Question

Check my work Enviro Company issues 8%, 10 year bonds with a par value of $230,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87V2. The straight-line method is used to allocate interest expense points 1. Using the implied selling price of 87 what are the issuer's cash proceeds from issuance of these bonds? 2. What total amount of bond interest expense will be recognized over the life of these bonds? 3. What is the amount of bond interest expense recorded on the first interest payment date? 209 5614 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What total amount of bond Interest expense will be recognized over the We of these bonds? Total Bond Interest Expense Over Life of Bonds Amount repaid 230,000 payments of Par value a maturity Total repayments Less amount borrowed from part 1) Total bond interest expense Required 3 > < Required

Answer 1

Solution of one independent question - Enviro company Date Credit ($) Issuance Account Title Cash ( 230000 * 87.5%) Discount on Bonds Payable Bonds Payable (to record the issuance of bonds) Debit ($) 201250 28750 230000 Part 1 - $ 201250 Part 2 Par value Annual Rate * Year = amon 230000 Semi annual cash payment 9200 8% 0.5 Par value - Bonds price = Discount / 28750 230000 201250 Semi annual periods = 20 ( 10 years * 2) SL discount amo. 1437.5 SL discount amo. Semi annual cash payment + 9200 Bond Intt. Expense 10637.5 1437.5 Total Bond Intt. Exp. Amount repaid : 20 payments of 9200 Par value at maturity Total repaid Less:-Amount borrowed Total Bond Intt. Exp. 184000 230000 414000 201250 212750 Part 3 $ 10637.5 Note :- Please ask other question separately as you are supposed to ask one question per post.