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- XYZ is Public Limited Company. The company board of director was decided to offer 1,000 no. of bonds of par value of $10 each in 2018; carrying 15 percent coupon rate and 3 year maturity period, bond would mature in 2021. The discount rate in first year (2019) was 8 percent. The rate was the same in 2020. After that market rate of return had increased to 10 % in 2021. The market (par) value of bonds will be 9 per bond (1,000 bonds). What will be present
value of bond ?
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- Smashing Cantaloupes Inc. issued 5-year bonds with a par value of $35,000 and an 8% semiannual coupon (payable June 30 and December 31) on January 1, 2018, when the market rate of interest was 10%. Were the bonds issued at a discount or premium? Assuming the bonds sold at 92.288, what was the sales price of the bonds?On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?On January 1, 2020, ABC Corporation invested in P2,000,000 bonds of DEF Company that will mature on December 31, 2022. The bond has a coupon rate of 10% and a required rate of return of 12%. What is the value of the investment on January 1, 2020.
- Digital Telephony issued 10% bonds, dated January 1, with a face amount of $43 million on January 1, 2021. The bonds mature in 2031 (10 years). For bonds of similar risk and maturity the market yield is 12%. Interest is paid semiannually on June 30 and December 31. Digital recorded the issue as follows: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) General Journal Cash Discount on bonds Bonds payable Debit 38,067,728 4,932,272 Credit 43,000,000 Digital also leased switching equipment to Midsouth Communications, Inc. on September 30, 2021. Digital purchased the equipment from MDS Corp. at a cost of $6 million. The five-year lease agreement calls for Midsouth to make quarterly lease payments of $391,548, payable each September 30, December 31, March 31, and June 30, with the first payment on September 30, 2021. Digital's implicit interest rate is 12%. Required: 1. What would be the amount(s) related to the…On January 1, 2021, Bishop Company issued 10% bonds dated January 1, 2021, with a face amount of $20 million. The bonds mature in 2030 (10 years). For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31. Required: 1. What would be the amounts related to the bonds Bishop would report in its balance sheet at December 31, 2021? 2. What would be the amounts related to the bonds that Bishop would report in its income statement for the year ended December 31, 2021?Auerbach Incorporated issued 4% bonds on October 1, 2024. The bonds have a maturity date of September 30, 2034 and a face value of $300 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2025. The effective interest rate established by the market was 6%. How much cash interest does Auerbach pay on March 31, 2025? Multiple Choice O $12.0 million $9.0 million $6.0 million $18.0 million
- On January 1, 2024, Ithaca Corporation purchases Cortland Incorporated bonds that have a face value of $210,000. The Cortland bonds have a stated interest rate of 10%. Interest is paid semiannually on June 30 and December 31, and the bonds mature in 10 years. For bonds of similar risk and maturity, the market yield on particular dates is as follows: Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) January 1, 2024 11.0% June 30, 2024 12.0% December 31, 2024 14.0%On January 1, 2024, Ithaca Corporation purchases Cortland Incorporated bonds that have a face value of $210,000. The Cortland bonds have a stated interest rate of 10%. Interest is paid semiannually on June 30 and December 31, and the bonds mature in 10 years. For bonds of similar risk and maturity, the market yield on particular dates is as follows: Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) January 1, 2024 11.0% June 30, 2024 12.0% December 31, 2024 14.0% Prepare all appropriate journal entries related to the bond investment during 2024, assuming that Ithaca chose the fair value option when the bonds were purchased, and that Ithaca determines fair value of the bonds semiannually. Ithaca calculates interest revenue at the effective interest rate as of the date it purchased the bonds. 1. Record the investment in bonds with a face value of $210,000, a stated interest rate of 10% and a market…On January 1, 2024, Ithaca Corporation purchases Cortland Incorporated bonds that have a face value of $330,000. The Cortland bonds have a stated interest rate of 5%. Interest is paid semiannually on June 30 and December 31, and the bonds mature in 10 years. For bonds of similar risk and maturity, the market yield on particular dates is as follows: Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) January 1, 2024 11.0% June 30, 2024 12.0% December 31, 2024 14.0% Required: 1-a. Calculate the price Ithaca would have paid for the Cortland bonds on January 1, 2024 (ignoring brokerage fees). 1-b. Prepare a journal entry to record the purchase. 2. Prepare all appropriate journal entries related to the bond investment during 2024, assuming Ithaca accounts for the bonds as a held-to-maturity investment. Ithaca calculates interest revenue at the effective interest rate as of the date it purchased the bonds. 3.…
- The balance sheet at December 31, 2024, for Nevada Harvester Corporation includes the liabilities listed below: 10% bonds with a face amount of $42 million were issued for $42 million on October 31, 2015. The bonds mature on October 31, 2035. Bondholders have the option of calling (demanding payment on) the bonds on October 31, 2025, at a redemption price of $42 million. Market conditions are such that the call is not expected to be exercised. Management intended to refinance $8.7 million of its 9% notes that mature in May 2025. In early March, prior to the actual issuance of the 2024 financial statements, Nevada Harvester negotiated a line of credit with a commercial bank for up to $6.5 million any time during 2025. Any borrowings will mature two years from the date of borrowing. Noncallable 10% bonds with a face amount of $18.2 million were issued for $18.2 million on September 30, 2005. The bonds mature on September 30, 2025. Sufficient cash is expected to be available to retire…The Bradford Company issued 10% bonds, dated January 1, with a face amount of $94 million on January 1, 2021. The bonds mature on December 31, 2030 (10 years). For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. Determine the price of the bonds at January 1, 2021. 2. to 4. Prepare the journal entries to record their issuance by The Bradford Company on January 1, 2021, interest on June 30, 2021 and interest on December 31, 2021 (at the effective rate). Complete this question by entering your answers in the tabs below. Req 1 Req 2 to 4 Determine the price of the bonds at January 1, 2021. (Enter your answer whole dollars.) Price of bonds 105,714,524 $The Bradford Company issued 10% bonds, dated January 1, with a face amount of $80 million on January 1, 2021. The bonds mature on December 31, 2030 (10 years). For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)Required:1. Determine the price of the bonds at January 1, 2021.2. to 4. Prepare the journal entries to record their issuance by The Bradford Company on January 1, 2021, interest on June 30, 2021 and interest on December 31, 2021 (at the effective rate).
