain b. 700,000 loss c. 300,000 gain d. 300,000 Ioss 3. What is the total payment to the bondholders on December 31, 2020? a. 4,200,000 b. 4,440,000 c. 4,240,000 d. 4,040,000