Homework Answers
On year 2 Company will incur a loss
Market interest rate is 6%
Whereas company is paying interest @9%
So the company is paying 3% more than market rate, company will incur loss.
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On January 1, Year 1. a company issues $100.000 of 8% bonds maturing in 10 years when the market rate of intere...
On January 1, Year 1. a company issues $100.000 of 8% bonds maturing in 10 years when the market rate of intere...
On January 1, Year 1. a company issues $100.000 of 8% bonds maturing in 10 years when the market rate of interest is 9%. The bonds were issued at a discount. Market interest rates drop to 6% by December 31, Year 2. The company retires these bonds on December 31, Year 2. Which of the following is true? Multiple Choice The bonds can be retired at their carrying value The company will incur a loss The company will incur again...
Knowledge Check 01 Zeta Corporation issues $100,000 of 8% bonds maturing in 10 years on January...
Knowledge Check 01 Zeta Corporation issues $100,000 of 8% bonds maturing in 10 years on January 1, Year 1, when the market rate of interest is 9%. The bonds were issued at a discount, Market interest rates drop to 7% by December 31, Year 1. The company retires these bonds on December 31, Year 1. How much did it cost the company to retire them? Multiple Choice $106,595 $100,000 o oo $93,496
On January 1, 2017, Shay issues $320,000 of 9%, 20-year bonds at a price of 96.75....
On January 1, 2017, Shay issues $320,000 of 9%, 20-year bonds at a price of 96.75. Six years later, on January 1, 2023, Shay retires 25% of these bonds by buying them on the open market at 104.75. All interest is accounted for and paid through December 31, 2022, the day before the purchase. The straight-line method is used to amortize any bond discount. 1- How much does the company receive when it issues the bonds on January 1, 2017?...
On January 1, 2019, Shay Company issues $430,000 of 8%, 15-year bonds. The bonds sell for...
On January 1, 2019, Shay Company issues $430,000 of 8%, 15-year bonds. The bonds sell for $417,100. Six years later, on January 1, 2025, Shay retires these bonds by buying them on the open market for $450,425. All interest is accounted for and paid through December 31, 2024, the day before the purchase. The straight-line method is used to amortize any bond discount. 1. What is the amount of the discount on the bonds at issuance? 2. How much amortization...
On January 1, 2019, Shay Company issues $400,000 of 10%, 12-year bonds. The bonds sell for...
On January 1, 2019, Shay Company issues $400,000 of 10%, 12-year
bonds. The bonds sell for $391,000. Six years later, on January 1,
2025, Shay retires these bonds by buying them on the open market
for $419,000. All interest is accounted for and paid through
December 31, 2024, the day before the purchase. The straight-line
method is used to amortize any bond discount.
1. What is the amount of the discount on the bonds
at issuance?
2. How much amortization...
On January 1, 2018, White, Inc. issues $1,000,000 total face value, 10-yr bonds with an annual...
On January 1, 2018, White, Inc. issues $1,000,000 total face value, 10-yr bonds with an annual stated interest rate of 5%. Interest is paid semi-annually on June 30th and December 31st. The company received $559,260 upon issuance. (Solutions posted online) Period Cash Paid Interest Expense Amortization of Discount/Premium Unamortized Premium/Discount Bonds Carrying Value (Book Value) Issuance Don’t use Don’t use Don’t use 6/30/2018 12/31/2018 6/30/2019 Are the bonds issued at a premium, a discount, or at face value? What is...
On January 1, 2019, Shay Company issues $290,000 of 11%, 20-year bonds. The bonds sell for...
On January 1, 2019, Shay Company issues $290,000 of 11%, 20-year bonds. The bonds sell for $282,750. Six years later on January 2025, Shay retires these bonds by buying them on the open market for $303,050. All interest is accounted for and paid through December 31, 2024, the day before the purchase. The straightline method is used to amortize any bond discount 1. What is the amount of the discount on the bonds at issuance? 2. How much amortization of...
On January 1, 2018, White, Inc. issues $1,000,000 total face value, 10-yr bonds with an annual...
On January 1, 2018, White, Inc. issues $1,000,000 total face value, 10-yr bonds with an annual stated interest rate of 5%. Interest is paid semi-annually on June 30th and December 31st. The company received $559,260 upon issuance. The chart below may help, but will not be graded. (Solutions included below; Need Steps to get to the answers) Period Cash Paid Interest Expense Amortization of Discount/Premium Unamortized Premium/Discount Bonds Carrying Value (Book Value) Issuance Don’t use Don’t use Don’t use 6/30/2018...
Hooker Company issues $200,000 of ten-year, 8% bonds to yield 10% on January 1, 2018. The...
Hooker Company issues $200,000 of ten-year, 8% bonds to yield 10% on January 1, 2018. The bonds pay interest annually on December 31. The bonds were sold at a discount of $24,578. The amount of cash interest paid in 2018 on the bonds is: Multiple Choice a) $14,458. b) $16,000. C) $17,542. d) $20,000.
On January 1, 2019, Shay Company issues $320,000 of 9%, 20-year bonds. The bonds sell for...
On January 1, 2019, Shay Company issues $320,000 of 9%, 20-year bonds. The bonds sell for $309,600. Six years later, on January 1, 2025, Shay retires these bonds by buying them on the open market for $335,200. All interest is accounted for and paid through December 31, 2024, the day before the purchase. The straight-line method is used to amortize any bond discount. 1. What is the amount of the discount on the bonds at issuance? 2. How much amortization...
On January 1, Year 1. a company issues $100.000 of 8% bonds maturing in 10 years when the market rate of interest is 9%. The bonds were issued at a discount. Market interest rates drop to 6% by December 31, Year 2. The company retires these bonds on December 31, Year 2. Which of the following is true? Multiple Choice The bonds can be retired at their carrying value The company will incur a loss The company will incur again...
Knowledge Check 01 Zeta Corporation issues $100,000 of 8% bonds maturing in 10 years on January 1, Year 1, when the market rate of interest is 9%. The bonds were issued at a discount, Market interest rates drop to 7% by December 31, Year 1. The company retires these bonds on December 31, Year 1. How much did it cost the company to retire them? Multiple Choice $106,595 $100,000 o oo $93,496
On January 1, 2019, Shay Company issues $400,000 of 10%, 12-year
bonds. The bonds sell for $391,000. Six years later, on January 1,
2025, Shay retires these bonds by buying them on the open market
for $419,000. All interest is accounted for and paid through
December 31, 2024, the day before the purchase. The straight-line
method is used to amortize any bond discount.
1. What is the amount of the discount on the bonds
at issuance?
2. How much amortization...
On January 1, 2019, Shay Company issues $290,000 of 11%, 20-year bonds. The bonds sell for $282,750. Six years later on January 2025, Shay retires these bonds by buying them on the open market for $303,050. All interest is accounted for and paid through December 31, 2024, the day before the purchase. The straightline method is used to amortize any bond discount 1. What is the amount of the discount on the bonds at issuance? 2. How much amortization of...
On January 1, 2019, Shay Company issues $320,000 of 9%, 20-year bonds. The bonds sell for $309,600. Six years later, on January 1, 2025, Shay retires these bonds by buying them on the open market for $335,200. All interest is accounted for and paid through December 31, 2024, the day before the purchase. The straight-line method is used to amortize any bond discount. 1. What is the amount of the discount on the bonds at issuance? 2. How much amortization...
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