Question

On January 1, 2017, Banek Inc. issued $350,000 of 8%, 9 year bonds for $309,086, which...

On January 1, 2017, Banek Inc. issued $350,000 of 8%, 9 year bonds for $309,086, which implies a market (yield) rate of 10%. Semiannual interest payable on June 30 and December 31 of each year.

A. Show computations to confirm the bond issue price

B. Inidicate the financial statement effects using the template for 1) bond insurance 2) semiannual interest payment and discount authorization on June 30, 2017 and 3) semiannual interest payment and discount amortization on December 31, 2017.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

A. Thi diference is due to rounding off.

Face Value of the bond 350000
Rate of interest 8%
Semiannual interest 14000
Present value of $ received 0.4241
after 9 years @10%
Present value of $ annuity for 11.6896
18 periods @5%
(9 x 2 periods, 10%/2 rate
since the interest is semiannual)
Present value of the face value 148435
Present value of the interest 163654
Price of the boond 312089

B.

Assets = Liabilities + Equity
Cash + Non cash = Bond Payable + Paid Up Equity + Earned Equity
1. Issue of Bonds 309086 309086
2. Semi annual interest payment on June 30, 2017 -14000 2273 -142273
3. Semi annual interest payment on Dec.31, 2017 -14000 2273 -142273
*Discount on bond issue is amortized on straight line method. (40,914 / 18)
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Reporting Financial Statement Effects of Bond Transactions On January 1, 2016, McKeown, Inc., issued $350,000 of...
Reporting Financial Statement Effects of Bond Transactions On January 1, 2016, McKeown, Inc., issued $350,000 of 10%, 9-year bonds for $312,103, yielding a market (yield) rate of 12%. Semiannual interest is payable on June 30 and December 31 of each year. Required a. Show computations to confirm the bond issue price. b. Prepare journal entries to record the bond issuance, semiannual interest payment and discount amortization on June 30, 2016, and semiannual interest payment and discount amortization on December 31,...
Reporting Financial Statement Effects of Bond Transactions On January 1, 2016, McKeown, Inc., issued $350,000 of...
Reporting Financial Statement Effects of Bond Transactions On January 1, 2016, McKeown, Inc., issued $350,000 of 12%, 9-year bonds for $314,792, yielding a market (yield) rate of 14%. Semiannual interest is payable on June 30 and December 31 of each year. Required a. Show computations to confirm the bond issue price. (Use a calculator or Excel for your calculations. Round your answers to the nearest dollar.) Present value of principal repayment $Answer Present value of interest payments $Answer Selling price...
Effective Interest Amortization On January 1, Eagle, Inc., issued $950,000 of 9%, 20-year bonds for $1,016,500...
Effective Interest Amortization On January 1, Eagle, Inc., issued $950,000 of 9%, 20-year bonds for $1,016,500 yielding an effective interest rate of 8%. Semiannual interest is payable on June 30 and December 31 each year. The firm uses the effective interest method to amortize the premium. Required a. Prepare an amortization schedule showing the necessary information for the first two interest periods. Round amounts to the nearest dollar. b. Prepare the journal entry for the bond issuance on January 1....
Reporting Financial Statement Effects of Bond Transactions On January 1, 2016, McKeown, Inc., issued $300,000 of...
Reporting Financial Statement Effects of Bond Transactions On January 1, 2016, McKeown, Inc., issued $300,000 of 6%, 9-year bonds for $262,023, yielding a market (yield) rate of 8%. Semiannual interest is payable on June 30 and December 31 of each year. Required a. Show computations to confirm the bond issue price. (Use a calculator or Excel for your calculations. Round your answers to the nearest dollar.) Present value of principal repayment $Answer Present value of interest payments $Answer Selling price...
On June 30, 2017, Novak Company issued $4,400,000 face value of 13%, 20-year bonds at $4,731,010,...
On June 30, 2017, Novak Company issued $4,400,000 face value of 13%, 20-year bonds at $4,731,010, a yield of 12%. Novak uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. Prepare the journal entries to record the following transactions: 1.) The issuance of bonds on June 30, 2017. 2.) The payment of interest and the amortization of the premium on December 31, 2017. 3.) The payment of interest...
On June 30, 2017, Novak Company issued $4,400,000 face value of 13%, 20-year bonds at $4,731,010,...
On June 30, 2017, Novak Company issued $4,400,000 face value of 13%, 20-year bonds at $4,731,010, a yield of 12%. Novak uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. Prepare the journal entries to record the following transactions: (1) The issuance of the bonds on June 30, 2017. (2) The payment of interest and the amortization of the premium on December 31, 2017. (3) The payment of...
On January 1, 2016, Knorr Corporation issued $1,100,000 of 9%, 5-year bonds dated January 1, 2016....
On January 1, 2016, Knorr Corporation issued $1,100,000 of 9%, 5-year bonds dated January 1, 2016. The bonds pay interest annually on December 31. The bonds were issued to yield 10%. Bond issue costs associated with the bonds totaled $20,058.17. Do not round answers. Required: Prepare the journal entries to record the following: January 1, 2016 Sold the bonds at an effective rate of 10% December 31, 2016 First interest payment using the effective interest method December 31, 2016 Amortization...
On January 1, 2016, Knorr Corporation issued $1,000,000 of 9%, 5-year bonds dated January 1, 2016....
On January 1, 2016, Knorr Corporation issued $1,000,000 of 9%, 5-year bonds dated January 1, 2016. The bonds pay interest annually on December 31. The bonds were issued to yield 10%. Bond issue costs associated with the bonds totaled $18,000. Required: Prepare the journal entries to record the following: January 1, 2016 Sold the bonds at an effective rate of 10% December 31, 2016 First interest payment using the effective interest method December 31, 2016 Amortization of bond issue costs...
On January​ 31, 2018​, Logo ​Logistics, Inc., issued ten​-year, 9​% bonds payable with a face value...
On January​ 31, 2018​, Logo ​Logistics, Inc., issued ten​-year, 9​% bonds payable with a face value of $7,000,000. The bonds were issued at 97 and pay interest on January 31 and July 31. Logo Logistics amortizes bond discounts using the​ straight-line method. Record​ (a) the issuance of the bonds on January​ 31, 2018​, ​(b) the semiannual interest payment and amortization of the bond discount on July​ 31, 2018​, and​ (c) the interest accrual and discount amortization on December​ 31, 2018.
Analyzing and Reporting Financial Statement Effects of Bond Transactions On January 1, 2012, Trueman Corporation issued...
Analyzing and Reporting Financial Statement Effects of Bond Transactions On January 1, 2012, Trueman Corporation issued $900,000 of 20-year, 11% bonds for $832,292, yielding a market (yield) rate of 12%. Interest is payable semiannually on June 30 and December 31. (a) Confirm the bond issue price. Round answers to the nearest whole number. Present value of principal repayment $Answer Present value of interest payments $Answer Selling price of bonds $ 832,292 (b) Indicate the financial statement effects using the template...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT