Question

Universal Foods issued 10% bonds, dated January 1, with a face amount of $154 million on January 1, 2021 to Wang Communications. The bonds mature on December 31, 2035 (15 years). The market rate of interest for similar issues was 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) (Use appropriate factor(s) from the tables provided.)

Required: 1. Prepare the journal entries to record the purchase of the bonds by Wang Communications on January 1, 2021

Answer #1

Date |
Account Titles and Explanation |
Debit |
Credit |

Jan 01, 2021 | Investment in Bonds | 154,000,000 | |

Discount on Investment in Bonds | 21,197,869 | ||

Cash | 132,802,131 | ||

Working | |||

Face Value | |||

$154,000,000 x PV of $1 6%, 30 | |||

$154,000,000 x 0.17411 | $26,812,940 | ||

Interest | |||

$7,700,000 x PVA of $1 6%, 30 | $105,989,191 | ||

$7,700,000 x 13.76483 | |||

$132,802,131 |
|||

Universal Foods issued 10% bonds, dated January 1, with a face
amount of $172 million on January 1, 2021 to Wang Communications.
The bonds mature on December 31, 2035 (15 years). The market rate
of interest for similar issues was 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) (Use
appropriate factor(s) from the tables provided.)
Required:
1. to...

The Bradford Company issued 12% bonds, dated January 1, with a
face amount of $96 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 14%. 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) (Use appropriate factor(s) from the
tables provided.) Required: 1. Determine...

When Patey Pontoons issued 10% bonds on January 1, 2018, with a
face amount of $560,000, the market yield for bonds of similar risk
and maturity was 11%. The bonds mature December 31, 2021 (4 years).
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) (Use
appropriate factor(s) from the tables provided.) Q.6 - What is the
interest expense for...

On January 1, 2021, Anne Teak Furniture issued $100,000 of 12%
bonds, dated January 1. Interest is payable semiannually on June 30
and December 31. The bonds mature in 4 years. The annual market
rate for bonds of similar risk and maturity is 14%. What was the
issue price of the bonds? (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.)
a. $89,460...

On January 1, 2021, Bishop Company issued 10% bonds dated
January 1, 2021, with a face amount of $19.1 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. (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. Round your intermediate calculations to...

On January 1, 2018, Shirley Corporation purchased 10% bonds
dated January 1, 2018, with a face amount of $13 million. The bonds
mature in 2027 (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) (Use appropriate factor(s) from the tables
provided.)
Required: Determine the price of...

On January 1, 2018, Shirley Corporation purchased 12% bonds
dated January 1, 2018, with a face amount of $19 million. The bonds
mature in 2027 (10 years). For bonds of similar risk and maturity,
the market yield is 16%. 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) (Use appropriate factor(s) from the tables
provided.) Required: Determine the price of...

On January 1, 2021, Bishop Company issued 8% bonds dated January
1, 2021, with a face amount of $20.7 million. The bonds mature in
2030 (10 years). For bonds of similar risk and maturity, the market
yield is 10%. 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) (Use appropriate factor(s) from the tables provided. Round
your intermediate calculations to...

On January 1, 2021, Bishop Company issued 8% bonds dated January
1, 2021, with a face amount of $20.7 million. The bonds mature in
2030 (10 years). For bonds of similar risk and maturity, the market
yield is 10%. 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) (Use appropriate factor(s) from the tables provided. Round
your intermediate calculations to...

On January 1, 2018, Shirley Corporation purchased 12% bonds
dated January 1, 2018, with a face amount of $24 million. The bonds
mature in 2027 (10 years). For bonds of similar risk and maturity,
the market yield is 16%. 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) (Use appropriate factor(s) from the tables
provided.) Required: Determine the price of...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 7 minutes ago

asked 24 minutes ago

asked 29 minutes ago

asked 33 minutes ago

asked 34 minutes ago

asked 40 minutes ago

asked 44 minutes ago

asked 47 minutes ago

asked 47 minutes ago

asked 56 minutes ago

asked 1 hour ago

asked 1 hour ago