Nordbock Inc. reports the following outstanding bond issue on its December 31, 20Y1,balance sheet: $1,000,000, 7%, 10-year bonds that pay interest semiannually. The bonds have been outstanding for five years and were originally issued at face amount. The company is considering redeeming these bonds on January 1, 20Y2, at 103 and issuing new $1,000,000, 5%, five-year bonds at their face amount. These bonds would pay interest semiannually on June 30 and December 31. Write a brief memo to Liz Nolan, the chief financial officer, discussing the costs of redeeming the existing bonds, the proceeds from issuing the new bonds, and whether this is a good financial decision.

On February 1, 20x1, Broncos Company issued 9.75% 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 11.5%. Interest is paid semiannually on July 31 and January 31. Broncos is a calendar-year corporation. 1) Determine the price of the bonds on February 1, 20x1 using the Excel. 2) Prepare the journal entry to record the bond issuance on February 1, 20x1. 3) Prepare an amortization table for 5 years using the effective interest method. 4) Prepare the journal entries (using the effective interest method) on July 31, 20x1 (1st payment). 5) Prepare the journal entry (using the effective interest method) on December 31, 20x1 (adjusting entry, no cash payment!) 6) What would be the journal entry if all bonds are retired at 102.5 on August 1, 20x2 right after the third payment. Prepare the journal entry for the bond retirement.

The Merchant Company issued 10-year bonds on January 1. The 8% bonds have a face value of $109,000 and pay interest every January 1 and July 1. The bonds were sold for $131,466 based on the market interest rate of 6%. Merchant uses the effective interest method to amortize bond discounts and premiums. On July 1 of the first year, Merchant should record interest expense (round to the nearest dollar) of $4,360 $3,270 $3,944 $5,259

The Merchant Company issued 10-year bonds on January 1. The 9% bonds have a face value of $93,000 and pay interest every January 1 and July 1. The bonds were sold for $112,168 based on the market interest rate of 7%. Merchant uses the effective interest method to amortize bond discounts and premiums. On July 1 of the first year, Merchant should record interest expense (round to the nearest dollar) of $3,926 $5,048 $3,255 $4,185