On January 1 Tab Company issued $1 million of ten-year 8% bonds at 95% of faceamount. The bond interest will be paid semiannually. The approximate market rate ofinterest (rounded to the nearest percent) on this bond issue would be:

Market interest rate refers to the rate of interest which is charged on the bond amount by the…

Answered: On January 1 Tab Company issued $1…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 2PB: Charleston Inc. issued $200,000 bonds with a stated rate of 10%. The bonds had a 10-year maturity...

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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?
On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%. The bonds paid interest semi-annually. Assuming the bonds sold at 58.55, what was the selling price of the bonds? Explain why the cash received from selling this bond is different from the $200,000 face value of the bond.
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On January 1 Tab Company issued $1 million of ten-year 8% bonds at 95% of face amount. The bond interest will be paid semiannually. The approximate market rate of interest (rounded to the nearest percent) on this bond issue would be: