Question

Garcia Company issues 10%, 15-year bonds with a par value of $240,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 14%, which implies a selling price of 75 ¼. The effective interest method is used to allocate interest expense. 1. Using the implied selling price of 75 ¼, what are the issuer's cash proceeds from issuance of these bonds? 2. What total amount of bond interest expense will be recognized over the life of these bonds? 3. What amount of bond interest expense is recorded on the first interest payment date?

Answer #1

Enviro Company issues 11.00%, 10-year bonds with a par value of
$310,000 and semiannual interest payments. On the issue date, the
annual market rate for these bonds is 8.00%, which implies a
selling price of 124 7/8. The straight-line method is used to
allocate interest expense.
1. Using the implied selling price of 124 7/8.
what are the issuer’s cash proceeds from issuance of these
bonds?
2. What total amount of bond interest expense will
be recognized over...

Garcia Company issues 9.0%, 15-year bonds with a par value of
$310,000 and semiannual interest payments. On the issue date, the
annual market rate for these bonds is 7.0%, which implies a selling
price of 114. Prepare the journal entry for the issuance of these
bonds for cash on January 1.
Record the issue of bonds with a par value of $310,000 at a
selling price of 114.
Date
General Journal
Debit
Credit
Jan 01

Garcia Company issues 9.00%, 15-year bonds with a par value of
$200,000 and semiannual interest payments. On the issue date, the
annual market rate for these bonds is 8.00%, which implies a
selling price of 108 3/5. Confirm that the bonds’ selling price is
approximately correct. Use present value Table B.1 and Table B.3 in
Appendix B. (Round all table values to 4 decimal places, and use
the rounded table values in calculations. Round your other final
answers to nearest...

Garcia Company issues 12.00%, 15-year bonds with a par value of
$200,000 and semiannual interest payments. On the issue date, the
annual market rate for these bonds is 10.00%, which implies a
selling price of 115 1/4.
Confirm that the bonds’ selling price is approximately correct. Use
present value Table B.1 and Table B.3 in Appendix B. (Round
all table values to 4 decimal places, and use the rounded table
values in calculations. Round your other final answers to nearest...

Stanford issues bonds dated January 1, 2017, with a par value of
$240,000. The bonds’ annual contract rate is 9%, 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 $222,307.
1. What is the amount of the discount on these
bonds at issuance?
2. How much total bond interest expense will be
recognized over...

Stanford issues bonds dated January 1, 2017, with a par value of
$241,000. The bonds’ annual contract rate is 8%, 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 10%,
and the bonds are sold for $228,764.
1. What is the amount of the discount on these
bonds at issuance?
2. How much total bond interest expense will be
recognized over...

Quatro Co. issues bonds dated January 1, 2019, with a par value
of $860,000. 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
8%, and the bonds are sold for $905,068.
1. What is the amount of the premium on these
bonds at issuance?
2. How much total bond interest expense will be
recognized over...

Marwick Corporation issues 10%, 5 year bonds with a par value of
$1,020,000 and semiannual interest payments. On the issue date, the
annual market rate for these bonds is 8%. What is the bond's issue
(selling) price, assuming the following Present Value factors: 1n=
i= Present Value of an Annuity (series of payments) Present value
of 1 (single sum) 5 10 % 3.7908 0.6209 10 5 % 7.7217 0.6139 5 8 %
3.9927 0.6806 10 4 % 8.1109 0.6756 Multiple...

Bringham Company issues bonds with a par value of $560,000 on
their stated issue date. The bonds mature in 8 years and pay 7%
annual interest in semiannual payments. On the issue date, the
annual market rate for the bonds is 10%. (Table B.1, Table B.2,
Table B.3, 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?
2. How many semiannual interest payments will be
made...

Quatro Co. issues bonds dated January 1, 2017, with a par value
of $820,000. 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
8%, and the bonds are sold for $862,972.
1. What is the amount of the premium on these
bonds at issuance?
2. How much total bond interest expense will be
recognized over...

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