Tuku limited issued a 5% K70 million bond on 1/1/2018. The bond attract an issue costs of 10% as well as discount of 2%. The effective interest rate is 8%. Required to explain and show how the above instrument will be accounted for the years 2018 to 2020. The company has a year that ends in December
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Tuku limited issued a 5% K70 million bond on 1/1/2018. The bond attract an issue costs of 10% as well as discount of 2%. The effective interest rate is 8%.
Required to explain and show how the above instrument will be accounted for the years 2018 to 2020. The company has a year that ends in December
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- On July 1, a company sells 8-year $250,000 bonds with a stated interest rate of 6%. If interest payments are paid annually, each interest payment will be ________. A. $120,000 B. $60,000 C. $7,500 D. $15,000Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market rate of 4%. The bonds paid interest semi-annually on June 30 and Dec. 31. How much money did the company receive when the bonds were issued? The bonds would be quoted at what rate?A company issued bonds with a $100,000 face value, a 5-year term, a stated rate of 6%, and a market rate of 7%. Interest is paid annually. What is the amount of interest the bondholders will receive at the end of the year?
- Iniki Bhd issues five year bonds with the following terms: Face value (RM 1,000 each) RM 10,000 Stated interest rate 8% Annual interest payment date January 1 Date of bonds January 1, 2018 Date of maturity December 31, 2022 The company's required rate of return is 6%. Required:- (i) Calculate the selling price of the bonds, rounded to the nearest Ringgit Malaysia. (ii) Prepare the journal entries to record the bond issuance. (iii)Prepare the amortization schedule, assuming the amortization is recorded on interest payment dates.Claremont Inc. issued a $400,000 bond on January 1, 2020. The bond had a five-year life and an 8% stated rate of interest. The bond contract requires Claremont to pay semiannual dividends each June 30 and December 31. The market rate of interest on January 1, 2020 when Claremont issued the bond was 6%. Required: 1. Expalin / Report the effects of the bond on the 2020 income statement, cash flows statement and the balance sheet on December 31, 2020On December 31, 2020, Paulson company issues a 4-year bond with a par value of $100,000, a contract rate of 8% annually and semiannual interest payments. At time of issues, prevailing interest rates for bonds of similar credit quality and maturity are 10%. 1. Calculate the price of the bond are issued at and record the journal entry to record the bond issuance. (show your calculations) 2. Prepare the journal entry for the first interest payment on the bond.
- Debond Corp. issues £1,000,000 face value of fi ve-year bonds, dated 1 January 2010,when the market interest rate is 6 percent. Th e sales proceeds are £957,876. Th e bondspay 5 percent interest annually on 31 December.1 . What is the interest payment on the bonds each year?2 . What amount of interest expense on the bonds would be reported in 2010 and 2011using the eff ective interest rate method?3 . Determine the reported value of the bonds (i.e., the carrying amount) at 31 December 2010 and 2011, assuming the eff ective interest rate method is used to amortisethe discount.4 . What amount of interest expense on the bonds would be reported under thestraight-line method of amortising the discount?Waterway Ltd. issued a $1,062,000, 10-year bond dated January 1, 2023. The bond was sold to yield 12% effective interest. The bond paid 10% interest on January 1 and July 1 each year. The company's year-end was December 31, and Waterway followed IFRS. Using 1.factor Tables 2. a financial calculator, or 3. Excel function PV, calculate the amount received for the bond, and any discount or premium on the bond. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1 (Round present value factor calculations to 5 decimal places, eg. 1.25124 and final answers to 0 decimal places eg. 58,971.) Proceeds from sale of bond on bond Date $ $ Prepare the journal entries for above transactions. (Round answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.…Temptation Vacations issues $60 million in bonds on January 1, 2021, that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below:Required:1. Were the bonds issued at face amount, a discount, or a premium?2. What is the original issue price of the bonds?3. What is the face amount of the bonds?4. What is the stated annual interest rate?5. What is the market annual interest rate?6. What is the total cash paid for interest assuming the bonds mature in 20 years?
- A company issues 8%, two-year bonds on December 31, 2019, with a par value of $7,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 6%, which implies a selling price of 103.71 or $7,260. (a) Prepare an amortization table like Exhibit 14.11 for these bonds; use the straightline method to amortize the premium. Then prepare journal entries to record (b) the issuance of bonds on December 31, 2019; (c) the first through fourth interest payments on each June 30 and December 31; and (d) the maturity of the bonds on December 31, 2021.XYZ company issues R$100,000 in bonds dated January 1, 2020, due in five years with 9 percent interest payable annually on January 1. At the time of issue, the market rate for such bonds is 11 percent. Find the following: Present value of the principal?Present value of the interest payment?Recording entries : 1/1/2020, 31/12/2020, and 1/1/2021?On 1/6/2017, EB issued a subscription bond worth 400,000 dinars at an interest rate of 8% annually, and for a period of 10 years (that is, the bond is returned after this period), while the market interest rate on the date of issuance was 10%. This interest is paid annually on 31/5/ of each year. The company also uses the real interest method to amortize the issue difference. Required: Prepare journal entries to record each of the following: Issuance of bonds. Interest is paid and accrued for the first four years. Amortization schedule. Proof of entries in the investor's books until May 31, 2018.