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UGA / Accounting / ACCT 2101 / citywide company issues bonds with a par value of $150,000 on their st

citywide company issues bonds with a par value of $150,000 on their st

citywide company issues bonds with a par value of $150,000 on their st

Description

School: University of Georgia
Department: Accounting
Course: Principles of Accounting I
Professor: Bhandarkar
Term: Spring 2016
Tags: Accounting, Long-Term Liabilities, and accounting chapter 10
Cost: 25
Name: Accounting Ch 10 Long-Term Liabilities Connect Questions 18-20
Description: Accounting Chapter 10 Reporting & Analyzing Long-Term Liabilities McGraw Hill OnlineConnect Questions #18-20
Uploaded: 04/13/2016
1 Pages 393 Views 0 Unlocks
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18.Don't forget about the age old question of What is the lonesome West?

Citywide Company issues bonds with a par value of $150,000 on their stated issue date. The bonds mature in five years and pay 10% annual interest in semiannual payments. On the issue date, the annual market rate of the bonds is 8% (Table B,1,Table B.2, Table B3, and Table B.4)(use appropriate factor(s) from the tables provided)

  1. What is the amount of each semiannual interest payment for these bonds?

Par (maturity) value

Semiannual Rate

Semi Annual cash interest payment

$150,000

x

5%

=

7,500

  1. How many semiannual interest payments will be made on these bonds over their life?

Number of payment

10

  1. Use the interest rate given to select whether the bonds are issued at par, at a discount, or at a premium

At a premium

  1. Compute the price of the bonds as of their issue date

Table Values are Based on:

N =

10

I =

4.0%

Cash flow

Table Value

Amount

Present value

Par (maturity)

0.6750

x

$150,000

=

$101,340

Interest (annualty)

8.110.9

x

7,500

=

60.832

Price of Bonds

$162,172

  1. Prepare the journal entry to record the bonds’ issuance.(Round intermediate calculations to the nearest dollar amount)

Transaction

General journal

Debit

Credit

1

Cash

162,172

Premium on bonds payable

12,172

Bonds payable

150,000

If you want to learn more check out Why is fire important?

19.

Stanford issues bonds dated January 1, 2015, with a par value of $500,000. The bonds’ annual contract rate is 9%, and interest paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate of the data of issuance is 12%, and the bonds are sold for $463,140If you want to learn more check out What about invertebrates?

  1. What is the amount of the discount on these bonds at issuance?

Discount

$36,860

  1. How much total bond interest expense will be recognized over the life of these bonds?

Total bond interest expense over life of bonds:

Amount repaid:

6

Payment of

$22,500

$135,000

Par value at maturity

500,000

Less amount borrowed

(463,140)

Total bond interest expense

$171.860

  1. Prepare an Amortization table using the effective interest method to amortize the discount for these bonds. (Enter all amounts of positive values. Round all amounts to the nearest whole dollar)

Semiannual Interest Period - End

Cash Interest Paid

Bond Interest Expense

Discount Amortization

Unamortized Discount

Carrying Value

01/01/2015

$36,860

$463,140

06/30/2015

$22,500

$27,788

$5,288

31,572

468,428

12/31/2015

22,500

28,106

5,606

25,966

474,034

06/30/2016

22,500

28,442

5,942

20,024

479,976

12/31/2016

22,500

28,799

6,299

13,725

486.275

06/30/2017

22,500

29,176

6,676

7,049

492,951

12/31/2017

22,500

29,549

7,049

0

500,000

Total

$135,000

$171,860

$36,860

We also discuss several other topics like Should the organs be in perfect condition?
We also discuss several other topics like What are the two forms of discrimination under Title VII?
Don't forget about the age old question of What are the Reasons to believe that morality is objective and rationally based ?

20.

Quatro Co. issues bonds dated January 1, 2015 with a par value of $400,000. The bonds’ annual contract rate is 13% and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate of issuance is 12%, and bonds are sold for $409,850

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