Question

On January 1, 2020, Sro Company issued ten convertible bonds with a par value of $8,000 per bond in market for $82,000 in total. Each bond is convertible into 800 ordinary shares of $3 per ordinary share par value. The bonds have a four-year life and a stated interest rate of 8% payable annually. The market interest rate for similar non-convertible bonds on January 1, 2020, is 9%.

Prepare the amortization schedule for the bonds, including the cash interest, interest expense, amortized amount, and carrying amount of the bonds.

Answer #1

On January 1, 2020,
Sro Company issued ten convertible bonds with a par value of $8,000
per bond in market for $82,000 in total. Each bond is convertible
into 800 ordinary shares of $3 per ordinary share par value. The
bonds have a four-year life and a stated interest rate of 8%
payable annually. The market interest rate for similar
non-convertible bonds on January 1, 2020, is 9%.
c. Assume that the bond matured on December 31, 2023
and Sro...

A company issued $600,000 of 13%, ten-year convertible bonds on
January 1, 2020 at 107, with interest payable July 1 and January 1.
Bond discount/premium is amortized semiannually on a straight-line
basis. How much interest expense should the company record on June
30, 2020? (If there is no interest expense to be recorded, then
enter 0.)

On January 1, of the current year, Colour Inc. issued bonds with
a face value of $500,000. The bonds pay interest annually and
mature in 10 years. The bonds have a stated interest rate of 6%.
The market rate on the date of issue was 4%.
1. Compute the issue price of the bonds
2. What will the carrying value of the bond be at maturity?
3. What will be the total amount of interest expense recognized
over the life...

Ten Year, 6% Bonds with a $4,000,000 par value , were issued at
a time when the market rate of interest was 8%. The
Discount /Premium on these Bonds is amortized semi
-annually each interest period. Given these facts, which of
the following
statements would be true?
a.
The amount of unamortized premium decreases from its balance at
issuance date and the carrying
value of the Bond increases.
b.
The amount of unamortized discount decreases from its balance at
issuance...

A company issues bonds with a par value of $10,000,000 on
January 1, 2013. The bonds have an annual coupon rate of 5%, pay
interest semi-annually, and will mature in 5 years. If the market
rate of interest on the bonds is 6% per year, then what is the
carrying amount of the bonds on December 31, 2015? [Note: the
company uses the effective interest method of amortization.]

The Simon Corporation issued 10-year, $5,000,000 par, 7%
callable convertible subordinated debentures on January 2, 2020.
The bonds have a par value of $1,000, with interest payable
annually. The current conversion ratio is 14:1, and in 2 years it
will increase to 18:1. At the date of issue, the bonds were sold at
98. Bond discount is amortized on a straight-line basis. Simon’s
effective tax was 20%. Net income in 2020 was $9,500,000, and the
company had 2,000,000 shares outstanding...

Part 1:
On January 1 2018, Louis Company issued bonds with a Par Value
of $400,000. The coupon interest rate on the bond is 10%, and it
has a maturity of 3 years.
Interest is paid semiannually on June
30th and December 31 of each year.
Value of Bond @ 8%=
Value of Bond @10%=
Part 2:
From part 1, using the effective interest method,
show how the bond premium would be
amortized over the life of the bond. Fill...

Recording Entries for HTM Debt Securities— Effective Interest
Method On January 1, 2020, Baker Corp. purchased $32,000 of
Chocolate Inc. bonds. These bonds pay 5% interest annually on
December 31 and mature December 31, 2029. The investment is
classified as a held-to-maturity investment because Baker has the
intent and the ability to hold the bonds for 10 years. The
effective rate on the bonds is 4.5%.
Prepare a bond amortization schedule for 2020 and 2021 using the
effective interest method....

Problem#3. On January 1 2013, Louis Company issued bonds.
Bonds data:
Maturity (par value): $100,000.
Bond term: 4-years.
Stated interest rate: 10% annually
Market interest rate: 10% annually
Interest is paid every year January 1st.
Required: Calculate the bond selling price
1) Bond selling price = _____________________________
2) Is this a bond with premium or discount? Explain why.
1) Prepare journal entry on January 1, 2013.

Hinton Company issued $ 325, 000 $325,000, 6%, ten-year bonds
for 112, with interest paid annually. Assuming straight-line
amortization, what is the carrying value of the bonds after one
year?
A. $367,900
B. $362,050
C. $360,100
D. $364,000
Bonds with an 8% stated interest rate were issued when the
market rate of interest was 5%. This bond was issued at
A. premium
B. par value
C. discount
D. face value
Bolton Corporation issued $ 2,500,000 $2,500,000, 5-year, 5%
bonds for...

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