MGTB06- winter garden bonds problem

MGTB06- winter garden bonds problem - Winter Garden...

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Winter Garden Company (“Winter”) issued $1,000,000 face value of 10% bonds on January 1, 2007. Interest is paid on June 30 th and December 31 st . The bond matures on January 1, 2017. On the date of issue, the market rate was 8%. Required Assuming a December 31 st year end, provide the following answers using effective interest rate method. Please show all your calculations (rounded to two decimal places). 1. Calculate the bond cash issue price. Please show calculation. 2. Prepare ALL necessary journal entries for 2007. 3. Assume that on December 31, 2013, Winter redeemed 25% of the bonds outstanding at 105. i. Calculate the carrying value at December 31, 2013. You must show your calculation ii. What is the carrying value of the retired portion of the bond payable? iii. What is the carrying value of the outstanding bonds payable right after the retirement? iv. How much is the cash payment for the retired portion of the bond? v. Calculate the gain or loss on redemption.
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