Homework Answers
| 1 | Face Value of Bonds | $ 280,000 |
| Issue Value of Bonds (280000*109%) | $ 305,200 | |
| 2 | Face Value of Bonds | $ 280,000 |
| Annual Coupon (280000*13%) | $ 36,400 | |
| Number of Coupon Payments (2037-2017) | 20 | |
| Total cash payment (280000+20*36400) | $ 1,008,000 | |
| 3 | Total Interest Expense (1008000-305200) | $ 702,800 |
| 4 | Annual Interest Expense by Straight Line Amortization (36400-(305200-280000)/20) | $ 35,140 |
| Multiply Annual Interest by 20 | $ 702,800 |
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Colwood Manufacturing Inc. has $280,000 of 13% debenture bonds outstanding. The bonds were issued at 109...
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Malcolm Company borrowed money by issuing $4,000,000 of 4% bonds payable at 102.7 on July 1, 2018. The bonds are five-y...
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Assume that, on January 1, Austin Incorporated issued $2,400,000, 5% bonds t 102.3. The bonds are five-year bonds, with...
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On January 1, 2018, Aaron Unlimited issues 8%, 20-year bonds payable with a face value of...
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Problem 14-4 Bond amortization schedule [LO14-2) On January 1, 2018, Tennessee Harvester Corporation issued debenture bonds...
Problem 14-4 Bond amortization schedule [LO14-2) On January 1, 2018, Tennessee Harvester Corporation issued debenture bonds that pay interest semlannually on June 30 and December 31. Portions of the bond amortization schedule appear below 280,000293,611 280,000 280,000295,293 280,000 296,211 280,000297,18 280,000 298,215 13,611 14,428 15,293 16,211 17,184 18,215 4,907,129 294,428 4,953,061 4,970,245 4.988,46o 38 39 40 280,000397,547 280,000404, 600 280,000 412,072 117,547 124,600 132,072 6,867,928 7,000,000 1. What is the face amount of the bonds? 2. What is the initial...
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On January 31, 018, Driftwood Logistics, Inc., issued five-year, 2% bonds payable with a face value of $11,000,000. The bonds were issued at 94 and pay interest on January 31 and July 31. Driftwood Logistics amortizes bond discounts using the straight-line method.Read the requirement a. Record the issuance of the bond payable on January 31, 2018. (Record debits first, then credits. Exclude explanations from any journal entries.) Journal Entry Date Accounts Debit Credit Jan 31 Cash Discount on Bonds...
On January 1, 2021, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June...
On January 1, 2021, Tennessee Harvester Corporation issued
debenture bonds that pay interest semiannually on June 30 and
December 31. Portions of the bond amortization schedule appear
below:
Payment
Cash
Payment
Effective
Interest
Increase in
Balance
Outstanding
Balance
7,290,000
1
352,000
364,500
12,500
7,302,500
2
352,000
365,125
13,125
7,315,625
3
352,000
365,781
13,781
7,329,406
4
352,000
366,470
14,470
7,343,876
5
352,000
367,194
15,194
7,359,070
6
352,000
367,954
15,954
7,375,024
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Moreau Manufacturing Inc. has $290,000 of 12% debenture bonds outstanding. The bonds were issued at 107 in 2017 and mature in 2037. Requirements 1. How much cash did Moreau receive when it issued these bonds? 2. How much cash in total will Moreau pay the bondholders through the maturity date of the bonds? 3. Take the difference between your answers to Requirements 1 and 2. This difference represents Moreau's total interest expense over the life of the bonds. (Challenge) 4....
Homer Company borrowed money by issuing $4,500,000 of 8% bonds payable at 102.5 on July 1, 2018. The bonds are five-year bonds and pay interest each January 1 and July 1. Read the requirements. 1. How much cash did Homer receive when it issued the bonds payable? Journalize this transaction. Requirements - X Homer received $ when the bonds payable were issued. 1. How much cash did Homer receive when it issued the bonds payable? Journalize this transaction. How much...
Malcolm Company borrowed money by issuing $4,000,000 of 4% bonds payable at 102.7 on July 1, 2018. The bonds are five-year bonds and pay interest each January 1 and July 1. Read the requirements. 1. How much cash did Malcolm receive when it issued the bonds payable? Journalize this transaction. Malcolm received $ when the bonds payable were issued. i Requirements 1. How much cash did Malcolm receive when it issued the bonds payable? Journalize this transaction. 2. How much...
Assume that, on January 1, Austin Incorporated issued $2,400,000, 5% bonds t 102.3. The bonds are five-year bonds, with interest payments each June 30th and December 31st. The company uses straight-line amortization. (Round amounts to the nearest whole dollar throughout.) (1) Indicate how much the company received at issuance. when the bonds payable were issued. Austin received $ (2) Indicate how much the company will pay back at maturity. At maturity, Austin must pay back $ (3) Indicate the amount...
13. Tom Cruise Lines, Inc., issued bonds five years ago at $1,000 per bond. These bonds had a 25-year life when issued and the annual interest payment was then 12 percent. This return was in line with the required returns by bondholders at that point as described below: Real rate of return Inflation premium Risk premium Total return 3% 5 4 12% Assume that five years later the inflation premium is only 3 percent and is appro- priately reflected in...
On January 1, 2018, Aaron Unlimited issues 8%, 20-year bonds payable with a face value of $240,000. The bonds are issued at 104 and pay interest on June 30 and December 31. (Assume bonds payable are amortized using the straight-line amortization method.) Read the requirements. Requirements Requirement 1. Journalize the i s on the last line of the journal entry) Date Accd 2018 Jan. 1 1. Journalize the issuance of the bonds on January 1, 2018. 2. Journalize the semiannual...
Problem 14-4 Bond amortization schedule [LO14-2) On January 1, 2018, Tennessee Harvester Corporation issued debenture bonds that pay interest semlannually on June 30 and December 31. Portions of the bond amortization schedule appear below 280,000293,611 280,000 280,000295,293 280,000 296,211 280,000297,18 280,000 298,215 13,611 14,428 15,293 16,211 17,184 18,215 4,907,129 294,428 4,953,061 4,970,245 4.988,46o 38 39 40 280,000397,547 280,000404, 600 280,000 412,072 117,547 124,600 132,072 6,867,928 7,000,000 1. What is the face amount of the bonds? 2. What is the initial...
On January 1, 2021, Tennessee Harvester Corporation issued
debenture bonds that pay interest semiannually on June 30 and
December 31. Portions of the bond amortization schedule appear
below:
Payment
Cash
Payment
Effective
Interest
Increase in
Balance
Outstanding
Balance
7,290,000
1
352,000
364,500
12,500
7,302,500
2
352,000
365,125
13,125
7,315,625
3
352,000
365,781
13,781
7,329,406
4
352,000
366,470
14,470
7,343,876
5
352,000
367,194
15,194
7,359,070
6
352,000
367,954
15,954
7,375,024
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~...
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