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27 Oct 2018

1. Bakels Company issued a $100,000, 20 year bond with a statedinterest rate of 6%. Assume interest payments are made annually. What is the selling price of the bond if the marketrate of interest is 9%? (Round to the nearest dollar.)


2. Askers Company issued a $100,000, 20 year bond with a statedinterest rate of 6%. Assume interest payments are made annually. If the market rate of interest is 8%, the bond willsell at


3. Heww Inc., issued a $50,000, 10 year bond with a stated interestrate of 6%. Assume interest payments are made semi-annually. What is the selling price of the bond if themarket rate of interest is 5%? (Round to the nearestdollar.)


4. Voguard Company issued a $50,000, 10 year bond with a statedinterest rate of 6%. Assume interest payments are made semi-annually. If the market rate of interest is 5%, the bondwill sell at


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Reid Wolff
Reid WolffLv2
27 Oct 2018

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Related questions

1. BakelsCompany issued a $100,000, 20 year bond with a stated interest rateof 6%. Assume interest payments are made annually. What is the selling price of the bond if the marketrate of interest is 9%? (Round to the nearest dollar.)


2.AskersCompany issued a $100,000, 20 year bond with a stated interest rateof 6%. Assume interest payments are made annually. If the market rate of interest is 8%, the bond willsell at


3.HewwInc., issued a $50,000, 10 year bond with a stated interest rate of6%. Assume interest payments are made semi-annually. What is the selling price of the bond if themarket rate of interest is 5%? (Round to the nearestdollar.)


4.VoguardCompany issued a $50,000, 10 year bond with a stated interest rateof 6%. Assume interest payments are made semi-annually. If the market rate of interest is 5%, the bondwill sell at

(a) On 1/1/2015, Shocker Company issued $100,000 face valuebonds. The stated rate for these bonds is 10%, and the interest ispaid semi-annually, on June 30 and December 31. The market rate onthe date of issue was 12%. Bonds mature in three years, on December31, 2017. Required In the table provided, write the amount of thepayment, and the date of all payments that must be made by ShockerCompany to bond holders. Date Amount Date Amount

Date

Amount

(b) On 1/1/2015, Sooner Company issued $100,000face value bonds that make semi-annually on June 30 and December31. The coupon rate is 10% and each semi-annual payment is $5,000.The market rate on the date of issue was 8%. Bonds mature in fiveyears, on December 31, 2019.

Required

On the date of issue, calculate the market price of the bond andrecord journal entry for the issuance of the bond. Showcalculations.

(b)answer for Sooner Company here:

Market Price of the bond on 1/1/2015 is:

Journal entry to be recorded on 1/1/2015:

Calculations for Sooner Company:

Number of period = ___ discount rate to be used = ___ %

Market Price of the bonds:

=

=

(c) On 1/1/2015, Gator Companyissued $200,000 face value bonds that mature in five years, onDecember 31, 2019. The bonds have stated rate of 10%, withsemi-annual payments, on June 30 and December 31. The market rateon the date of issue was 9%, and the bonds were sold for$207,913.

Required

In the amortization table provided, complete the entries for thedates indicated. Write journal entries to be recorded on 6/30/2015and 12/31/2015.

Date

Cash Interest Paid

Interest Expense

Increase/decrease in Outstanding Balance

Outstanding Balance

1/1/2015

6/30/2015

12/31/2015

Assume that a company issues a bond at 113 having a face value of $2,000 and a coupon interest rate of 9%. The bond pays interest annually, has a five-year maturity time frame, and bonds of similar risk are currently paying interest rates of 6%. The bond's issue price would be ????

$, it would make an annual interest payment on the bond in the amount of ???$

, and at the end of five years would pay back the principal of $???

. The total premium on the bond is $???

. Because bonds issued at a premium result in the company receiving more money up front, the bonds are actually costing the company less than just the periodic interest payments. For this reason, total interest expense equals the total interest paid over the life of the bond less the total premium on the bond. Total interest expense on this bond is ???

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