Business, 21.04.2020 20:43 cisneros3

Bond Premium, Entries for Bonds Payable Transactions Campbell Inc. produces and sells outdoor equipment. On July 1, Year 1, Campbell issued $32,000,000 of 10-year, 13% bonds at a market (effective) interest rate of 11%, receiving cash of $35,824,150. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: If an amount box does not require an entry, leave it blank. 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1. 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.) b. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.) 3. Determine the total interest expense for Year 1. Round to the nearest dollar. $ 4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest? 5. Compute the price of $35,824,150 received for the bonds by using Exhibit 5 and Exhibit 7. (Round to the nearest dollar.) Your total may vary slightly from the price given due to rounding differences. Present value of the face amount $ Present value of the semi-annual interest payments $ Price received for the bonds $ Check My Work

Answers: 3

Show answers

Answers

Answer from: Jasten

Using effective -rate:

Cash 35,824,122 debit

Bonds Payable 32,000,000 credit

premium on bonds payable3,824,122 credit

--to record issuance--

Interest expense1,970,326.73 debit

premium on BP 109,673.27 debit

cash 2,080,000 credit

--to record first interest payment--

Interest expense1,976,358.76 debit

premium on BP 103,641.24 debit

interest payable 2,080,000 credit

--to record accrued interest to Dec 31th--

interest expense on first year:

1,970,326.73 + 1,976,358.76 = 3.946.685,49

Using Straight line:

interest expense 1.888.793,9‬ debit

premium on BP 191.206,1‬ debit

cash 2,080,000 credit

--to record first interest payment--

interest expense 1.888.793,9‬ debit

premium on BP 191.206,1‬ debit

interest payable 2,080,000 credit

--to record accrued interest for the second payment--

total interest expense:

1.888.793,9 + 1.888.793,9 = 3.777.587,8‬

4) Yes as investor will be willing to purchase at a higher price until get the market yield

PV coupon payment$ 24,856,795.5687

PV maturity $ 10,967,326.8265

Total $ 35,824,122.3952

Explanation:

Present value of the bond is the discounted value of the coupon payment and maturity.

$C \times \frac{1-(1+r)^{-time} }{rate} = PV\\$

C2,080,000.000

time20

rate0.055

$2080000 \times \frac{1-(1+0.055)^{-20} }{0.055} = PV\\$

PV$24,856,795.5687

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity 32,000,000.00

time 20.00

rate 0.055

$\frac{32000000}{(1 + 0.055)^{20} } = PV$

PV 10,967,326.83

PV c$24,856,795.5687

PV m $10,967,326.8265

Total$35,824,122.3952

Then we solve for the effective rate doing carrying value times market:

$35,824,122.3952 x 0.055 = 1,970,326.73

And the cash outlay:

32,000,000 x 0.065 = 2,080,000 debit

The difference is the amortization on premium

The striaght-line will distribute the premium over time equally:

3,824,122 / 20 = 191.206,1

this will be subtracted from the cash outlay to determinatethe interest expense.

Answer from: Quest

c is the answer, and do you have a ps4?

Answer from: Quest

The advantage of administering personality tests on employees is that it will allow the employer to know the mindset and personality of the employee. this will allow the employer to at least have an idea as to how the employee works and how his attitude in the workplace. the disadvantage is that it may make the employee a little anxious as to whether he would meet the personality requirements of the employer and whether he would be able to retain the job or not.

Another question on Business

Business, 21.06.2019 21:00

On january 1, 2018, red flash photography had the following balances: cash, $19,000; supplies, $8,700; land, $67,000; deferred revenue, $5,700; common stock $57,000; and retained earnings, $32,000. during 2018, the company had the following transactions: 1. february 15 issue additional shares of common stock, $27,000. 2. may 20 provide services to customers for cash, $42,000, and on account, $37,000. 3. august 31 pay salaries to employees for work in 2018, $30,000. 4. october 1 purchase rental space for one year, $19,000. 5. november 17 purchase supplies on account, $29,000. 6. december 30 pay dividends, $2,700. the following information is available on december 31, 2018: 1. employees are owed an additional $4,700 in salaries. 2. three months of the rental space has expired. 3. supplies of $5,700 remain on hand. 4. all of the services associated with the beginning deferred revenue have been performed.required: 1. record the transactions that occurred during the year.2. record the adjusting entries at the end of the year.3. prepare an adjusted trial balance.4. prepare an income statement, statement of stockholders’ equity, and classified balance sheet.5. prepare closing entries.

Answers: 2

Answer

Business, 22.06.2019 01:00

Need with my trade theory homework. i doubt what i wrote was right.consider a monopolistically competitive market for soft drinks in which n symmetric firms face the following demand function: q=s(1/n-b(p-(p with the straight line on which implies the marginal revenue functionmr=p-(q/sb)finally, suppose firms face the total cost functiontc=900,000+100qsuppose the market size, s, is 27,000,000, and the elasticity parameter b is 0.003.diagram the price and the average total cost in the market as a function of the number of firms. what are the equations for each curve, and why does each curve slope up or down? label the equilibrium number of firms and the equilibrium price in the diagram. why is this the equilibrium?

Answers: 1

Answer

Business, 22.06.2019 11:00

Acoase solution to a problem of externality ensures that a socially efficient outcome is to

Answers: 2

Answer

Business, 22.06.2019 15:20

Sauer food company has decided to buy a new computer system with an expected life of three years. the cost is $440,000. the company can borrow $440,000 for three years at 14 percent annual interest or for one year at 12 percent annual interest. assume interest is paid in full at the end of each year. a. how much would sauer food company save in interest over the three-year life of the computer system if the one-year loan is utilized and the loan is rolled over (reborrowed) each year at the same 12 percent rate? compare this to the 14 percent three-year loan.

Answers: 3

Answer

You know the right answer?

Bond Premium, Entries for Bonds Payable Transactions Campbell Inc. produces and sells outdoor equipm...

Questions