Bond issuance & amortization
Not what you're looking for?
1. Stowers Research issues bonds dated January 1, 2011, that pay interest semiannually on June 30 and December 31. The bonds have a $20,000 par value and an annual contract rate of 10%, and they mature in 10 years.
Required
For each of the following three separate situations, (a) determine the bonds' issue price on January 1, 2011, and (b) prepare the journal entry to record their issuance.
The market rate at the date of issuance is 8%.
The market rate at the date of issuance is 10%.
The market rate at the date of issuance is 12%.
2. Heathrow issues $2,000,000 of 6%, 15-year bonds dated January 1, 2011, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,728,224.
Required
Prepare the January 1, 2011, journal entry to record the bonds' issuance.
For each semiannual period, compute (a) the cash payment, (b) the straight-line discount amortization, and (c) the bond interest expense.
Determine the total bond interest expense to be recognized over the bonds' life.
Prepare the first two years of an amortization table like Exhibit 10.7 using the straight-line method.
Prepare the journal entries to record the first two interest payments.
Purchase this Solution
Purchase this Solution
Free BrainMass Quizzes
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Basic Social Media Concepts
The quiz will test your knowledge on basic social media concepts.
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Basics of corporate finance
These questions will test you on your knowledge of finance.