ZuoTi.Pro
Question

On January 1, 2018, Solda Co. issued its 10% bonds in the face amount of 8,000,000,...

On January 1, 2018, Solda Co. issued its 10% bonds in the face amount of 8,000,000, which mature on January 1, 2028. The bonds were issued at a time when the market rate was 8%. Using the effective-interest method of annual amortization, what is the bond premium?

A) 9,073,613
B) 1,073,613
C) 972,000
D) 812,000

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

Homework Answers

Answer #1

Bond Valuation FaceValue of the Bond Coupon Rate ssue Date Life of the Bond Interest Pavments Market Rate of Interest 8000000 10% anuary 1st 2018 10 Annually 8% Detemine the Price of the Bond 8000000 0.10 Interest Payment Calculation of Issue Proceeds Market Interest Rate Semi-annually Number of Payments 800000 8% - 10 years n- 10 Receipts PV.PVA @8%) Present Value Interest Payment (Semi-annuall Bond Face value 800000l 6.710081399 80,00,000 0.463193488 53,68,065 37,05,548 90,73,613 Price Of the Bond Issue Answer: Bond Premium: 9073613-80000o0 - B)1,073,613

0 0
Add a comment
Know the answer?
Add Answer to:
On January 1, 2018, Solda Co. issued its 10% bonds in the face amount of 8,000,000,...
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

  • 6 On January 1, 2018, Solis Co. issued its 10% bonds in the face amount of...

    6 On January 1, 2018, Solis Co. issued its 10% bonds in the face amount of $4,000,000, which mature on January 1, 2028. The bonds were issued for $3,100,000 to yield 8%, resulting in bond discount of $900,000. Solis uses the effective-interest method of amortizing bond premium. Interest is payable annually on December 31. What is the amount of Solis's adjusted unamortized bond premium at December 31, 2019?

  • On January 1, 2018, Bonita Industries issued its 11% bonds in the face amount of $8090000,...

    On January 1, 2018, Bonita Industries issued its 11% bonds in the face amount of $8090000, which mature on January 1, 2028. The bonds were issued for $9520000 to yield 9%, resulting in bond premium of $1430000. Bonita uses the effective-interest method of amortizing bond premium. Interest is payable annually on December 31. At December 31, 2018, Bonita's adjusted unamortized bond premium should be

  • 1. On July 1, 2017, Paton Corp. issued 9% bonds in the face amount of $8,000,000,...

    1. On July 1, 2017, Paton Corp. issued 9% bonds in the face amount of $8,000,000, which mature on July 1, 2023. The bonds were issued for $7,648,000 to yield 10%, resulting in a bond discount of $352,000. Paton uses the effective-interest method of amortizing bond discount. Interest is payable annually on June 30. On June 30, 2019, Paton's unamortized bond discount should be which of the following? 2. The Coral Company issues $10,000,000, 7.8%, 20-year bonds to yield 8%...

  • On January 1, 2018, Mania Enterprises issued 10% bonds dated January 1, 2018, with a face amount of $19.1 million. The...

    On January 1, 2018, Mania Enterprises issued 10% bonds dated January 1, 2018, with a face amount of $19.1 million. The bonds mature in 2027 (10 years). For bonds of similar risk and maturity, the market yield is 8%. 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. Enter your answers in whole...

  • 1. On January 1, 2020, Breton Company issued its 8% bonds in the face amount of...

    1. On January 1, 2020, Breton Company issued its 8% bonds in the face amount of $3,000,000, which mature on January 1, 2030. The bonds were issued for $3,441,591 to yield 6%. Geller uses the effective-interest method of amortizing bond premium. Interest is payable annually on December 31. Interest Expense for 2023 is: Answer $_______________ 2. On May 1, 2020, Judice Company issued 400 $1,000 bonds at 104. Each bond was issued with two detachable stock warrants. Shortly after issuance,...

  • 1) On January 1, 2018, Boomer Universal issued 12% bonds dated January 1, 2018, with a...

    1) On January 1, 2018, Boomer Universal issued 12% bonds dated January 1, 2018, with a face amount of $200 million. The bonds mature in 2027 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31.                         Required: 1.   Determine the price of the bonds at January 1, 2018. 2.   Prepare the journal entry to record the bond issuance by Boomer on January 1, 2018. 3.  ...

  • On February 1, 2018, Wolf Inc. issued 10% bonds dated February 1, 2018, with a face...

    On February 1, 2018, Wolf Inc. issued 10% bonds dated February 1, 2018, with a face amount of $200,000. The bonds will mature in 10 years. The effective interest rate for these bonds was 8%. Interest is paid semiannually on July 31 and January 31. Wolf's fiscal year is the calendar year. Wolf uses the effective interest method of amortization. Required: Prepare the bond entry to record interest on July 31, 2018. I was just told this question needs updated....

  • National Orthopedics Co issued 8% bonds, cated January 1, with a face amount of $650,000 on...

    National Orthopedics Co issued 8% bonds, cated January 1, with a face amount of $650,000 on January 1 2018. The bonds mature on December 31, 2021(4 years). For bonds of similars and maturity the market yield was 10%. Interest is paid semiannually on June 30 and December 31(FV of S1 PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $ (Use appropriate factors) from the tables provided.) Required: 1. Determine the price of the...

  • Stafford Co. Issued $200,000 face value, 6%, 10-year bonds on January 1, 2017 for $172,740. The...

    Stafford Co. Issued $200,000 face value, 6%, 10-year bonds on January 1, 2017 for $172,740. The market rate of interest was 8%. Interest is payable semi-annually on June 30 and December 31. Staffer uses the effective interest method to amortize bond premium or discount. (a) Determine the amount of interest expense to be recorded with the first cash interest payment. (b) Determine the carrying value of the bonds on December 31, 2017, after the interest payment has been made. (c)...

  • Stafford Co. Issued $200,000 face value, 6%, 10-year bonds on January 1, 2017 for $172,740. The...

    Stafford Co. Issued $200,000 face value, 6%, 10-year bonds on January 1, 2017 for $172,740. The market rate of interest was 8%. Interest is payable semi-annually on June 30 and December 31. Staffer uses the effective interest method to amortize bond premium or discount. (a) Determine the amount of interest expense to be recorded with the first cash interest payment. (b) Determine the carrying value of the bonds on December 31, 2017, after the interest payment has been made. $...

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