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    Comprehensive Bond Problem

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    Please explain how you get answers and don't use PV in Excel. Attached also are PV tables.

    2. Bell Company sells $2,400,000 of 6% bonds on June 1, 2010. The
    bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2014. The bonds
    yield 5% On October 1, 2011, Douglas Company buys back $720,000
    worth of the bonds for $738,000 (includes accrued interest). Give the entries through
    December 31, 2012.
    Jun 1, 10 Cash Amount
    Bonds Payable 2,400,000
    Premium on Bonds Payable Amount

    Maturity value of bonds payable $2,400,000
    Present value of $2,400,000 due in 8 periods at 2.5% Formula
    Present value of interest payable semiannually Formula
    Proceeds from sale of bonds Formula
    Premium on bonds payable Formula

    Dec 1, 10 Interest Expense Amount
    Account Title Amount
    Cash [$2,400,000 * 6.00% * (6/12)] 72,000
    Note: Amortization table is semi-annual, interest rate is stated as annual value.

    Dec 31, 10 Account title Amount
    Account title Amount
    Account title Amount

    Jun 1, 11 Account Title Amount
    Account Title Amount
    Account Title Amount
    Account Title 21,600

    Oct 1, 11 Account title Amount
    Account title Amount
    Account title Amount

    Oct 1, 11 Account title Amount
    Account title Amount
    Account title Amount
    Account title Amount

    Net carrying amount of bonds redeemed - Par value 720,000
    Unamortized premium Amount
    Formula
    Reacquisition price Amount
    Gain on redemption Formula

    Dec 1, 11 Account title Amount
    Account title Amount
    Account title Amount

    Dec 31, 11 Account title Amount
    Account title Amount
    Account title Amount

    Jun 1, 12 Account title Amount
    Account title Amount
    Account title Amount
    Account title Amount

    Dec 1, 12 Account Amount
    Account Amount
    Account Amount

    Schedule of Bond Discount Amortization
    Effective Interest Method
    6% Bonds Sold to Yield 5%
    Date "Cash
    Paid" "Interest
    Expense" "Bond
    Premium" "Carrying
    Value
    of Bonds"
    Jun 1, 10 Amount
    Dec 1, 10 Formula Formula Formula Formula
    Jun 1, 11 Formula Formula Formula Formula
    Dec 1, 11 Formula Formula Formula Formula
    Jun 1, 12 Formula Formula Formula Formula
    Dec 1, 12 Formula Formula Formula Formula
    Jun 1, 13 Formula Formula Formula Formula
    Dec 1, 13 Formula Formula Formula Formula
    Jun 1, 14 Formula Formula Formula Formula.

    © BrainMass Inc. brainmass.com June 4, 2020, 2:04 am ad1c9bdddf
    https://brainmass.com/business/bond-valuation/comprehensive-bond-problem-436911

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    2. Bell Company sells $2,400,000 of 6% bonds on June 1, 2010. The
    bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2014. The bonds
    yield 5% On October 1, 2011, Douglas Company buys back $720,000
    worth of the bonds for $738,000 (includes accrued interest). Give the entries through
    December 31, 2012.
    Jun 1, 10 Cash 2,486,042
    Bonds Payable 2,400,000
    Premium on Bonds Payable 86,042

    Maturity value of bonds payable $2,400,000
    Present value of ...

    Solution Summary

    The solution explains the comprehensive bond problem and provides an answer.

    $2.19

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