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29 Sep 2019
On January 1, 2014, Nowell Corporation issued $303,000 in bonds that mature in ten years. The bonds have a stated interest rate of 6% and pay interest on June 30 and December 31 each year. When the bonds were sold, the market of interest was 6%. (FV of $1, PV of $1, FVA of $1,and PVA of $1: use the appropriate factors from the tables)
a) What was the issue price on January 1, 2014?
b) What amount of interest expense should be recorded on June 30, 2014 and December 31, 2014?
c) What amount of cash interest should be paid on June 30, 2014 and December 31, 2014?
d) What is the book value of the bonds on December 31, 2014 and December 31, 2015?
On January 1, 2014, Nowell Corporation issued $303,000 in bonds that mature in ten years. The bonds have a stated interest rate of 6% and pay interest on June 30 and December 31 each year. When the bonds were sold, the market of interest was 6%. (FV of $1, PV of $1, FVA of $1,and PVA of $1: use the appropriate factors from the tables)
a) What was the issue price on January 1, 2014?
b) What amount of interest expense should be recorded on June 30, 2014 and December 31, 2014?
c) What amount of cash interest should be paid on June 30, 2014 and December 31, 2014?
d) What is the book value of the bonds on December 31, 2014 and December 31, 2015?
Nestor RutherfordLv2
29 Sep 2019
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| On January 1, 2014, Nowell Company issued $500,000 in bonds that mature in five years. The bonds have a stated interest rate | |||||||||
| of 8 percent and pay interest on June 30 and December 31 each year. When the bonds were sold, the market rate of interest was 8 percent. | |||||||||
| (If necessary, use the appropriate factor(s) from the tables provided.) ( | FV of $1 | PV of $1 | FVA of $1 | PVA of $1 | ) | ||||
| Required: | |||||||||
| 1 | What was the issue price on January 1, 2014? | ||||||||
| Issue price | |||||||||
| 2 | What amount of interest expense should be recorded on (a) June 30, 2014? and (b) December 31, 2014? | ||||||||
| June 30, 2014 | December 31, 2014 | ||||||||
| Interest expense | $20,000 | ||||||||
| 3 | What amount of cash interest should be paid on (a) June 30, 2014? and (b) December 31, 2014? | ||||||||
| June 30, 2014 | December 31, 2014 | ||||||||
| Cash paid | |||||||||
| 4 | What is the book value of the bonds on (a) December 31, 2014? and (b) December 31, 2015? | ||||||||
| December 31, 2014 | December 31, 2015 | ||||||||
| Bonds payable | |||||||||
