On January 1, 2020, the company has purchased a 14 year $100,000 bonds investment. The bond calls for an annual payment of interest on 12/31 at a contractual (stated) rate of 6%. Given the credit standing of the issuing company, an interest rate of 8.25% has been imputed as the effective rate. The principal amount of the bond is due at maturity. The company classified this bond investment as Held-to-Maturity.
1. At what amount should the investment be recorded on 1/1/20 (i.e., what is the present value of future cash collection for the company)? ( Enter the Excel formula (not numbers) in cell B8 in Worksheet.)
2. Prepare an amortization schedule for the premium or discount for the bond investment in an excel spreadsheet. (Enter the Excel formula (not numbers) in cell B8 in Worksheet.)
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On January 1, 2020, the company has purchased a 14 year $100,000
bonds investment. The bond...
i need help working out the problem and entering it into excel Background: On January 1,...
i need help working out the problem and entering it into
excel
Background: On January 1, 2020, the company has purchased a 14 year $100,000 bonds investment. The bond calls for an annual payment of interest on 12/31 at a contractual (stated) rate of 6%. Given the credit standing of the issuing company, an interest rate of 8.25% has been imputed as the effective rate. The principal amount of the bond is due at maturity. The company classified this bond...
QUESTION: On January 1, 2020, the company purchased $100,000, 10% bond investment at $92,790 due in...
QUESTION: On January 1, 2020, the company purchased $100,000, 10% bond investment at $92,790 due in 5 years, with interest payable annually on December 31. The company classifies this investment as Held-to-Maturity. The company adopt the Effective Interest Method (i.e. Market Interest Rate = 12%) to amortize any discount or premium. Prepare journal entries at the following dates. If no entry is required, write "No entry is required." January 1, 2020, Purchase of Bond Investment: December 31, 2020, the first...
On January 1, 2016, Gates Corporation issued $100,000 of 5-year bonds due December 31, 2020, for...
On January 1, 2016, Gates Corporation issued $100,000 of 5-year bonds due December 31, 2020, for $103,604.78 minus bond issue costs of $3,000. The bonds carry a stated rate of interest of 13% payable annually on December 31 and were issued to yield 12%. The company uses the effective interest method of amortization. Required: Prepare the journal entries to record the issuance of the bonds, all the interest payments, premium amortizations, bond issue cost amortizations, and the repayment of the...
On January 1, 2020, Pharoah Corporation purchased a newly issued $1,525,000 bond. The bond matured on...
On January 1, 2020, Pharoah Corporation purchased a newly issued
$1,525,000 bond. The bond matured on December 31, 2022, and paid
interest at 6% every June 30 and December 31. The market interest
rate was 8%. Pharoah’s fiscal year-end is October 31, and the
company had the intention and ability to hold the bond until its
maturity date. The bond will be accounted using the amortized cost
model.
1. Calculate the price paid for the bond using a financial
calculator...
On January 1, 2020, Sweet Company acquires $130,000 of Spiderman Products, Inc., 9% bonds at a...
On January 1, 2020, Sweet Company acquires $130,000 of Spiderman Products, Inc., 9% bonds at a price of $120,632. Interest is received on January 1 of each year, and the bonds mature on January 1, 2023. The investment will provide Sweet Company a 12% yield. The bonds are dassified as held-to-maturity. Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the straight-line method. (Round answers to 0 decimal places, e.g. 2,500.) Schedule of Interest Revenue and Bond...
On January 1, 2019, Rodgers Company purchased $100,000 face value, 9%, 3-year bonds for $97,462.11, a...
On January 1, 2019, Rodgers Company purchased $100,000 face
value, 9%, 3-year bonds for $97,462.11, a price that yields a 10%
effective annual interest rate. The bonds pay interest semiannually
on June 30 and December 31.
Required:
1.
Record the purchase of the bonds.
2.
Prepare an investment interest income and discount
amortization schedule using the effective interest method.
3.
Record the receipts of interest on June 30, 2019, and June
30, 2021.
Date Cash Debit Interest Income Credit Investment...
On January 1, 2020, Sweet Company acquires $120,000 of Spiderman Products, Inc., 9% bonds at a...
On January 1, 2020, Sweet Company acquires $120,000 of Spiderman Products, Inc., 9% bonds at a price of $114,135. Interest is received on January 1 of each year, and the bonds mature on January 1, 2023. The investment will provide Sweet Company a 11% yield. The bonds are classified as held-to-maturity. Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the straight-line method. (Round answers to o decimal places, e.g. 2,500.) Schedule of Interest Revenue and Bond...
problem 14-6. Before maturity, Foster incorporated sold $500,000 of 12% bonds on january 1, 2019, for...
problem 14-6. Before maturity, Foster incorporated
sold $500,000 of 12% bonds on january 1, 2019, for $470,143.47 a
price that yields a 14% interest rate. the bonds pay interest
semiannually on June 30 and december 31 and are due December 31,
2022. foster uses the effective interest method.
prepare an interest expense and discount ammortization
schedule.
assume the company reacquired the bonds on July 1, 2021 at 104.
prepare journal entries to record the bond retirement.
40 Chapter 14 Financing...
On January 1, a company purchased 4%, 10-year corporate bonds for $63,842,205 as an investment. The...
On January 1, a company purchased 4%, 10-year corporate bonds for $63,842,205 as an investment. The bonds have a face amount of $75 million and are priced to yield 6%. Interest is paid semiannually. Prepare a partial amortization table at the effective interest rate on June 30 and December 31 Prepare the journal entries necessary to record revenue at the effective interest rate on June 30 and December 31 Complete this question by entering your answers in the tabs below....
On January 1, 2016, Gates Corporation issued $100,000 of 5-year bonds due December 31, 2020, for...
On January 1, 2016, Gates Corporation issued $100,000 of 5-year bonds due December 31, 2020, for $103,604.79 minus debt issuance costs of $3,000. The bonds carry a stated rate of interest of 13% payable annually on December 31 and were issued to yield 12%. The company uses the effective interest method of amortization to amortize any discounts or premiums and the straight-line method to amortize the debt issuance costs. Required: Prepare the journal entries to record the issuance of the...
i need help working out the problem and entering it into
excel
Background: On January 1, 2020, the company has purchased a 14 year $100,000 bonds investment. The bond calls for an annual payment of interest on 12/31 at a contractual (stated) rate of 6%. Given the credit standing of the issuing company, an interest rate of 8.25% has been imputed as the effective rate. The principal amount of the bond is due at maturity. The company classified this bond...
QUESTION: On January 1, 2020, the company purchased $100,000, 10% bond investment at $92,790 due in 5 years, with interest payable annually on December 31. The company classifies this investment as Held-to-Maturity. The company adopt the Effective Interest Method (i.e. Market Interest Rate = 12%) to amortize any discount or premium. Prepare journal entries at the following dates. If no entry is required, write "No entry is required." January 1, 2020, Purchase of Bond Investment: December 31, 2020, the first...
On January 1, 2020, Pharoah Corporation purchased a newly issued
$1,525,000 bond. The bond matured on December 31, 2022, and paid
interest at 6% every June 30 and December 31. The market interest
rate was 8%. Pharoah’s fiscal year-end is October 31, and the
company had the intention and ability to hold the bond until its
maturity date. The bond will be accounted using the amortized cost
model.
1. Calculate the price paid for the bond using a financial
calculator...
On January 1, 2020, Sweet Company acquires $130,000 of Spiderman Products, Inc., 9% bonds at a price of $120,632. Interest is received on January 1 of each year, and the bonds mature on January 1, 2023. The investment will provide Sweet Company a 12% yield. The bonds are dassified as held-to-maturity. Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the straight-line method. (Round answers to 0 decimal places, e.g. 2,500.) Schedule of Interest Revenue and Bond...
On January 1, 2019, Rodgers Company purchased $100,000 face
value, 9%, 3-year bonds for $97,462.11, a price that yields a 10%
effective annual interest rate. The bonds pay interest semiannually
on June 30 and December 31.
Required:
1.
Record the purchase of the bonds.
2.
Prepare an investment interest income and discount
amortization schedule using the effective interest method.
3.
Record the receipts of interest on June 30, 2019, and June
30, 2021.
Date Cash Debit Interest Income Credit Investment...
On January 1, 2020, Sweet Company acquires $120,000 of Spiderman Products, Inc., 9% bonds at a price of $114,135. Interest is received on January 1 of each year, and the bonds mature on January 1, 2023. The investment will provide Sweet Company a 11% yield. The bonds are classified as held-to-maturity. Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the straight-line method. (Round answers to o decimal places, e.g. 2,500.) Schedule of Interest Revenue and Bond...
problem 14-6. Before maturity, Foster incorporated
sold $500,000 of 12% bonds on january 1, 2019, for $470,143.47 a
price that yields a 14% interest rate. the bonds pay interest
semiannually on June 30 and december 31 and are due December 31,
2022. foster uses the effective interest method.
prepare an interest expense and discount ammortization
schedule.
assume the company reacquired the bonds on July 1, 2021 at 104.
prepare journal entries to record the bond retirement.
40 Chapter 14 Financing...
On January 1, a company purchased 4%, 10-year corporate bonds for $63,842,205 as an investment. The bonds have a face amount of $75 million and are priced to yield 6%. Interest is paid semiannually. Prepare a partial amortization table at the effective interest rate on June 30 and December 31 Prepare the journal entries necessary to record revenue at the effective interest rate on June 30 and December 31 Complete this question by entering your answers in the tabs below....
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