RequiredCompute the cash proceeds from bond issues under the following terms. For each case, indicate whether the bonds sold at apremium or discount. (Round your answers to nearest dollar amount.)CashDiscount orProceedsPremiumа.Pear, Inc. issued $168,000 of 10-year, 8 percent bonds at 102.b.Apple, Inc. issued $139,000 of five-year, 12 percent bonds at 97.С.Cherry Co. issued $159,000 of five-year, 6 percent bonds at 102 1/4.d.Grape, Inc. issued $70,000 of four-year, 8 percent bonds at 98.00.

Solution: Computation of cash proceeds from bond and same is issued on discount or premium is as…

Answered: Compute the cash proceeds from bond…

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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Krystian Inc. issued 8-year bonds with a face value of $100,000 and a stated rate of 5% when the market rate was 7%. Interest was paid semi-annually. A. Calculate the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. NOTE: The requirement is referring to total interest and principal. B. Would an investor be willing to pay more or less than face value for this bond? Less than
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Bonds Payable has a balance of $1,184,000 and Discount on Bonds Payable has a balance of $11,840. If the issuing corporation redeems the bonds at 97.5, what is the amount of gain or loss on redemption? a. $17,760 loss b. $11,840 loss c. $11,840 gain Od. $17,760 gain
Calculate the total amount of interest expense over the life of the bonds for the following independent situations. a. $100,000 face value, 10%, 10-year bonds issued at 101. $ b. $240,000 face value, 5%, 5-year bonds issued at 100. $ c. $300,000 face value, 9%, 6-year bonds issued at 98.
On January 1, Year 1, Hanover Corporation issued bonds with a $57,750 face value, a stated rate of interest of 8%, and a 5-year term to maturity. The bonds were issued at 97. Hanover uses the straight-line method to amortize bond discounts and premiums. Interest is payable in cash on December 31 each year. How much interest expense will Hanover report on its income statement on December 31, Year 1? Multiple Choice O ● O $4,967 $1,733 $4,620 $347
Cramer Corp. issued $20,000,000 of 5-year, 9% bonds at a market (effective) interest rate of 10%, receiving cash of $19,227.757. Interest on the bonds is payable semiannually. What is the entry to record the first semiannual interest payment, and the amortization of the bond discount, using the interest method?
Diaz Company issued bonds with a face value of $127,000 on January 1, Year 1. The bonds had a stated interest rate of 8 percent and a 10-year term. Interest is paid in cash annually, beginning December 31, Year 1. The bonds were issued at 98. The straight-line method is used for amortization. Required a. Use a financial statements model to demonstrate how (1) the January 1, Year 1, bond issue and (2) the December 31, Year 1, recognition of interest expense, including the amortization of the discount and the cash payment, affect the company's financial statements. b. Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, Year 1. c. Determine the amount of interest expense reported on the Year 1 income statement. d. Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, Year 2. e. Determine the amount of interest expense reported on the Year 2 income statement.
Smith Corporation issues $1,800,000, 10-year, 9% bonds payable at a price of 98. The journal entry to record the issuance will include a: A. credit to Bonds Payable for $1,764,000. OB. debit to Cash of $1,800,000. OC. O D. credit to Discount on Bonds Payable for $36,000. debit to Cash for $1,764,000.
On January 1, Pina Inc. issued $101050000, 9% bonds at 103. The journal entry to record the issuance of the bonds will include O a credit to Bonds Payable for $104081500. a credit to Interest Expense for $3031500. O a credit to Premium on Bonds Payable for $3031500. O a debit to Cash for $101050000.
Wildhorse Company purchased bonds with a face amount of $1225000 between interest payment dates. Wildhorse purchased the bonds at 101, paid brokerage costs of $15900, and paid accrued interest for three months of $25900. The amount to record as the cost of this long-term investment in bonds is $1253150. $1237250. $1225000. $1279050.
A company received cash proceeds of $426,525 on a bond issue with a par value of $400,000. The difference between par value and issue price for this bond is recorded as a:
Bonds Payable has a balance of $1,000,000 and Discount on Bonds Payable has a balance of $12,500. If the issuing corporation redeems the bonds at 99, what is the amount of gain or loss on redemption?

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