Requirement 1. Assume the market interest rate is 5% on January 1 of year 1, the date the bonds are issued. (Round your answers to the nearest whole dollar.) a. Using the PV function in Excel, what is the issue price of the bonds?

Requirement 1. Assume the market interest rate is 5% on January 1 of year 1, the date the bonds are issued. (Round your answers to the nearest whole dollar.) a. Using the PV function in Excel, what is the issue price of the bonds?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 9EA: On Jan. 1, Year 1, Foxcroft Inc. issued 100 bonds with a face value of $1,000 for $104,000. The...

See similar textbooks

Related questions

Q: Consultants notify management of Discount Pharmaceuticals that a stroke medication poses a potential…

A: Liability means the amount which is to be paid to an outsider by business. It is the present…

Q: , 44:13 Blaze Corporation allocates overhead on the basis of DLH and the standard amount per…

A: Overhead : Indirect costs incurred while producing goods or services. Overhead costs cannot be…

Q: a) × Your answer is incorrect. What portion of the total contract price would be recognized as…

A: As per the percentage-of-completion method, the percentage-of-completion is determined by dividing…

Q: None

A: MARGINAL COSTING INCOME STATEMENTMarginal Costing Income Statement is One of the Important Cost…

Q: To finance a vacation in 3 years, Elsie saves $480 at the beginning of every six months in an…

A: Solution:-The question pertains to Elsie saving $480 every six months in an account with a 10%…

Q: Requirement General Journal General Ledger Trial Balance Income Statement Balance Sheet The balance…

A: Every transaction has a double impact on the books of accounts according to the dual concept of…

Q: https://www.republictt.com/pdfs/annual-reports/RFHL-Annual-Report-2022.pdf Financial Reporting…

A: a) Evaluate the company's latest annual financial statements (balance sheet, income statement, and…

Q: Performing Accounting Research A settlement is a transaction that is an irrevocable action, relieves…

A: A settlement in the context of pension or postretirement benefit obligations is recognized in the…

Q: On February 13, Scanlon Co. paid $1,530 to repair the transmission on one of its delivery vans. In…

A: DateAccount Titles and ExplanationsDebitCreditFeb-13Accumulated depreciation- Delivery Van$1,530…

Q: Eaton Inc. purchases the following used items at an auction for $88,000 cash: a drill press, a…

A: Please refer to the attachments below Thank you Let me know if you have any doubts…

Q: SCC Company reported the following for the current year: Net sales Cost of goods sold Beginning…

A: a. Numerator/Denominator=Inventory turnoverCost of goods sold/Average inventory=Inventory…

Q: [The following information applies to the questions displayed below.] CommercialServices.com…

A: The objective of the question is to calculate the Return on Investment (ROI) for…

Q: A food processing plant has fixed charges, overhead, and general expenses equal to $ 3,000,000 and…

A: The objective of the question is to calculate the breakeven production rate and the net profit at…

Q: None

A: Direct Material Quantity Variance =Standard price ×( Standard quantity - Actual quantity)

Q: Required information [The following information applies to the questions displayed below.] Raleigh…

A: Ending inventory using LIFO retail method = Beginning inventory at cost + Current period layer at…

Q: Income Statement with Variances Encinas Company produces a product that requires 6 standard pounds…

A: Encinas Company Income Statement Through Gross Profit For the Month Ended July 31Sales | $270 *…

Q: The following accounts and corresponding balances were drawn from Delsey Company's Year balance…

A: CASH FLOW FROM INVESTING ACTIVITIES Cash flow from investing activities is a section of the cash…

Q: Predetermined Factory Overhead Rate Poehling Medical Center has a single operating room that is used…

A: Pre-determined overhead rateThe rate of allocation used for the determination of overheads based on…

Q: The following information is available to reconcile Branch Company's book balance of cash with its…

A: Bank Reconciliation Statement (BRS) is usually prepared to compare the balances on their bank…

Q: Using EDGAR (Electronic Data Gathering, Analysis, and Retrieval system), find the annual report…

A: Financial statementsThe tables and reports showing the financial performance of the company for a…

Q: monster beverage is considering purchasing a new canon machine this machine cost $3,500,000 up…

A: The objective of the question is to calculate the present value of the cash flow for Year 3. This…

Q: None

A: PRODUCTION BUDGETProduction Budget is a Forecast of the Production for the Budgeted Peirod of an…

Q: Journalize the declaration of a 14% stock dividend on December 10,2022 for the following independent…

A: No.Accounts and explanationDebitCredita.Stock dividends$453,530 Common stock dividends…

Q: Zeke Company sells 25,300 units at $15 per unit. Variable costs are $7 per unit, and fixed costs are…

A: The objective of the question is to calculate the contribution margin ratio and the unit…

Q: Liverpool Limited urgently needs to upgrade its utility capacity. They require a new generator…

A: Since net present value of cash outflow is lower in owning option it is advisable to go ahead with…

Q: Jahlil Corporation has GAAP net income of $4,670,000,000. To compute Jahlil's AFSI, the following…

A: Answer:- AMT meaning:- The acronym "AMT" refers to the "Alternative Minimum Tax". Regardless of…

Q: Question Content Area Jake Entertainment Corporation has three segments with revenue, operating…

A: The objective of the question is to calculate the EBITDA (Earnings Before Interest, Taxes,…

Q: For the year ended December 31, 2024, Fidelity Engineering reported pretax accounting income of…

A: The calculation for net income (NI), which is also known as net profits, is the same as the…

Q: On January 1, 2025, Nancy White signed an agreement, covering 5 years, to operate as a franchisee of…

A: Journal entries are required to be made in a systematic order which helps to track the transactions…

Q: Miller and Sons' static budget for 10,000 units of production includes $38,700 for direct materials,…

A: The objective of the question is to calculate the flexible budget for 12,300 units of production…

Q: Black Diamond Company produces snowboards. Each snowboard requires 3 pounds of carbon fiber.…

A: The statement prepared by an entity to estimate the amount of fixed and variable overhead to be…

Q: Determine the dividends per share on each class of stock for each of the four years. Round all…

A: The distribution of profits by a company to its eligible shareholders is called dividend. The amount…

Q: Bravo Co. acquired and placed in service $3,000,000 in machinery and equipment throughout the 2023…

A: As per Section 179, the deduction allows businesses to deduct the full purchase price of qualifying…

Q: Parker & Stone, Incorporated, is looking at setting up a new manufacturing plant In South Park to…

A: Initial Investment refers to the initial cost of any project that is capitalised and used to…

Q: Units-of-activity depreciation A truck acquired at a cost of $80,000 has an estimated residual value…

A: The Depreciation expense is charged on fixed assets as reduction in the value of the fixed assets…

Q: At what price did the bonds sell?

A: Issue price of bonds would be the present value of the interest annuity & maturity amount at…

Q: None

A: MARGIN OF SAFETYSales Above the Break-Even Point is called Margin of Safety Sales.Margin of Safety…

Q: In September, Manson Paint Corporation began operations in a state that requires new employers of…

A: Federal Unemployment Tax (FUTA) are paid by the employers in order to support the federal…

Q: The Village of Shelburne operates a nine-hole golf course as an enterprise fund. You are provided…

A: A fiscal statement that gives an overview of an association's fiscal situation at a particular…

Q: b. Brent uses the actual cost method. [Assume that no § 179 expensing is claimed and that 200%…

A: The "adjusted basis" describes the initial cost of an asset after depreciation, upgrades, or other…

Q: During Year 4, Lamb Inc. suffered a tax loss of $(360,000). Lamb qualifies for a two-year loss…

A: Answer:- Journal entry meaning:- In accounting a journal entry is a record of a commercial…

Q: None

A: Current Contribution margin (4,200 units * $21)$88,200Revised sales volume [4,200 units + (4,200…

Q: The following monthly data are taken from Ramirez Company at July 31: Sales salaries, $200,000;…

A: Journal Entry :Journal entries refer to the recording of daily transactions of a business entity.…

Q: points The "spending variance" is the difference between actual costs and planning budget costs.…

A: The objective of the question is to verify the statement about spending variance and to calculate…

Q: On December 31, 2023, Berclair Incorporated had 200 million shares of common stock and 3 million…

A: EPS refers to earnings per share and it is a measure of profitability, it is used to know how much…

Q: Nicanor is a married man with surviving spouse: Community Properties: Real Property located in…

A: Income tax liability:The tax liability refers to the amount that needs to be paid to the tax…

Q: Required information [The following information applies to the questions displayed below.] Raleigh…

A: Ending inventory using LIFO retail method = Beginning inventory at cost + Current period layer at…

Q: If Robert is self-employed, how much can he deduct for this event?

A: Since Rober is a self-employed businessman he can deduct the cost of food and meals related to…

Q: Required information [The following information applies to the questions displayed below.] The…

A: Cash flow statement :— It is one of the financial statements that shows change in cash and cash…

Q: CORIS RA is a government owned enterprise which is legislated to generate its own income which it…

A: The cash flow statement is prepared at the end of the period to know the cash position. It reflects…

Concept explainers

Debenture Valuation

A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.

Note Valuation

It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:

Question

The notes to the Giving Ltd. financial statements reported the following data on December 31, Year 1 (end of the fiscal year):
(Click the icon to view the financial statement data.)
Givingamortizes bond discounts using the effective-interest method and pays all interest amounts at December 31.
Read the requirements.
Requirement 1. Assume the market interest rate is 5% on January 1 of year 1, the date the bonds are issued. (Round your answers to the nearest whole dollar.)
a. Using the PV function in Excel, what is the issue price of the bonds?
The issue price of the bonds is
Get more help
Data table
Note 6. Indebtedness
Bonds payable, 1% due on December 31, Year 8
Less: Discount
$ 4,500,000
?
?
Notes payable, 6%, payable in $50,000 annual
installments starting in Year 5
Print
Done
$
300,000
×

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Define bond

VIEW

Step 2: Calculate issue price of bonds

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

On Jan. 1, Year 1, Foxcroft Inc. issued 100 bonds with a face value of $1,000 for $104,000. The bonds had a stated rate of 6% and paid interest semi-annually. What is the journal entry to record the first payment to the bondholders?
The notes to the Thorson Ltd.financial statements reported the following data on December 31, Year 1 (end of the fiscal year): Thorson amortizes bond discounts using the effective-interest method and pays all interestamounts at December 31. Requirements1. Assume the market interest rate is 6% on January 1 of year 1, the date the bonds are issued.a. Using the PV function in Excel, what is the issue price of the bonds?b. What is the maturity value of the bonds?c. What is Thorson’s annual cash interest payment on the bonds?d. What is the carrying amount of the bonds at December 31, year 1?2. Prepare an amortization table through the maturity date for the bonds using Excel. (Roundall amounts to the nearest dollar.) How much is Thorson’s interest expense on the bonds forthe year ended December 31, Year 4?3. Show how Thorson would report these bonds and notes at December 31, Year 4.
[The following information applies to the questions displayed below.] Hillside issues $4,000,000 of 6%, 15-year bonds dated January 1, 2021, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $3,456,448. Required: 1. Prepare the January 1 journal entry to record the bonds' issuance. 2(a) For each semiannual period, complete the table below to calculate the cash payment. 2(b) For each semiannual period, complete the table below to calculate the straight-line discount amortization. 2(c) For each semiannual period, complete the table below to calculate the bond interest expense. 3. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life. 4. Prepare the first two years of a straight-line amortization table. 5. Prepare the journal entries to record the first two interest payments. Complete this question by entering your answers in the tabs below. Req 1 Req 2A to 2C Req 3 Req 4 Req 5 For each…
In each separate situation, show how bonds payable is reported in the long-term liabilities section of the December 31 balance sheet. (Amounts to be deducted should be entered with a minus sign.) 1. Bonds payable with a par value of $10,000 and a premium on bonds payable of $240. 2. Bonds payable with a par value of $30,000 and a discount on bonds payable of $500. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Bonds payable with a par value of $10,000 and a premium on bonds payable of $240. Long-term liabilities Liabilities Section of Balance Sheet December 31
In each separate situation, show how bonds payable is reported in the long-term liabilities section of the December 31 balance sheet. (Amounts to be deducted should be entered with a minus sign.) 1. Bonds payable with a par value of $10,000 and a premium on bonds payable of $240. 2. Bonds payable with a par value of $30,000 and a discount on bonds payable of $500. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Bonds payable with a par value of $30,000 and a discount on bonds payable of $500. Long-term liabilities Bonds payable Liabilities Section of Balance Sheet December 31 $ 29,500 $ 29,500
For each of the following three examples, provide the journal entry that the company would make on the date the bonds are issued. Note that you will need to do a present value calculation to determine the cash proceeds from each bond issue. You can round your answer to the nearest dollar. 1. Andersson Inc. issues 8-year bonds with a face value of $50,000,000 and a stated annual interest rate of 6%. The bonds pay interest semiannually on June 30 and December 31. The annual market rate of interest on the date of issue is 8%.
Ajax, Inc., issued callable bonds with a par value of $1,000,000 that require the payment of a call premium of $10,000. The bonds have a carrying value of $990,000. We call these bonds prior to maturity on September 30. Complete the necessary journal entry by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns. View transaction list Journal entry worksheet Ajax, Inc., issued callable bonds with a par value of $1,000,000 that require the payment of a call premium of $10,000. The bonds have a carrying value of $990,000. We call these bonds prior to maturity on September 30. Note: Enter debits before credits. %24 .. 1:46 P %3D 3/28/202 F3 F4 F5 F8 F9 F10 F11 F12 Insert Fn Lock F6 F7 Prt Sc
Bond premium, entries for bonds payable transactions Rodgers Gridiron Co. produces and sells football equipment. On July 1, 20Y1, Rodgers issued $75,900,000 of 10- year, 13% bonds at a market (effective) interest rate of 12%, receiving cash of $80,252,470. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: For all journal entries, if an amount box does not require an entry, leave it blank. 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 20Y1 July 1 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. 20Y1 Dec. 31 b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. 20Y2 June 30 3.…
tELLiy, you must enter your ID number on the first sheet! On January 1, 2020 Omsk Corporation issued Bonds pay interest each July 1 and January 1. 150,000 of 5 % bonds, due in 17 years 12 % market rate of interest. Assume Requirements (Round to 0 decimals, Rounding errors do not matter): 1. Compute market price of bonds. Provide detailed computation. Use functions in Excel 2. What is an amount of discount /premium? Indicate, what it is (discount or premium). Computation. 3. Prepare amortization schedule for first 5 years. Use formulas in Excel. 4. Prepare journal entry to record bond issue. 5. Prepare journal entry on July 1, 2020. 6. Prepare journal entry on December 31, 2020. 7. Prepare journal entry on January 1, 2021
THIS QUESTION WILL ALSO BE CHECKED MANUALLY (to make adjustments for typos). QUESTION 9 On the first day of the fiscal year, a company issues a $828,000, 12%, 10-year bond that pays semiannual interest of $49,680, receiving cash of $869,400. Journalize the entry for the first interest payment and amortiation of premium using the straight-line method and the chart of accounts below. Bonds Payable Cash Discount on Bonds Payable Interest Revenue Gain on Redemption of Bonds Interest Expense Interest Payable Loss on Redemption of Bonds Premiun on Bonds Payable Enter your answers into the table below. Key the account names carefully (exactly as shown above) and follow formatting instructions below. DO NOT USE A DECIMAL WITH ZEROES FOR WHOLE DOLLAR AMOUNTS AND USE COMMAS APPROPRIATELY. WHEN THE DEBIT/CREDIT DOES NOT REQUIRE AN ENTRY, LEAVE IT BLANK. Account Debit Credit THIS QUESTION WILL ALSO BE CHECKED MANUALLY (to make adjustments for typos). Click Save and Submit to save and submit. Click…
On the first day of the fiscal year, a company issues an $946,000, 8%, 5-year bond that pays semiannual interest of $37,840 ($946,000 × 8% × 1/2), receiving cash of $889,240. Required: Journalize the entry to record the first interest payment and the amortization of the related bond discount using the straight-line method. Refer to the Chart of Accounts for exact wording of account titles. Chart Of Accounts CHART OF ACCOUNTS General Ledger ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 113 Allowance for Doubtful Accounts 114 Notes Receivable 115 Interest Receivable 121 Merchandise Inventory 122 Supplies 131 Prepaid Insurance 140 Land 151 Building 152 Accumulated Depreciation-Building 153 Equipment 154 Accumulated Depreciation-Equipment LIABILITIES 210 Accounts Payable 221 Salaries Payable 231 Sales Tax Payable 241 Notes Payable 242 Interest Payable 251 Bonds Payable…
On the first day of the fiscal year, a company issues an $800,000, 6%, 5-year bond that pays semiannual interest of $24,000 ($800,000 × 6% × 1/2), receiving cash of $690,960. Required: Journalize the entry to record the first interest payment and the amortization of the related bond discount using the straight-line method. Refer to the Chart of Accounts for exact wording of account titles.