On January 1, 2025, Blossom Co. issued ten-year bonds with a face value of $6, 750,000 and a stated interest rate of 10%, payable semiannually on June 30 andDecember 31. The bonds were sold to yield 12%. Table values are: Present value of 1 for 10 periods at 10% 0.38554 Present value of 1 for 10 periods at 12 % 0.32197Present value of 1 for 20 periods at 5 % 0.37689 Present value of 1 for 20 periods at 6 % 0.31180 Present value of annuity for 10 periods at 10% 6.14457 Present value ofannuity for 10 periods at 12 % 5.65022 Present value of annuity for 20 periods at 5% 12.46221 Present value of annuity for 20 periods at 6 % 11.46992 1. Calculate theissue price of the bonds. 2. Prepare he amortization table for 2025, assuming that amortization is recorded on interest payment dates using the effective - interest method.

Par value of the bonds = $6,750,000Stated interest rate = 10%Years to maturity = 10 yearsYeild =…

Answered: On January 1, 2025, Blossom Co. issued…

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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On January 1, 2024, Chang's Company issued 10% bonds dated January 1, 2024, with a face amount of $19.9 million. The bonds mature in 2033 (10 years). For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31. Prepare the journal entry to record interest on June 30, 2024, using the effective interest method. Credit General Journal Date June 30, 2024 Debit
1. On January 1, 2024, Lansing Group issued $1,000,000 of 6% bonds, dated January 1. Interest is payable semiannually on June 30 and December 31. The bonds mature in five years. The market yield for bonds of similar risk and maturity is 8%. INSTRUCTIONS: 1. Determine the price of these bonds that are issued to yield the 8% market rate using the Time Value of Money Tables. Include the table and relevant components for each factor used. 2. Record the issuance of these bonds by Lansing Group. 3. Prepare an amortization schedule that determines interest at the effective rate through the maturity date of the bonds. 4. Prepare the entries to record the interest on June 30, 2024, and December 31, 2024. 5. Assume that Lansing Group retires the bonds on January 1, 2026, paying $1,027,544. Prepare the entry to record the retirement.
On January 1, 2025, Cullumber Co. issued five-year bonds with a face value of $510,000 and a stated interest rate of 10% payable semiannually on July 1 and January 1. The bonds were sold to yield 6%. Present value table factors are: Present value of 1 for 5 periods at 6% Present value of 1 for 5 periods at 10% Present value of 1 for 10 periods at 3% Present value of 1 for 10 periods at 5% Present value of an ordinary annuity of 1 for 5 periods at 6% Present value of an ordinary annuity of 1 for 5 periods at 10% Present value of an ordinary annuity of 1 for 10 periods at 3% Present value of an ordinary annuity of 1 for 10 periods at 5% Click here to view factor tables 0.74726 0.62092 0.74409 0.61391 4.21236 3.79079 8.53020 7.72173 Calculate the issue price of the bonds. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,582.)
On June 30, 2024, LN Bean issued $25 million of its 8% bonds for $23 million. The bonds were priced to yield 10%. Interest is payable semiannually on December 31 and July 1. If the effective interest method is used, how much bond interest expense should the company report for the 6 months ended December 31, 2024? Multiple Choice $1,150.000 $1.207500 $1.293.750
On January 1, 2021, GLITTER Company issued 10% bonds dated January 1, 2021 with a face amount of ₱8,000,000. The bonds mature on December 31, 2026. For bonds of similar risk and maturity, the market yield is 14%. Interest is paid semi-annually on June 30 and December 31. (Use at most, 4 decimalplaces for PV factors) REQUIREMENTS: a. How much is the interest expense for the year ended, December 31, 2021?b. How much is the interest expense for the year ended, December 31, 2022? c. What is the carrying amount of the bonds on December 31, 2022?
Ellis Company issues 6.5%, five-year bonds dated January 1, 2021, with a $250,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $255,333. The annual market rate is 6% on the issue date. Required: 1. Compute the total bond interest expense over the bonds' life. 2. Prepare an effective interest amortization table for the bonds' life. 3. Prepare the journal entries to record the first two interest payments.
On January 1, 2022, Aaron Incorporated issued $1,530,000 par value, 6%, 7-year bonds (i.e., there were 1,530 of $1,000 par value bonds in the issue). Interest is payable semiannually each January 1 and July 1 with the first interest payment due at the end of the period on July 1. The issue price of the bonds based on a 12% market rate of interest is $1,103,360. Prepare the amortization table for the first 2 years, assuming Aaron uses the straight-line method. (Round each calculation to the nearest whole number and then use the rounded value for each subsequent calculation in the table.) Date January 1, 2022 July 1, 2022 January 1, 2023 July 1, 2023 January 1, 2024 Cash Interest Straight-Line Interest Discount/Premium Amortization Carrying Value
On June 1, 2024, Ivanhoe Bottle Company sold $3,240,000 in long-term bonds for $2,841,822. The bonds will mature in 10 years and have a stated interest rate of 8% and a yield rate of 10 %. The bonds pay interest annually on May 31 of each year. The bonds are to be accounted for under the effective - interest method. (a) Construct a bond amortization table for this problem to indicate the amount of interest expense and discount amortization at each May 31. Include only 531 the first four years. (Round answers to 0 decimal places, e.g. 25,000.) \table[[Date, Credit Cash, Debit Interest Expense,Credit Bond Discount Carrying Amount of Bonds], [6/1/24,,,], [₁₁/25,,,], [¸₁/27,,,], [28 ,,,]] 5 31 5 31
On September 30, 2024, the Techno Corporation issued 8% stated rate bonds with a face amount of $280 million. The bonds mature on September 30, 2044 (20 years). The market rate of interest for similar bonds was 10%. Interest is paid semiannually on March 31 and September 30. Required: Determine the price of the bonds on September 30, 2024.
On January 1, 2017, Ellison Co. issued eight-year bonds with a fase value of S6,000,000 and a stated interest rate of6%, payable semlannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are: Present value of 1 for 8 periods at 6% Present value of 1 for 8 periods at 8% Use the following to answer question 12: .627 .540 Present value of 1 for 16 periods at 3% Present value of 1 for 16 periods at 4% Present value of annuity for 8 periods at 6% Present value of annuity for 8 periods at 8% Present value of annuity for 16 periods at 3% Present value of annuity for 16 periods at 4% .623 .534 6.210 5.747 12.561 11.652 honds issued 12. The present value of the interest is A) $2,068,920. B) $2,097,360. C) $2,235,600. D) $2,260,980.
On January 1, 2024, Anne Teak Furniture issued $100,000 of 12% bonds, dated January 1. Interest is payable semiannually on June 30 and December 31. The bonds mature in 4 years. The annual market rate for bonds of similar risk and maturity is 14%. What was the issue price of the bonds? Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Multiple Choice $89,460 $120,942 $95,460 $94,029
On January 1, 2018, Oman Cables Industry (SAOG) issued 12% bonds dated January 1, 2018, with a principal amount of OR20 million. The bonds mature in 2027 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. Note: to determine the price of bonds, you should use tables (2) present value of $1 and (4) present value of an ordinary annuity of$1 to find the appropriate P.V. factors to calculate the interest and principal. The appropriate journal entry to record interest on June 30, 2018, using the effective interest method is: Select one: a. Interest expense 1,124,623 Premium on bonds payable 75,377 Cash 1,200,000 O b. Interest expense 1,102,009 Premium on bonds payable 97,991 Cash 1,200,00 c. Interest expense 1,275,377 Discount on bonds payable 75,377 Cash 1,200,000 d. Interest expense 1,128,391 Premium on bonds payable 71,609 Cash 1,200,000

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