Saverin Inc. produces and sells outdoor equipment. On July 1, 2016, Saverin Inc. issued $21,000,000 of 10-year, 13% bonds at a market (effective) interest rate of 12%, receiving cash of $22,204,241. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 2016.* 2. Journalize the entries to record the following:* a. The first semiannual interest payment on December 31, 2016, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.) b. The interest payment on June 30, 2017, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)
3. Determine the total interest expense for 2016. 4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest? 5. Compute the price of $22,204,241 received for the bonds by using the tables shown in Present Value Tables. (Round to the nearest dollar.)
Saverin Inc. produces and sells outdoor equipment. On July 1, 2016, Saverin Inc. issued $21,000,000 of 10-year, 13% bonds at a market (effective) interest rate of 12%, receiving cash of $22,204,241. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:
| 1. | Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 2016.* | ||||
| 2. | Journalize the entries to record the following:*
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| 3. | Determine the total interest expense for 2016. | ||||
| 4. | Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest? | ||||
| 5. | Compute the price of $22,204,241 received for the bonds by using the tables shown in Present Value Tables. (Round to the nearest dollar.) |
Related questions
Saverin, Inc. produces and sells outdoor equipment. On July 1,2016, Saverin, Inc. issued $62,500,000 of 10-year, 9% bonds at amarket (effective) interest rate of 8%, receiving cash of$66,747,178. Interest on the bonds is payable semiannually onDecember 31 and June 30. The fiscal year of the company is thecalendar year.
Required:
| 1. | Journalize the entry to recordthe amount of cash proceeds from the issuance of thebonds.* | ||||
| 2. | Journalize the entries torecord the following:*
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| 3. | Determine the total interestexpense for 2016.
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| 3. | Determine the total interestexpense for 2016.
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Campbell Inc. produces and sells outdoor equipment. On July 1, Year 1, Campbell issued $25,000,000 of 10-year, 10% bonds at a market (effective) interest rate of 9%, receiving cash of $26,625,925. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:
| 1. | Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.* | ||||
| 2. | Journalize the entries to record the following:*
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| 3. | Determine the total interest expense for Year 1. | ||||
| 4. | Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest? | ||||
| 5. | Compute the price of $26,625,925 received for the bonds by using the present value tables. (Round to the nearest dollar.)
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