P10-3 (Static) Comparing Bonds Issued at Par, at a Discount, and at a Premium LO 10-2, 10-4, 10-5On January 1 of this year, Barnett Corporation sold bonds with a face value of $500,000 and a coupon rate of 7 percent. The bondsmature in 10 years and pay interest annually on December 31. Barnett uses the effective interest amortization method. Ignore any taxeffects. Each case is independent of the other cases. EV of S1 PV of $1. EVA of $1. and PVA of $1)Required:1. Complete the following table. The interest rates provided are the annual market rate of interest on the date the bonds were issued.Note: Use appropriate factor(s) from the tables provided. Round your final answers to nearest whole dollar amount.Case A (7 percent)Case B (8 percent) Case C (6 percent)a Cash received at issuanceb. Interest expense recorded in Year 11c. Cash paid for interest in Year 1d. Cash paid at maturity for bond principal

Case ASince the coupon and market rate are same bonds are issued at face valuea) Cash received at…

Answered: n January 1 of this year, Barnett…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 15MCQ

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On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
Gingko Inc. issued bonds with a face value of $100,000, a rate of 7%, and a 10-yearterm for $103,000. From this information, we know that the market rate of interest was ________. A. more than 7% B. less than 7% C. equal to 7% D. equal to 1.3%
On January 2, Year 1, Kampai Sushi Bar sold $800,000 of bonds for $785,000. The bonds will mature in 10 years and pay interest annually on December 31. The company properly recorded the payment of interest and the amortization of the discount using the effective interest method. What will be the carrying value of the bonds at the end of Year 1? a.$800,000 b.less than $785,000 c.$785,000 d.greater than $785,000, but less than $800,000
P10-3 (Algo) Comparing Bonds Issued at Par, at a Discount, and at a Premium LO10-2, 10-4, 10-5 On January 1 of this year, Barnett Corporation sold bonds with a face value of $506,500 and a coupon rate of 6 percent. The bonds mature in 12 years and pay interest annually on December 31. Barnett uses the effective-interest amortization method. Ignore any tax effects. Each case is independent of the other cases. (FV of $1, PV of $1, FVA of $1, and PVA of $1) Required: 1. Complete the following table. The interest rates provided are the annual market rate of interest on the date the bonds were issued. Note: Use appropriate factor(s) from the tables provided. Round your final answers to nearest whole dollar amount. a. Cash received at issuance b. Interest expense recorded in Year 1 c. Cash paid for interest in Year 1 d. Cash paid at maturity for bond principal $ $ $ $ X Answer is not complete. Case A (6 Case B (7 percent) percent) 506,500 30,390 30,390 $ 506,500 $ Case C (5 percent) 30,390 $…
P10-5 (Algo) Recording a Bond Issued at a Discount and Determining How the Issuance Affects Ratios LO10-3, 10-4, 10-6 [The following information applies to the questions displayed below.] On January 1 of this year, Cunningham Corporation issued bonds with a face value of $219,000 and a coupon rate of 6 percent. The bonds mature in 30 years and pay interest annually every December 31. When the bonds were sold, the annual market rate of interest was 8 percent. The company uses the effective-interest amortization method. By December 31 of this year, the annual market rate of interest had increased to 10 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.) P10-5 Part 3 3. Determine whether the company's debt-to-equity ratio and times interest earned ratio increase, decrease, or stay the same when (a) the bonds are issued, and (b) interest expense is recorded and cash is paid to investors for interest. (Select "NE" if there is no…
use excel II. On December 1, 20x1, AVS Company issued 10% bonds with a face amount of $20 million. The bonds mature in 5 years. For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on May 31 and November 30. AVS is a calendar-year corporation. Determine the price of the bonds at December 1, 20x1. Explain how you compute this price. No credit if not explained. 2.Prepare the journal entry to record the bond issuance on December 1, 20x1. 3. Prepare an amortization table using the effective interest method. 4. Prepare the journal entry (using the effective interest method) on December 31, 20x1 (adjusting entry, no cash payment) 5. Prepare the journal entries (using the effective interest method) on May 31, 20x2 (1st payment). 6. What would be the journal entry if all bonds are retired at 103 on June 1, 20x3 right after the third payment.
P10-6 (Algo) Recording and Reporting Bonds Issued at a Discount LO10-4 [The following information applies to the questions displayed below.] PowerTap Utilities is planning to issue bonds with a face value of $2,300,000 and a coupon rate of 7 percent. The bonds mature in 10 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. PowerTap uses the effective-interest amortization method. Assume an annual market rate of interest of 8 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1) Note: Use appropriate factor(s) from the tables provided. P10-6 Part 2 2. What amount of interest expense should be recorded on June 30 and December 31 of this year? Note: Round your final answers to nearest whole dollar amount. Interest expense > Answer is complete but not entirely correct. $ June 30 41,988 × $ December 31 43,528
n Jan.1 of this year Barnett Cop. sold bonds with a face value of $506,000 and a coupon rate of 7%. The bonds mature in 10 years and pay interest annually on December 31. Barnett uses the effective interest amortization method. Ignore any tax effects. complete the following table. a. cash received at issuance- Case A-7%; Case B- 8%; Case C 6%.---b. Interest expense recorded in year 1- Case A-7% ; Case B - 8%; Case C-6%; c. Cash paid for interest in year 1- Case A 7%; Case B 8%; Case C 6% and d.- Cash paid at maturity for bond principle Case A -7% Case B 8% and Case C 6%
On January 1 of this year, Barnett Corporation sold bonds with a face value of $510,000 and a coupon rate of 5 percent. The bonds mature in 20 years and pay interest annually on December 31. Barnett uses the effective-interest amortization method. Ignore any tax effects. Each case is independent of the other cases. Required: 1. Complete the following table. The interest rates provided are the annual market rate of interest on the date the bonds were issued. Case A (5 percent) Case B (6 percent) Case C (4 percent) a. Cash received at issuance b. Interest expense recorded in Year 1 c. Cash paid for interest in Year 1 d. Cash paid at maturity for bond principal ]\
On January 1, the Ryan Company issued $400,000 of 6%, 6-year bonds when the market rate of interest was 8%. The bonds pay interest semiannually on June 30 and December 31. How much are the proceeds that Ryan will receive from the bond issue date? Select one: A. $360,032 B. $399,800 C. $362,460 D. $280,400 *if there is excel function/shortcut show it
2. (10 points) Mazeltox Corporation issued $100,000 3-year, 8% stated rate bonds on January 1, 2004. The bonds pay interest semi-annually and were sold when the market rate was 10%. a. Calculate the issue price of the bonds. b. Prepare an amortization schedule for the bonds (use the table below): Payment Carrying Value, Amortization Date beginning 6/30/04 12/31/04 6/30/05 12/31/05 6/30/06 12/31/06 C. Cash Interest Interest Expense Record the interest expense entry for the 6/30/05 interest payment: Accounts Debits Credits Carrying Value, ending
Parrish Industries has bonds outstanding (originally sold for $5,400,000) in the amount of $6,000,000 with a current bond discount at 104 on the market at its year end. What should be the balance of the Fair Value Adjustment on Bonds Payable? Show your work. A. $840,000 debit balance B. $340,000 debit balance C. $840,000 credit balance D. $340,000 credit balance

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