Intermediate Accounting with British Airways Annual Report + Connect Plus

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C-Homework #3 zrv On January 1, 2011, Instaform, Inc., issued 10% bonds with a face amount of $50 million, dated January 1. The bonds mature in 2030 (20 years). The market yield for bonds of similar risk and maturity is 12%. Interest is paid semiannually. (Use Table 2 and Table 4 .) Required: (1-a) Determine the price of the bonds at January 1, 2011. (Enter your answer in dollars not in millions. Round PV factors to 5 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your response.) Price of the bonds $ 42,476,750 (1-b) Prepare the journal entry to record their issuance by Instaform. (Enter your answers in dollars not in millions. Round PV factors to 5 decimal places and final answers to the nearest dollar amount. Omit the "$" sign in your response.) General Journal Debit Credit Cash 42,476,7 Discount on bonds 7,523,25 Bonds payable 50,000,000 (2-a) Assume the market rate was 9%. Determine the price of the bonds at January 1, 2011. (Enter your answer in dollars not in millions. Round PV factors to 5 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your response.) Price of the bonds $ 54,600,450 (2-b) Prepare the journal entry to record their issuance by Instaform. (Enter your answers in dollars not in millions. Round PV factors to 5 decimal places and final answers to the nearest dollar amount. Omit the "$" sign in your response.) General Journal Debit Credit Cash 54,600,450 Premium on bonds 4,600,45 Bonds payable 50,000,0 (3) Assume Broadcourt Electronics purchased the entire issue in a private placement of the bonds. Using the data in requirement 2, prepare the journal entry to record the purchase by Broadcourt. (Enter your answers in dollars not in millions. Round PV factors to 5 decimal places and final answers to the nearest dollar amount. Omit the "$" sign in your response.) General Journal Debit Credit Investment in bonds 50,000,0 Premium on bond investment 4,600,45 Cash 54,600,450
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C-Homework #3 zrv On January 1, 2011, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Payment Cash Payment Effective Interest Increase in Balance Outstanding Balance 6,627,273 1 320,000 331,364 11,364 6,638,637 2 320,000 331,932 11,932 6,650,569 3 320,000 332,528 12,528 6,663,097 4 320,000 333,155 13,155 6,676,252 5 320,000 333,813 13,813 6,690,065 6 320,000 334,503 14,503 6,704,568 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 38 320,000 389,107 69,107 7,851,247 39 320,000 392,562 72,562 7,923,809 40 320,000 396,191 76,191 8,000,000 Required: (1) What is the face amount of the bonds? (Omit the "$" sign in your response.) Face amount $ 8,000,000 (2) What is the initial selling price of the bonds? (Omit the "$" sign in your response.) Initial selling price $ 6,627,273 (3) What is the term to maturity in years? Term to maturity
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This note was uploaded on 02/23/2012 for the course CONT 4019 taught by Professor N/a during the Spring '12 term at UPR Mayagüez.

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Asignacion 3 - On January 1, 2011, Instaform, Inc., issued...

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