Question

A company issues bonds with a par value of $10,000,000 on January 1, 2013. The bonds...

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.]

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

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
On January 1, a company issues bonds dated January 1 with a par value of $480,000....
On January 1, a company issues bonds dated January 1 with a par value of $480,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 10% and the bonds are sold for $461,461. The journal entry to record the second interest payment using the effective interest method of amortization is:
On January 1, a company issues bonds dated January 1, 2018 with a par value of...
On January 1, a company issues bonds dated January 1, 2018 with a par value of $300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid annually on December 31. The bonds are sold for $312,200. The journal entry to record the first interest payment using straight-line amortization is: Muheet Corporation issues $550,000, 10%, 5-year bonds on January 1, 2019 for $489,000. Interest is paid annually on January 1. If Muheet Corporation uses the...
Hamilton issues bonds dated January 1, 2019, with a par value of $250,000. The bonds’ annual...
Hamilton issues bonds dated January 1, 2019, with a par value of $250,000. 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 $231,570. Required: (You are better to prepare an amortization table to support your answer) Please calculate, cash interest paid, bond interest expense, discount amortization, and carrying...
On 1 January 2013, Ouyang Inc issues $1,000,000 face value, 10-year bonds with annual interest rate...
On 1 January 2013, Ouyang Inc issues $1,000,000 face value, 10-year bonds with annual interest rate of 5% to be paid each 31 December. The market interest rate is 4%. Using the effective interest rate method of amortization, Ouyang Inc should record when it closes its annual book on Dec 31, 2015 (Round your number to integers): Choices: a carrying amount of 1,081,109 on Dec 31, 2015 an interest expense of 42,974 on Dec 31, 2015 a cash disbursement of...
Tano issues bonds with a par value of $80,000 on January 1, 2015 the bonds and...
Tano issues bonds with a par value of $80,000 on January 1, 2015 the bonds and only contract rate is 8% and interest is paid semi annually on June 30 and December 31 bonds mature in three years the venue market rate at the date of insurance is 10% in the bonds are sold for $75,938. 1.What is the amount of the discount on 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 $240,000. The bonds’ annual...
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...
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...
RKO Company sold bonds with a face value of $850,000 for $909,701. The bonds have a...
RKO Company sold bonds with a face value of $850,000 for $909,701. The bonds have a coupon rate of 8 percent, mature in 10 years, and pay interest annually every December 31. All of the bonds were sold on January 1 of this year. Using a premium account, record the sale of the bonds on January 1 and the payment of interest on December 31 of this year. RKO uses the effective-interest amortization method. Assume an annual market rate of...
Quatro Co. issues bonds dated January 1, 2017, with a par value of $820,000. The bonds’...
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...
Tano issues bonds with a par value of $89,000 on January 1, 2015. The bonds’ annual...
Tano issues bonds with a par value of $89,000 on January 1, 2015. 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 $82,439. 1. What is the amount of the discount on these bonds at issuance? 2. How much total bond interest expense will be recognized over the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT