{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

practice prob nonds

# practice prob nonds - 2007 interest payment journal entry...

This preview shows pages 1–2. Sign up to view the full content.

© Mikhail Pevzner and George Mason University Bonds’ practice problems On December 1, 2006, MBP issued 50,000 \$100 par value bonds that pay interest semi- annually . Bonds mature in 5 years and have a stated annual coupon rate of 12%. Assume that annual market interest rate is: a) 8% b) 12% c) 16% Required: For each interest rate (a)-(c), determine: 1) Were bonds issued at discount or premium? 2) Bond price at issuance 3) Journal entry at issuance date 4) Construct bond amortization table using: a. Straight line premium/discount amortization method b. Effective interest amortization method 5) Using amortization tables in step (4), determine: a. Amount of interest expense for all years b. Amount of amortization of bond discount/premium for all years, if any c. Journal entries for all years 6) Using straight line premium/discount amortization method, what is 2006 and

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 2007 interest payment journal entry, if bonds are issued at: a. 0.75 b. 1.1? 7) On January 1, 2008 ABC issues bonds with face value of \$1,000,000 and coupon rate of 10%, paid semiannually. The bonds mature in 30 years. At the time of © Mikhail Pevzner and George Mason University issuance, the annual market yield was 12%. On January 1, 2020, ABC buys bonds back on the open market for \$700,000. Determine: a. Whether the bond is issued at discount, par, or premium; b. Original issue price on January 1, 2008 c. The value of bond liability on ABC’s books on January 1, 2020 d. The journal entry ABC books on January 1, 2020 e. The total amount of interest expense over the bond’s maturity period ABC would have paid, had it not retired the bonds...
View Full Document

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern