Accounting for Bonds Sold at a DiscountThe Peoples National Bank raised capital through the sale of $60 million face value of four percent coupon rate, ten-year bonds. The bonds paid interest semiannually and were sold at a time when equivalent risk-rated bonds carried a yield rate of six percent.Round all answers to the nearest whole number.a. Calculate the proceeds that The Peoples National Bank received from the sale of the six percent bonds.$ 51,073,515b. Calculate the interest expense on the bonds for the first year that the bonds are outstanding.$2,400,000Xc. Calculate the book value of the bonds at the end of the first year.$ 51,966,164XPrevious

The bonds were issued at a discount. We can build an amortization table for the 1st year of the…

Answered: b. Calculate the interest expense on…

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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$70,000 worth of 5 year bonds were issued on January 1st with a contract rate of 5% and market rate of 6%. Interest is paid semiannually. Calculate the amount of interest paid to bondholders on July 1st. $4.200 O 31,750 $3.500 O $2,100
1. On January 1, a company issues bonds dated January 1 with a par value of $300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $312,177. The journal entry to record the issuance of the bond is: Debit Cash $312,177; credit Discount on Bonds Payable $12,177; credit Bonds Payable $300,000. Debit Cash $300,000; debit Premium on Bonds Payable $12,177; credit Bonds Payable $312,177. Debit Bonds Payable $300,000; debit Interest Expense $12,177; credit Cash $312,177. Debit Cash $312,177; credit Premium on Bonds Payable $12,177; credit Bonds Payable $300,000. Debit Cash $312,177; credit Bonds Payable $312,177.
issued $ 480,000 of 4%, 10-year bonds payable at a price of 94. The market interest rate at the date of issuance was 5%, and the bonds pay interest semiannually. The journal entry to record the first semiannual interest payment using the effective interest amortization method is?
7. Bower Company sold $100,000 of 20-year bonds for $95,000. The stated rate on the bonds was 7%, and interest is paid annually on December 31. What entry would be made on December 31 when the interest is paid? (Numbers are omitted.) a.Dr. Interest ExpenseCr. Bonds PayableCr. Cash b.Dr. Interest ExpenseCr. Cash c.Dr. Interest ExpenseCr. Discount on Bonds PayableCr. Cash d.Dr. Interest ExpenseDr. Discount on Bonds PayableCr. Cash
On January 1 of the current year, the Queen Corporation issued 12% bonds with a face value of $83,000. The bonds are sold for $80,510. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, five years from now. Queen records straight-line amortization of the bond discount. Determine the bond interest expense for the year ended December 31. Select the correct answer. a-$830 b-$10,458 c-$2,490 d-$9,960
Vikram Bhai
5
On January 1, $881,000, 5-year, 10% bonds were issued for $854,570. Interest is paid semiannually on January 1 and July 1. If the issuing company uses the straight-line method to amortize a discount on bonds payable, the semiannual amortization amount is a. $44,050 b. $26,430 c. $5,286 d. $2,643
3. Your company issues $10,000,000 in 4% bonds maturing in 10 years on January 1, Year 1 Interest will be paid annually on January 1, On the day the bonds are issued, the market rate was 3%, resulting in a bond price of $10,853,000. Prepare all of the journal entries to record issuance of these bonds and any end of year adjustments for Year 1. 1/1/X1 12/31/X1 4. Please record all of the necessary journal entries for Year 2. 1/1/X2 12/31/X2
A company issued $93,000 bonds at 108. If the total interest payments during the term of the bond adds up to $70,000, then the interest expense over the bond's term will be: Type your numeric answer and submit 85560 Correct Answer: v 62560.0
6. On January 1, Year 1, a $100,000 bond with a 5% annual stated rate is issued at 94 to yield an effective rate of 7%. Interest payments are made each December 31. If the effective interest method is applied, how much interest expense is recognized in Year 1?
A $319,000 bond was redeemed at 104 when the carrying value of the bond was $344,000. The entry to record the redemption would include a a.loss on bond redemption of $12,240. b.gain on bond redemption of $25,000. c.loss on bond redemption of $25,000. d.gain on bond redemption of $12,240.

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b. Calculate the interest expense on the bonds for the first year that the bonds are outstanding. $2,400,000 c. Calculate the book value of the bonds at the end of the first year. $ 51,966,164