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 1, 2021.
2-b. Assume the market rate was 12%. Prepare the journal entry to record their issuance by Instaform.
3. Assume Broadcourt Electronics purchased the entire issue in a private placement of the bonds. Using the data in requirement 2, prepare the journal entry to record the purchase by Broadcourt.
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On January 1, 2021, Instaform, Inc., issued 12% bonds with a face amount of $60 million,...
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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 14%. Interest is paid semiannually. (FV of $1, PV of
$1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use
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1-a. Determine the price of the bonds at January 1,
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maturity is 14%. Interest is paid semiannually. (FV of $1, PV of
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appropriate factor(s) from the tables provided.)
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1-a. Determine the price of the bonds at January 1,
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