Loose Leaf for Financial Accounting: Information for Decisions
9th Edition
ISBN: 9781260158762
Author: John J Wild
Publisher: McGraw-Hill Education
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Question
Chapter B, Problem 12E
Summary Introduction
Concept Introduction:
Cash proceeds from bonds can be calculated using the discounting method. Under this method the future
To calculate: total cash proceeds from issuance of bonds.
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On January 1, 2024, Martin Company issued $5,000,000, 10% bonds. Interest is payable semi-annually on June 30 and December 31. The bonds mature on January 1, 2034. The bonds are sold to yield 12%.
Will the bonds be issued at a premium or discount? Explain why.
Calculate the issue price of the bonds.
Prepare the amortization table for the bonds assuming the effective interest method is used to calculate interest. You may (should) prepare the table in Excel then copy and paste into Word.
The Werner Company issued 10-year bonds on January 1, 2020. The debt has a face value of $800,000 and an annual stated interest rate of 6%. Interest payments are due semiannually beginning June 30, 2020. The market interest rate on the bonds is 6%.
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Spiller Corp. plans to issue 10%, 15-year, $500,000 par value bonds payable that pay interest semiannually on June 30 and December 31. The bonds are dated December 31, 2019, and are issued on that date. If the market rate of interest for the bonds is 8% on the date of issue, what will be the total cash proceeds from the bond issue?
Chapter B Solutions
Loose Leaf for Financial Accounting: Information for Decisions
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