Financial Accounting
3rd Edition
ISBN: 9780133791129
Author: Jane L. Reimers
Publisher: Pearson Higher Ed
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Question
Chapter 7, Problem 8SEA
1.
To determine
Identify Company C issued the bonds with premium or discount or issued at par.
2.
To determine
Identify Company D issued the bonds with premium or discount or issued at par.
3.
To determine
Identify Company L issued the bonds with premium or discount or issued at par.
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Students have asked these similar questions
a. Assume that the market interest rates were slightly higher than 9% when the
bonds were sold. Would the proceeds from the bond issue have been more than,
less than, or equal to the face amount? Explain.
b. Independent of your answer to part a, assume that the proceeds were
$14,820,000. Use the horizontal model (or write the journal entry) to show the
effect of issuing the bonds.
C. Calculate the interest expense that Coley Co. will show with respect to these bonds
in its income statement for the fiscal year ended September 30, 2013, assuming that
the discount of $180.000 is amortized on a straight-line basis.
1. ABC, Inc. issued P1,000,000, 10% bonds to yield 8%. bond issuance costs were P10,000. How should ABC calculate the net proceeds to be received from the issuance? *
a. Discount the bonds at the stated rate of interest.
b. Discount the bonds at the stated rate of interest and deduct bond issuance costs.
c. Discount the bonds at the market rate of interest.
d. Discount the bonds at the market rate of interest and deduct bond issuance costs.
5. Compute the price of $94,580,761 received for the bonds by using the tables shown in Present Value Tables. (Round to the nearest dollar.)
Present value of the face amount
Present value of the semiannual interest payments
Price received for the bonds
Chapter 7 Solutions
Financial Accounting
Ch. 7 - Prob. 1YTCh. 7 - Prob. 2YTCh. 7 - Prob. 3YTCh. 7 - If a 1,000 bond is selling for 95.5, how much cash...Ch. 7 - Prob. 5YTCh. 7 - Prob. 6YTCh. 7 - Prob. 7YTCh. 7 - Prob. 1QCh. 7 - Prob. 2QCh. 7 - What is a mortgage?
Ch. 7 - Prob. 4QCh. 7 - Prob. 5QCh. 7 - Prob. 6QCh. 7 - Prob. 7QCh. 7 - Prob. 8QCh. 7 - Prob. 9QCh. 7 - Prob. 10QCh. 7 - Prob. 11QCh. 7 - Prob. 12QCh. 7 - Prob. 13QCh. 7 - Prob. 1MCQCh. 7 - All of the following are current liabilities...Ch. 7 - Prob. 3MCQCh. 7 - Prob. 4MCQCh. 7 - Prob. 5MCQCh. 7 - Prob. 6MCQCh. 7 - Prob. 7MCQCh. 7 - Prob. 8MCQCh. 7 - A 1,000 bond with a stated rate of 8% is issued...Ch. 7 - Prob. 10MCQCh. 7 - Prob. 1SEACh. 7 - Prob. 2SEACh. 7 - Prob. 3SEACh. 7 - Prob. 4SEACh. 7 - Account for mortgages. (LO 3). Nunez Company has...Ch. 7 - Prob. 6SEACh. 7 - Account for bonds. (LO 4). If a 1,000 bound is...Ch. 7 - Prob. 8SEACh. 7 - Prob. 9SEACh. 7 - Prob. 10SEACh. 7 - Prob. 11SEACh. 7 - Prob. 12SEBCh. 7 - Prob. 13SEBCh. 7 - Prob. 14SEBCh. 7 - Prob. 15SEBCh. 7 - Account for mortgages. (LO 3). Curtain Company...Ch. 7 - Prob. 17SEBCh. 7 - Prob. 18SEBCh. 7 - Prob. 19SEBCh. 7 - Prob. 20SEBCh. 7 - Prob. 21SEBCh. 7 - Prob. 22SEBCh. 7 - Prob. 23EACh. 7 - Prob. 24EACh. 7 - Prob. 25EACh. 7 - Prob. 26EACh. 7 - Account for long-term liabilities. (LO 3, 5)....Ch. 7 - Prob. 28EACh. 7 - Prob. 29EACh. 7 - Prob. 30EACh. 7 - Prob. 31EACh. 7 - Prob. 32EACh. 7 - Prob. 33EACh. 7 - Prob. 34EACh. 7 - Prob. 35EACh. 7 - Prob. 36EACh. 7 - Prob. 37EACh. 7 - Prob. 38EACh. 7 - Prob. 39EACh. 7 - Prob. 40EACh. 7 - Prob. 41EACh. 7 - Prob. 42EBCh. 7 - Prob. 43EBCh. 7 - Prob. 44EBCh. 7 - Prob. 45EBCh. 7 - Prob. 46EBCh. 7 - Prob. 47EBCh. 7 - Prob. 48EBCh. 7 - Account for long-term liabilities. (LO 3, 5). On...Ch. 7 - Prob. 50EBCh. 7 - Prob. 51EBCh. 7 - Prob. 52EBCh. 7 - Prob. 53EBCh. 7 - Prob. 54EBCh. 7 - Prob. 55EBCh. 7 - Prob. 56EBCh. 7 - Prob. 57EBCh. 7 - Prob. 58EBCh. 7 - Prepare an amortization schedule for a bond issued...Ch. 7 - Prob. 60EBCh. 7 - Account for current liabilities. (LO 1, 5). On...Ch. 7 - Prob. 62PACh. 7 - Prob. 63PACh. 7 - Prob. 64PACh. 7 - Prob. 65PACh. 7 - Prob. 66PACh. 7 - Prob. 67PBCh. 7 - Prob. 68PBCh. 7 - Prob. 69PBCh. 7 - Prob. 70PBCh. 7 - Prob. 71PBCh. 7 - Prob. 72PBCh. 7 - Prob. 1FSACh. 7 - Prob. 2FSACh. 7 - Prob. 3FSACh. 7 - Prob. 1IECh. 7 - Prob. 2IECh. 7 - Do owners or creditors have more claims on the...Ch. 7 - Prob. 4IE
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Similar questions
- A company issues a bond with a par value of $500,000 and a contract rate of 5%. Explain the concept of market rate. Why would a company issue a bond at a discount or a premium? How is bond price impacted? If the bond is issued at a discount or a premium, does it impact the interest or principal paid? Why or why not? (Answer in 5-10 sentences)arrow_forward(a) Bonds with a face amount of $10,000,000 have a stated interest rate of 5%. The current market rate of interest is 6%. Will these bonds sell (issue) at a price that is less than, equal to, or more than $10,000,000? (b) Bonds with a face amount of $10,000,000 have a stated interest rate of 7%. The current market rate of interest is 6%. Will these bonds sell (issue) at a price that is less than, equal to, or more than $10,000,000?arrow_forwardIf the Bonds Payable account has a balance of $700,000 and the Discount on Bonds Payable account has a balance of $36,000, what is the carrying value of the bonds? Carrying value of the bonds $arrow_forward
- If bonds are issued at 101.25, this means thata. a $1,000 bond sold for $1,012.50.b. a $1,000 band sold for $101.25.c. the bonds sold at a discount.d. The bond rate of interest is 10.125% of the market rate of interest.arrow_forwardIf bonds are issued at 103, this means that: The bond rate of interest is 10.3% of the market rate of interest. B) A $2,000 bond sold for $2,060.00. OA) OC) A $1,000 bond sold for $103. ○ D) The bonds sold at a discount.arrow_forwardA bond traded at 971⁄2 means that a. The bond pays 971⁄2% interest. b. The bond trades at $975 per $1,000 bond. c. The market rate of interest is below the contract rate of interest for the bond. d. The bonds can be retired at $975 each. e. The bond’s interest rate is 21⁄2%.arrow_forward
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