Solution 1-3:
Computation of bond price | |||
Table values are based on: | |||
n= | 30 | ||
i= | 7.00% | ||
Cash flow | Table Value | Amount | Present Value |
Par (Maturity) Value | 0.13137 | $175,000,000.00 | $22,989,750 |
Interest (Annuity) | 12.40904 | $10,500,000.00 | $130,294,920 |
Price of bonds | $153,284,670 |
Journal Entries - Wang Communications | ||||
Event | Date | Particulars | Debit | Credit |
1 | 1-Jan-18 | Investment in Bond Dr | $175,000,000.00 | |
To Cash | $153,284,670.00 | |||
To Discount on bond investment | $21,715,330.00 | |||
(Being investment in bond recorded) | ||||
2 | 30-Jun-18 | Cash Dr ($175,000,000 *12% * 6/12) | $10,500,000.00 | |
Discount on bond investment Dr ($21,715,330 / 30) | $723,844.00 | |||
To Interest revenue | $11,223,844.00 | |||
(Being revenue recoginition for bond interest and discount amortized) | ||||
3 | 31-Dec-25 | Cash Dr ($175,000,000 *12% * 6/12) | $0.00 | |
Discount on bond investment Dr ($21,715,330 / 30) | $723,844.00 | |||
To Interest revenue | $723,844.00 | |||
(Being revenue recoginition for bond interest and discount amortized) |
Exercise 14-8 Investor, straight-line method (LO14-2) Universal Foods issued 12% bonds, dated January 1, with a...
Exercise 14-7 Determine the price of bonds; issuance; straight-line method [LO14-2] Universal Foods issued 12% bonds, dated January 1, with a face amount of $225 million on January 1, 2018. The bonds mature on December 31, 2027 (10 years). The market rate of interest for similar issues was 14%. Interest is paid semiannually on June 30 and December 31. Universal uses the straight-line method. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and...
Universal Foods issued 8% bonds, dated January 1, with a face amount of $250 million on January 1, 2018. The bonds mature on December 31, 2032 (15 years). The market rate of interest for similar issues was 10%. Interest is paid semiannually on June 30 and December 31. Universal uses the straight-line method. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:...
Universal Foods issued 12% bonds, dated January 1, with a face amount of $140 million on January 1, 2021 to Wang Communications. The bonds mature on December 31, 2035 (15 years). The market rate of interest for similar issues was 14%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. to...
Universal Foods issued 12% bonds, dated January 1, with a face amount of $155 million on January 1, 2021 to Wang Communications. The bonds mature on December 31, 2035 (15 years). The market rate of interest for similar issues was 14%. Interest is paid semiannually on June 30 and December 31. (FV of $1. PV of $1. EVA of $1. PVA of $1. FVAD of $1 and PVAD of $1 (Use appropriate factor(s) from the tables provided.) Required: 1. to...
Universal Foods issued 12% bonds, dated January 1, with a foce amount of $155 million on January 1, 2021 to Wang Communications. The bonds mature on December 31, 2035 (15 years). The market rate of Interest for similar issues was 14%. Interest is pald semiannually on June 30 and December 31. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. to...
Exercise 14-7 (Algo) Determine the price of bonds; issuance; straight-line method [LO14-2] Universal Foods issued 10% bonds, dated January 1, with a face amount of $110 million on January 1, 2021. The bonds mature on December 31, 2040 (20 years). The market rate of interest for similar issues was 12%. Interest is paid semiannually on June 30 and December 31. Universal uses the straight-line method. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1...
Universal Foods issued 12% bonds, dated January 1, with a face amount of $200 million on January 1, 2018. The bonds mature on December 31, 2027 (10 years). The market rate of interest for similar issues was 14%. Interest is paid semiannually on June 30 and December 31. Universal uses the straight-line method. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:...
Universal Foods issued 10% bonds, dated January 1, with a face amount of $200 million on January 1, 2018. The bonds mature on December 31 2037 20 years). The market rate of interest for similar issues was 12% Interest is paid semiannually on June 30 and December 31. Universal uses the straight line method. (FV of $1. PV of $1. EVA of $1. PVA of SL. FVAD of S1 and PVAD of Use appropriate factor(s) from the tables provided.) Required:...
Universal Foods issued 10% bonds, dated January 1, with a face amount of $176 million on January 1, 2021 to Wang Communications. The bonds mature on December 31, 2035 (15 years). The market rate of interest for similar issues was 12%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. to...
Universal Foods issued 12% bonds, dated January 1, with a face amount of $150 million on January 1, 2021. The bonds mature on December 31, 2030 (10 years). The market rate of interest for similar issues was 14%. Interest is paid semiannually on June 30 and December 31. Universal uses the straight-line method. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:...