Part A
The bonds were issued in a Premium because cash received ($2403407) is higher than the face value of bonds ($2200000). Bond premium = 2403407-2200000 = $203407
Part B
Year |
coupon |
Interest expenses |
Discount/premium amortization |
Discount/premium balance |
Bonds payable, net |
0 |
203407 |
2403407 |
|||
2015 |
220000 |
192273 |
27727 |
175680 |
2375680 |
2016 |
220000 |
190054 |
29946 |
145734 |
2345734 |
2017 |
220000 |
187659 |
32341 |
113393 |
2313393 |
2018 |
220000 |
185071 |
34929 |
78464 |
2278464 |
2019 |
220000 |
182277 |
37723 |
40741 |
2240741 |
2020 |
220000 |
179259 |
40741 |
0 |
2200000 |
Coupon = 2200000*10%= 220000
Interest expense = previous bonds payable, net *8%
Discount/premium amortization = coupon – interest expense
Discount/premium balance = previous Discount/premium balance - Discount/premium amortization
Bonds payable, net = previous Bonds payable, net - Discount/premium amortization
Part C
Date |
Account titles and explanation |
Debit |
Credit |
December 31, 2015 |
Cash |
220000 |
|
Premium on bonds payable |
27727 |
||
Interest revenue |
192273 |
||
December 31, 2016 |
Cash |
220000 |
|
Premium on bonds payable |
29946 |
||
Interest revenue |
190054 |
Part D
Capital gain = 2313393-2270000 = $43393 (carrying value is greater than purchase price)
Question 2: Chupack Ltd. has issued bonds with a face value of $2,200,000. The bonds were...
Question 2 On January 1, 2018, Carvel Corp. issued five-year bonds with a face value of $480,000 and a coupon interest rate of 6%, with interest payable semi-annually. (a) Your answer is correct. Prepare a partial bond amortization table for the first two interest payments assuming that interest is paid on July 1 and January 1 and that the bonds sold when the market interest rate was 5%. (Round answers to 0 decimal places, e.g. 5,255.) CARVEL CORP. Bond Premium...
Question 2 On January 1, 2018, Carvel Corp. issued five-year bonds with a face value of $590,000 and a coupon interest rate of 6%, with interest payable semi-annually. (a) Prepare a partial bond amortization table for the first two interest payments assuming that interest is paid on July 1 and January 1 and that the bonds sold when the market interest rate was 5%. (Round answers to o decimal places, e.g. 5,255.) CARVEL CORP. Bond Premium Amortization On January 1,...
On January 1, Soren Enterprises issued 15-year bonds with a face value of $200,000. The bonds carry a coupon rate of 8 percent, and interest is paid semi-annually. On the issue date, the annual market interest rate for bonds issued by companies with similar riskiness was 10 percent. The issuance price of the bonds was $169,255. Which ONE of the following would be included in the journal entry necessary on the books of the bond issuer to record the SECOND...
10 Question5 coupon rate of 8% and were issued to ny issued S1 million, 10-year face-value bonds. The bonds have a year end is December 31. Required Copy the yield 6%. The bonds pay interest on May 1 and November 1 . BLK's and complete it. Show all following partial bond amortization schedule in your exam booklet calculations Value of Bonds Interest Period nterest Discount/Premium Discount/Premium Carrying Balance Amortization Interest Expense 2 Opening 2 May 1, 2012 2 November 1,...
if $691,000 of 8% bonds are issued at 94, what is the amount of cash recieved from the sale ? Calculator If $691,000 of 8% bonds are issued at 94, what is the amount of cash received from the sale? Select the correct answer. $635,720 $649,540 $746,280 $691,000 Assignment Main.do?invokerStake AssignmentSessionLocator Binprogressa false Calculator A corporation issues for cash $1,000,000 of 10%, 20-year bonds, interest payable annually, at a time when the market rate of interest is 12%. The straight-line...
Hopkins Ltd. issued five-year bonds with a face value of $150,000 on January 1. The bonds have a coupon interest rate of 6% and interest is paid semi-annually on June 30 and December 31. The market interest rate was 7% when the bonds were issued at a price of 96 Using above information, determine the proceeds received by the company when the bonds were issued. Proceeds from issue of the bonds LINK TO TEXT Determine the interest expense recorded for...
Question 2 On January 1, 2018, Carvel Corp. issued five-year bonds with a face value of $480,000 and a coupon interest rate of 6%, with interest payable semi-annually. (a) Your answer is correct. Prepare a partial bond amortization table for the first two interest payments assuming that interest is paid on July 1 and January 1 and that the bonds sold when the market interest rate was 5%. (Round answers to 0 decimal places, e.g. 5,255.) CARVEL CORP. Bond Premium...
Hopkins Ltd. issued five-year bonds with a face value of $160,000 on January 1. The bonds have a coupon interest rate of 6% and interest is paid semi-annually on June 30 and December 31. The market interest rate was 7% when the bonds were issued at a price of 97. Your answer is correct Using above information, determine the proceeds received by the company when the bonds were issued. Proceeds from issue of the bonds 155200 LINK TO TEXT Your...
On January 1, 2019, Company C. issued five-year bonds with a face value of $500,000 and a coupon interest rate of 6%, with interest payable semi-annually. 1. Prepare a partial bond amortization table for the first two interest payments assuming that interest is paid on July 1 and January 1 and that the bonds sold based on the following scenario. 2. Record the journal entries relating to the bonds on January 1, July 1, and December 31 Market Rate 7%...
Tahoe Tent Ltd. issued bonds with a par value of $809,000 on January 1, 2017. The annual contract rate on the bonds was 16.50%, and the interest is paid semiannually. The bonds mature after three years. The annual market interest rate at the date of issuance was 14.50%, and the bonds were sold for $847,265. a. What is the amount of the original premium on these bonds? (Use financial calculator for calculating PV's.) Premium b. How much total bond interest...