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Randy Corp. issued $200,000 of 7.6% (payable each 28 February and 31 August). 4-year bonds. The bonds were dated 1 March 20X4, and mature on 28 February 20X8. The bonds were issued (to yield 8%) on 30 September 20X4, for appropriate proceeds plus accrued interest. The accounting period ends on 31 December. Required: 1. Calculate the present value of the bond first assuming that it was issued on an interest date, 1 March 20X4. (Round time value factor to 5 decimal places. Do not round Intermediate calculations.) Present value of the bond 2. Prepare an amortization schedule using the effective interest method of amortization. (Round time value factor to 5 decimal places. Round Intermediate calculations to the nearest whole dollar amount.) Interest Expense Date Opening 31 Aug. 20x4 28 Feb. 20x5 31 Aug. 20x5 28 Feb. 20x6 31 Aug. 20x6 28 Feb. 20x7 31 Aug. 20x7 28 Feb. 20x8 Proceeds of bond Accrued interest $ 197,307 Interest Payment $ 7,800 $ 7,600 7,600 7,600 7,600 7,600 7,600 7,600 $ Discount Amortization 1,267 7,892 $ 7,904 7,916 7,929 7,942 7,956 7,970 7,983 292 304 316 329 342 356 370 384 Unamortized Discount $ 2.003 $ 2,401 2,097 1,781 1,452 1,110 754 384 Net bond Liability 0 3. Calculate the proceeds of the bond reflecting the fact that it was actually issued on 30 September 20X4. Also calculate the accrued interest. (Round your final answers to the nearest whole dollar amount.) 197,307 197.500 197,903 198,219 198,548 198,890 199,248 199,616 200,000

Randy Corp. issued $200,000 of 7.6% (payable each 28 February and 31 August). 4-year bonds. The bonds were dated 1 March 20X4, and mature on 28 February 20X8. The bonds were issued (to yield 8%) on 30 September 20X4, for appropriate proceeds plus accrued interest. The accounting period ends on 31 December. Required: 1. Calculate the present value of the bond first assuming that it was issued on an interest date, 1 March 20X4. (Round time value factor to 5 decimal places. Do not round Intermediate calculations.) Present value of the bond 2. Prepare an amortization schedule using the effective interest method of amortization. (Round time value factor to 5 decimal places. Round Intermediate calculations to the nearest whole dollar amount.) Interest Expense Date Opening 31 Aug. 20x4 28 Feb. 20x5 31 Aug. 20x5 28 Feb. 20x6 31 Aug. 20x6 28 Feb. 20x7 31 Aug. 20x7 28 Feb. 20x8 Proceeds of bond Accrued interest $ 197,307 Interest Payment $ 7,800 $ 7,600 7,600 7,600 7,600 7,600 7,600 7,600 $ Discount Amortization 1,267 7,892 $ 7,904 7,916 7,929 7,942 7,956 7,970 7,983 292 304 316 329 342 356 370 384 Unamortized Discount $ 2.003 $ 2,401 2,097 1,781 1,452 1,110 754 384 Net bond Liability 0 3. Calculate the proceeds of the bond reflecting the fact that it was actually issued on 30 September 20X4. Also calculate the accrued interest. (Round your final answers to the nearest whole dollar amount.) 197,307 197.500 197,903 198,219 198,548 198,890 199,248 199,616 200,000

Cornerstones of Financial Accounting
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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Randy Corp. issued $200,000 of 7.6% ( payable each 28 February and 31 August). 4-year bonds. The bonds were dated 1 March 20X4, and mature on 28 February 20X8. The bonds were issued (to yield 8%) on 30 September 20X4, for appropriate proceeds plus accrued interest. The accounting period ends on 31 December. Required: 1. Calculate the present value of the bond first assuming that it was issued on an interest date, 1 March 20X4. (Round time value factor to 5 decimal places. Do not round Intermediate calculations.) Present value of the bond 2. Prepare an amortization schedule using the effective interest method of amortization. (Round time value factor to 5 decimal places. Round Intermediate calculations to the nearest whole dollar amount.) Date Interest Expense Opening 31 Aug. 20x4 28 Feb. 20x5 31 Aug. 20x5 28 Feb. 20x8 31 Aug. 20x6 28 Feb. 20x7 31 Aug. 20x7 28 Feb. 20x8 Proceeds of bond Accrued interest $ Interest Payment $ 7,600 $ 7,600 7,600 7,600 7,600 197,307 7,600 7,600 7.600 S Discount Amortization 1,267 7,892 $ 7,904 7,916 7,929 7,942 7,956 7,970 7,983 292 304 316 329 342 356 370 384 Unamortized Discount $ 2,693 $ 2,401 2,097 1,781 1,452 1,110 754 384 0 Net bond Liability 3. Calculate the proceeds of the bond reflecting the fact that it was actually issued on 30 September 20X4. Also calculate the accrued interest. (Round your final answers to the nearest whole dollar amount.) 197,307 197,599 197,903 198,219 198,548 198,890 199,246 199,616 200,000
Transcribed Image Text:Randy Corp. issued $200,000 of 7.6% ( payable each 28 February and 31 August). 4-year bonds. The bonds were dated 1 March 20X4, and mature on 28 February 20X8. The bonds were issued (to yield 8%) on 30 September 20X4, for appropriate proceeds plus accrued interest. The accounting period ends on 31 December. Required: 1. Calculate the present value of the bond first assuming that it was issued on an interest date, 1 March 20X4. (Round time value factor to 5 decimal places. Do not round Intermediate calculations.) Present value of the bond 2. Prepare an amortization schedule using the effective interest method of amortization. (Round time value factor to 5 decimal places. Round Intermediate calculations to the nearest whole dollar amount.) Date Interest Expense Opening 31 Aug. 20x4 28 Feb. 20x5 31 Aug. 20x5 28 Feb. 20x8 31 Aug. 20x6 28 Feb. 20x7 31 Aug. 20x7 28 Feb. 20x8 Proceeds of bond Accrued interest $ Interest Payment $ 7,600 $ 7,600 7,600 7,600 7,600 197,307 7,600 7,600 7.600 S Discount Amortization 1,267 7,892 $ 7,904 7,916 7,929 7,942 7,956 7,970 7,983 292 304 316 329 342 356 370 384 Unamortized Discount $ 2,693 $ 2,401 2,097 1,781 1,452 1,110 754 384 0 Net bond Liability 3. Calculate the proceeds of the bond reflecting the fact that it was actually issued on 30 September 20X4. Also calculate the accrued interest. (Round your final answers to the nearest whole dollar amount.) 197,307 197,599 197,903 198,219 198,548 198,890 199,246 199,616 200,000
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