ZuoTi.Pro
Question

The Alfa company issued bonds with a par value of $ 60 million and a nominal...

The Alfa company issued bonds with a par value of $ 60 million and a nominal interest rate of 9%. The bonds pay interest every six months on January 1 and July 1. They were issued on July 1, 2019 and on that date had a duration of 15 years. On the issuance date, the market interest rate (yield) was 7.5%.

A. Prepare the journal entry to record the issuance of the bonds on July 1, 2019.

b. Prepare the wage entry for July 1, 2020.

c. If with five years (10 semesters) until the bonds mature, the company withdraws them in the amount of $ 62 million, calculate the gain or loss on the withdrawal of the bonds.

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

Homework Answers

Answer #1

Working notes: Based on PV table Amount PV factor at 3.75% 0.33140 17.82925 Face value-Bond $60,000,000 Cash interest $2,700,

0 0
Add a comment
Know the answer?
Add Answer to:
The Alfa company issued bonds with a par value of $ 60 million and a nominal...
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

  • 1. The Alfa company issued bonds with par value of $ 50 million and a nominal...

    1. The Alfa company issued bonds with par value of $ 50 million and a nominal interest rate of 6.50%. The bonds pay interest every six months on January 1 and July 1. They were issued on July 1, 2019 and on that date had a duration of 20 years. On the issuance date, the market interest rate (yield) was 5.25%. A. Prepare the journal entry to record the issuance of the bonds on July 1, 2019. b. Prepare the...

  • Alfa issued bonds with an even value of $60 million and a nominal interest rate of...

    Alfa issued bonds with an even value of $60 million and a nominal interest rate of 7%. Bonuses pay interest every six months on January 1 and July 1. They aired on July 1, 2019 and lasted for 15 years on that date. At the date of issue the market interest rate (yield) was 8.5%. A.Prepare the jornal entry to record the issuance of the bonds on July 1, 2019. B. Prepare the jornal entrance for July 1, 2020. C....

  • Company XYZ issued bonds with a par value of $ 60 million and a nominal interest...

    Company XYZ issued bonds with a par value of $ 60 million and a nominal interest rate of 7%. The bonds pay interest every six months on January 1 and July 1. They were issued on July 1, 2019 and on that date had a duration of 15 years. On the issue date, the market interest rate (yield) was 8.5%. Assume the presented data, except that the bonds do NOT pay periodic interest to answer the following questions: A. Prepare...

  • Dallas Clothing Company issued $400,000 of 6% serial bonds on July 1, 2019, at face value....

    Dallas Clothing Company issued $400,000 of 6% serial bonds on July 1, 2019, at face value. The bonds are dated July 1, 2019; they call for semiannual interest payments on July 1 and January 1; and they mature at the rate of $100,000 per year, with the first maturity date falling on July 1, 2020. The company's accounting period ends on September 30. A. Prepare the journal entry to record the issuance of the bonds on July 1, 2019. B....

  • On January 1, 2019, Bishop Company issued 8% bonds dated January 1, 2019, with a face...

    On January 1, 2019, Bishop Company issued 8% bonds dated January 1, 2019, with a face amount of $20 million. The bonds mature in 2028 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. Determine the price of the bonds at January 1, 2019. Show computations Prepare the journal entry to record the bond issuance by Bishop on January 1, 2019. Prepare the journal entry...

  • Bringham Company issues bonds with a par value of $800,000 on their stated issue date.

    Bringham Company issues bonds with a par value of $800,000 on their stated issue date. The bonds mature in 10 years and pay 6% annual interest in semiannual payments. On the issue date, the annual market rate for the bonds is 8%. 1. What is the amount of each semiannual interest payment for these bonds? 2. How many semiannual interest payments will be made on these bonds over their life? 3. Use the interest rates given to determine whether the bonds are issued...

  • On January 1, 2021, Instaform, Inc., issued 14% bonds with a face amount of $60 million,...

    On January 1, 2021, Instaform, Inc., issued 14% bonds with a face amount of $60 million, dated January 1. The bonds mature in 2040 (20 years). The market yield for bonds of similar risk and maturity is 16%. Interest is paid semiannually. Required: 1-a. Determine the price of the bonds at January 1, 2021. 1-b. Prepare the journal entry to record their issuance by Instaform. 2-a. Assume the market rate was 12%. Determine the price of the bonds at January...

  • On January 1, Taylor Inc. issued $200,000 par bonds with a stated rate of 8% that...

    On January 1, Taylor Inc. issued $200,000 par bonds with a stated rate of 8% that mature in 5 years. The market rate on the date of issuance was 10% and the bonds pay interest semiannually on June 30 and December 31. Prepare the journal entry to record the issuance of the bonds. Also prepare the journal entry for June 30 and December 31 of the first year assuming Taylor uses the SL amortization method. Finally, indicate the total amount...

  • Tano Company issues bonds with a par value of $92,000 on January 1, 2019. The bonds’...

    Tano Company issues bonds with a par value of $92,000 on January 1, 2019. The bonds’ annual contract rate is 10%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 12%, and the bonds are sold for $87,480. 1. What is the amount of the discount on these bonds at issuance? 2. How much total bond interest expense will be recognized over...

  • 2) A company issued 9%, 10-year bonds with a par value of $100,000. Interest is paid...

    2) A company issued 9%, 10-year bonds with a par value of $100,000. Interest is paid semiannually. The market interest rate on the issue date was 10%, and the issuer received $95,016 cash for the bonds. Prepare a journal entry to record the issuance of the bond On the first semiannual interest date, what amount of cash should be paid to the holders of these bonds for interest? On January 1, ABC company issued a 12%, 10-year bond with a...

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