Question

ABC Inc. issued bonds with 4% stated annual coupon rate on October 1, 2015. The bonds...

ABC Inc. issued bonds with 4% stated annual coupon rate on October 1, 2015. The bonds have a maturity date of September 30, 2025, and a face value of $300 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2016. The effective interest rate established by the market at the time of bond issuance was 6% per year. Assume that ABC issued the bonds for $255,369,000 cash and uses straight-line amortization of its discounts. As of March 31, 2016, which of the following is closest to what the company would report for its net bond liability balance, rounded to the nearest thousand?

A) $258,369,000 B) $300,000,000 C) $253,137,000 D) $257,601,000

Please explain / show work

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Auerbach Inc. issued 8% bonds on October 1, 2021. The bonds have a maturity date of...
Auerbach Inc. issued 8% bonds on October 1, 2021. The bonds have a maturity date of September 30, 2031 and a face value of $800 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2022. The effective interest rate established by the market was 10%. Assuming that Auerbach issued the bonds for $700,296,000, what would the company report for its net bond liability balance at December 31, 2021, rounded up to the nearest thousand? (Do...
Auerbach Inc. issued 6% bonds on October 1, 2018. The bonds have a maturity date of...
Auerbach Inc. issued 6% bonds on October 1, 2018. The bonds have a maturity date of September 30, 2028 and a face value of $700 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2019. The effective interest rate established by the market was 8%. Assuming that Auerbach issued the bonds for $604,863,000, what would the company report for its net bond liability balance at December 31, 2018, rounded up to the nearest thousand? (Do...
Auerbach Inc. issued 6% bonds on October 1, 2021. The bonds have a maturity date of...
Auerbach Inc. issued 6% bonds on October 1, 2021. The bonds have a maturity date of September 30, 2031 and a face value of $420 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2022. The effective interest rate established by the market was 8%. Assuming that Auerbach issued the bonds for $362,922,000, what would the company report for its net bond liability balance after its first interest payment on March 31, 2022?
On November 1, 2015, Archangel Services issued $200,000 of 10-year bonds with a stated rate of...
On November 1, 2015, Archangel Services issued $200,000 of 10-year bonds with a stated rate of 3%. The bonds were sold at par, and make semiannual payments on April 30 and October 31. At December 31, 2015, Archangel made an adjusting entry to accrue interest at year-end. Journalize transcations on Nov 1 2015, April 30 2016, Dec 31 2015 and October 31 2016. Show calculations.
On November 1, 2015, Archangel Services issued $200,000 of 10-year bonds with a stated rate of...
On November 1, 2015, Archangel Services issued $200,000 of 10-year bonds with a stated rate of 3%. The bonds were sold at par, and make semiannual payments on April 30 and October 31. At December 31, 2015, Archangel made an adjusting entry to accrue interest at year-end. Journalize transcations on Nov 1 2015, April 30 2016, Dec 31 2015 and October 31 2016. Show calculations.
Auerbach Inc. issued 4% bonds on October 1, 2021. The bonds have a maturity date of...
Auerbach Inc. issued 4% bonds on October 1, 2021. The bonds have a maturity date of September 30, 2031 and a face value of $300 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2022. The effective interest rate established by the market was 6%. Auerbach issued the bonds: Multiple Choice A. At par. B. At a premium. C. At a discount. D. Cannot be determined from the given information.
ABC Company decides to use bonds as a method of debt financing. They issue 4% bonds...
ABC Company decides to use bonds as a method of debt financing. They issue 4% bonds on October 1, 2021 with a face amount of $750,000 and a maturity date of September 30, 2024. The bonds pay interest semiannually March 31 and September 30. The market rate of interest is 4.8% Prepare an amortization table using the effective interest method related to the above. I would suggest inserting a table or Excel object into a Word document to prepare this....
On January 1, 2018, "ABC" Company issued $200,000, 10%, 4 years callable bonds at 105, which...
On January 1, 2018, "ABC" Company issued $200,000, 10%, 4 years callable bonds at 105, which pay interest semi-annually on June 30, and December 31. The bonds were sold for $187,580.41, since the market was 12%. In addition, On July 1, 2019, the company issued ad- ditional bonds with a face value of $400,000 that mature on June 30, 2029 for $427,355.48, since the market rate was 8%. The new bonds are non-callable bonds that has a stated rate of...
1. On March 1, 2015, Bowan Corporation issued 6% bonds dated February 1, 2015, the face...
1. On March 1, 2015, Bowan Corporation issued 6% bonds dated February 1, 2015, the face amount of $700,000. The bonds were sold for the present value of the bonds on March1, 2015 plus one-month accrued interest. The bonds mature on January 31, 2018. Interest is paid semiannually on July 31 and January 31. Bowan's fiscal year ends on December 31 each year. The effective interest rate is 8%.                                     Required:    a. Determine the present value the bonds...
On January 1, Year 1, Weller Company issued bonds with a $380,000 face value, a stated...
On January 1, Year 1, Weller Company issued bonds with a $380,000 face value, a stated rate of interest of 10.00%, and a 10-year term to maturity. Weller uses the effective interest method to amortize bond discounts and premiums. The market rate of interest on the date of issuance was 8.00%. Interest is paid annually on December 31. Assuming Weller issued the bonds for $410,240, what is the carrying value of the bonds on the December 31, Year 3? (Round...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT