Homework Answers
| Semi-annual Interest payment | 12000000*10%/2 | 600000 | |
| Present value of bond interest payment | coupon payment*PVAF at 4% for 10 semiannual period | 600000*8.1109 | 4866540 |
| coupon payment | 600000 | ||
| PVAF at 4% for 10 semiannual period | 8.1109 | ||
| present value of bond face amount | face value * PVF at 4% at 10th period | 12000000*.67556 | 8106720 |
| face value | 12000000 | ||
| PVF at 4% for 10th period | 0.67556 | ||
| Bond price | 12973260 | ||
| Journal entries | |||
| date | explanation | debit | credit |
| 1-Apr | cash | 12973260 | |
| bonds payable | 12000000 | ||
| premium on bonds | 973260 | ||
| 1-Oct | interest expense | 502674 | |
| premium on bonds payable | 97326 | ||
| cash | 600000 |
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Sample Bond Questions Lerner Corporation wholesales repair products to equipment manufacturers Lerner Corporation issued $12,000,000 of...
nmen Use the following tables to calculate the present value of a $342,000-5%, 6-year bond that...
nmen Use the following tables to calculate the present value of a $342,000-5%, 6-year bond that pays $17,100 interest annually, if the market rate of interest is 69, Round to the nearest dollar. Present Value of $1 Present Value of Annuity of $1 Periods 5% 6% 7% 10%: Periods 5% 6% 7% 10% 90909 2 1.85941 1.83339 1.80802 1.73554 3 86384 83962 .81630 751313 2.72325 2.67301 2.62432 2.48685 3.54595 3.46511 3.38721 3.16987 5 4.32948 4.21236 4.10020 3.79079 6 .7 6...
TABLE 3 Present Value of 1 (n) Periods 2 3 4 5 6 7 8 9...
TABLE 3 Present Value of 1 (n) Periods 2 3 4 5 6 7 8 9 10 4% .96154 .92456 .88900 .85480 .82193 .79031 .75992 .73069 .70259 .67556 .64958 .62460 .60057 .57748 .55526 .53391 51337 .49363 .47464 .45639 5% .95238 .90703 .86384 .82270 .78353 .74622 .71068 .67684 .64461 .61391 .58468 .55684 .53032 .50507 .48102 .45811 .43630 .41552 .39573 .37689 6% .94340 .89000 .83962 .79209 .74726 .70496 .66506 .62741 .59190 .55839 .52679 .49697 .46884 .44230 41727 .39365 .37136 .35034 .33051 31180...
Hillsong Inc. manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of...
Hillsong Inc. manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Hillsong spent $55,000 to keep it operational. The existing sewing machine can be sold today for $239,855. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7: Year 1 $389,000 2...
Daan Corporation wholesales repair products to equipment manufacturers. On April 1, 2016, Daan Corporation issued $1,100,000...
Daan Corporation wholesales repair products to equipment manufacturers. On April 1, 2016, Daan Corporation issued $1,100,000 of 4-year, 12% bonds at a market (effective) interest rate of 9%, receiving cash of $1,208,833. Interest is payable semiannually on April 1 and October 1. a. Journalize the entry to record the issuance of bonds on April 1, 2016. For a compound transaction, if an amount box does not require an entry, leave it blank. Cash Premium on Bonds Payable Bonds Payable...
Use the following tables to calculate the present value of a $506,000 @ 5%, 5-year bond...
Use the following tables to calculate the present value of a $506,000 @ 5%, 5-year bond that pays $25,300 interest annually, if the market rate of interest is 10%. Round to the nearest dollar Present Value of $1 Present Value of Annuity of $1 6% 94340 Periods 5% 6% 7% 10% | Periods 5% 10% 95238 .94340 .93458.909091 90703 .89000 .87344 .826452 86384 .83962 .81630 751313 82270 .79209.76290 683014 78353 74726 .71299 .62092 74622 70496 .66634.56447 71068 .66506 .62275 .51316...
Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $1,900,000 of...
Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $1,900,000 of 8-year, 8% bonds at a market (effective) interest rate of 7%, receiving cash of $2,014,896. Interest is payable semiannually on April 1 and October 1. a. Journalize the entry to record the issuance of bonds on April 1, 20Y1. If an amount box does not require an entry, leave it blank. b. Journalize the entry to record the first interest payment on October 1,...
The following terms relate to independent bond issues: 400 bonds; $1,000 face value; 8% stated rate;...
The following terms relate to independent bond issues: 400
bonds; $1,000 face value; 8% stated rate; 5 years; annual interest
payments 400 bonds; $1,000 face value; 8% stated rate; 5 years;
semiannual interest payments 820 bonds; $1,000 face value; 8%
stated rate; 10 years; semiannual interest payments 2,150 bonds;
$500 face value; 12% stated rate; 15 years; semiannual interest
payments Use the appropriate present value table: PV of $1 and PV
of Annuity of $1 Required: Assuming the market rate...
Blossom Leasing Company agrees to lease equipment to Blue Corporation on January 1, 2017. The fol...
Blossom Leasing Company agrees to lease equipment to Blue Corporation on January 1, 2017. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $569,000, and the fair value of the asset on January 1, 2017, is $682,000. 3. At the end of the lease term, the asset reverts to the...
Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, Year 1, Smiley Corporation issued...
Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, Year 1, Smiley Corporation issued $18,400,000 of five-year, 8% bonds at a market (effective) interest rate of 7%, receiving cash of $19,165,153. Interest is payable semiannually on April 1 and October 1. Required: A. Journalize the entries to record the following. Refer to the Chart of Accounts for exact wording of account titles. 1. Issuance of bonds on April 1. 2. First interest payment on October 1 and amortization...
Find the present value of an investment in equipment if it is expected to provide annual...
Find the present value of an investment in equipment if it is expected to provide annual savings of $61,000 for 10 years and to have a resale value of $69,000 at the end of that period. Assume an interest rate of 9% and that savings are realized at year end. (Round factor values to 5 decimal places, e.g. 1.25125 and final answer to O decimal places, e.g. 458,581.) (Use the below tables.) PRESENT VALUE OF AN ORDINARY ANNUITY OF 1...
nmen Use the following tables to calculate the present value of a $342,000-5%, 6-year bond that pays $17,100 interest annually, if the market rate of interest is 69, Round to the nearest dollar. Present Value of $1 Present Value of Annuity of $1 Periods 5% 6% 7% 10%: Periods 5% 6% 7% 10% 90909 2 1.85941 1.83339 1.80802 1.73554 3 86384 83962 .81630 751313 2.72325 2.67301 2.62432 2.48685 3.54595 3.46511 3.38721 3.16987 5 4.32948 4.21236 4.10020 3.79079 6 .7 6...
TABLE 3 Present Value of 1 (n) Periods 2 3 4 5 6 7 8 9 10 4% .96154 .92456 .88900 .85480 .82193 .79031 .75992 .73069 .70259 .67556 .64958 .62460 .60057 .57748 .55526 .53391 51337 .49363 .47464 .45639 5% .95238 .90703 .86384 .82270 .78353 .74622 .71068 .67684 .64461 .61391 .58468 .55684 .53032 .50507 .48102 .45811 .43630 .41552 .39573 .37689 6% .94340 .89000 .83962 .79209 .74726 .70496 .66506 .62741 .59190 .55839 .52679 .49697 .46884 .44230 41727 .39365 .37136 .35034 .33051 31180...
Use the following tables to calculate the present value of a $506,000 @ 5%, 5-year bond that pays $25,300 interest annually, if the market rate of interest is 10%. Round to the nearest dollar Present Value of $1 Present Value of Annuity of $1 6% 94340 Periods 5% 6% 7% 10% | Periods 5% 10% 95238 .94340 .93458.909091 90703 .89000 .87344 .826452 86384 .83962 .81630 751313 82270 .79209.76290 683014 78353 74726 .71299 .62092 74622 70496 .66634.56447 71068 .66506 .62275 .51316...
Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $1,900,000 of 8-year, 8% bonds at a market (effective) interest rate of 7%, receiving cash of $2,014,896. Interest is payable semiannually on April 1 and October 1. a. Journalize the entry to record the issuance of bonds on April 1, 20Y1. If an amount box does not require an entry, leave it blank. b. Journalize the entry to record the first interest payment on October 1,...
The following terms relate to independent bond issues: 400
bonds; $1,000 face value; 8% stated rate; 5 years; annual interest
payments 400 bonds; $1,000 face value; 8% stated rate; 5 years;
semiannual interest payments 820 bonds; $1,000 face value; 8%
stated rate; 10 years; semiannual interest payments 2,150 bonds;
$500 face value; 12% stated rate; 15 years; semiannual interest
payments Use the appropriate present value table: PV of $1 and PV
of Annuity of $1 Required: Assuming the market rate...
Blossom Leasing Company agrees to lease equipment to Blue Corporation on January 1, 2017. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $569,000, and the fair value of the asset on January 1, 2017, is $682,000. 3. At the end of the lease term, the asset reverts to the...
Find the present value of an investment in equipment if it is expected to provide annual savings of $61,000 for 10 years and to have a resale value of $69,000 at the end of that period. Assume an interest rate of 9% and that savings are realized at year end. (Round factor values to 5 decimal places, e.g. 1.25125 and final answer to O decimal places, e.g. 458,581.) (Use the below tables.) PRESENT VALUE OF AN ORDINARY ANNUITY OF 1...
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