ZuoTi.Pro
Question

The Bradford Company issued 8% bonds, dated January 1, with a face amount of $80 million on January 1, 2021 to Saxton-Bose Corporation. The bonds mature on December 31, 2030 (15 years). For bonds of similar risk and maturity, the market yield is 10%. 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 3. Prepare the journal entries to record the purchase of the bonds by Saxton-Bose on January 1, 2021, interest revenue on June 30, 2021 and interest revenue on December 31, 2021 (at the effective rate). (Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

TABLE 4 Present Value of an Ordinary Annuity of $1 11 PVA = (1 + i) n/i 1 2 3 4 5 1.0% 1.5% 2.0% 0.99010 0.98522 0.98039 1.97

TABLE 2 Present Value of $1 PV = $ n/i 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 7.0% 1 0.99010 0.98522 0.98039

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Solution 1 to 3:

Computation of bond price
Table values are based on:
n= 30
i= 5.00%
Cash flow Table Value Amount Present Value
Par (Maturity) Value 0.23138 $80,000,000.00 $18,510,400
Interest (Annuity) 15.37245 $3,200,000.00 $49,191,843
Price of bonds $67,702,243
Journal Entries - Saxton - Bose Corporation
Event Date Particulars Debit Credit
1 1-Jan-18 Investment in Bond Dr $80,000,000
         To Cash $67,702,243
         To Discount on bond investment $12,297,757
(Being investment in bond recorded)
2 30-Jun-18 Cash Dr ($80,000,000 * 8% * 6/12) $3,200,000
Discount on bond investment Dr $185,112
         To Interest revenue ($67,702,243*10%*6/12) $3,385,112.00
(Being revenue recognition for bond interest and discount amortized)
3 31-Dec-18 Cash Dr ($80,000,000 * 8% * 6/12) $3,200,000
Discount on bond investment Dr $194,368
         To Interest revenue [($67,702,243 + $185,112)*10%*6/12] $3,394,368
(Being revenue recognition for bond interest and discount amortized)
0 0
Add a comment
Know the answer?
Add Answer to:
The Bradford Company issued 8% bonds, dated January 1, with a face amount of $80 million...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • The Bradford Company issued 12% bonds, dated January 1, with a face amount of $92 million...

    The Bradford Company issued 12% bonds, dated January 1, with a face amount of $92 million on January 1, 2021. The bonds mature on December 31, 2030 (10 years). For bonds of similar risk and maturity, the market yield is 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. Determine...

  • The Bradford Company issued 8% bonds, dated January 1, with a face amount of $50 million...

    The Bradford Company issued 8% bonds, dated January 1, with a face amount of $50 million on January 1, 2021 to Saxton-Bose Corporation. The bonds mature on December 31, 2030. For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. 1. Prepare the journal entry to record the purchase of the bonds by Saxton-Bose on January 1, 2021. 2. Prepare the journal entry to record interest for Saxton-Bose...

  • The Bradford Company issued 8% bonds, dated January 1, with a face amount of $50 million...

    The Bradford Company issued 8% bonds, dated January 1, with a face amount of $50 million on January 1, 2021 to Saxton-Bose Corporation. The bonds mature on December 31, 2030 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. 1. Prepare the journal entry to record the purchase of the bonds by Saxton-Bose on January 1, 2021. 2. Prepare the journal entry to record interest...

  • The Bradford Company issued 8% bonds, dated January 1, with a face amount of $50 million...

    The Bradford Company issued 8% bonds, dated January 1, with a face amount of $50 million on January 1, 2021 to Saxton-Bose Corporation. The bonds mature on December 31, 2030 (20 years). For bonds of similar risk and maturity, the market yield is 10%. 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.)...

  • The Bradford Company issued 8% bonds, dated January 1, with a face amount of $100 million...

    The Bradford Company issued 8% bonds, dated January 1, with a face amount of $100 million on January 1, 2021 to Saxton-Bose Corporation. The bonds mature on December 31, 2030 (20 years). For bonds of similar risk and maturity, the market yield is 10%. 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.)...

  • The Bradford Company issued 8% bonds, dated January 1, with a face amount of $60 million...

    The Bradford Company issued 8% bonds, dated January 1, with a face amount of $60 million on January 1, 2018 to Saxton-Bose Corporation. The bonds mature on December 31, 2023 (6 years). For bonds of similar risk and maturity, the market yield is 10%. 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.):...

  • The Bradford Company issued 10% bonds, dated January 1, with a face amount of $75 million on January 1, 2021 to Saxton-Bose Corporation.

    The Bradford Company issued 10% bonds, dated January 1, with a face amount of $75 million on January 1, 2021 to Saxton-Bose Corporation. The bonds mature on December 31, 2030 (6 years). For bonds of similar risk and maturity, the market yield is 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....

  • The Bradford Company issued 8% bonds, dated January 1, with a face amount of $50 million...

    The Bradford Company issued 8% bonds, dated January 1, with a face amount of $50 million on January 1, 2013 to Saxton-Bose Corporation. The bonds mature on December 31, 2032 (20 years). For bonds of similar risk and maturity, the market yield is 10%. 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.):...

  • On September 30, 2021, the San Fillipo Corporation issued 8% stated rate bonds with a face...

    On September 30, 2021, the San Fillipo Corporation issued 8% stated rate bonds with a face amount of $340 million. The bonds mature on September 30, 2041 (20 years). The market rate of interest for similar bonds was 10%. Interest is paid semiannually on March 31 and September 30. ((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: Determine the price of...

  • Please help thank you January 1, 2012 Kristy Corp is issuing 400,000 of 10% 3-year bonds...

    Please help thank you January 1, 2012 Kristy Corp is issuing 400,000 of 10% 3-year bonds with semiannual interest payments. Potential bond investors want a rate of 8% interest (market Rate). Compute the market price (present value) of the bonds and the "Closing Price % of Face". 14 AE10-17 PV Bond B Kristy Assignment 400k 896 Prem Video XX Show your calculations including the #'s from the PV tables. Text pages 384 - 387 7e Calculate Present value of Bond...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT