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When the contract rate is above the market rate, do bonds sell at a premium or a discount?
Six years ago, a company issued $500,000 of 6%, eight-year bonds at a price of 95. The current carrying value is $493,750.
Prepare the entry to record this bond issuance and the first semiannual interest payment.
When a borrower records an interest payment on an installment note, how are the balance sheet and income statement affected?
On December 31, 2010, a company issues 16%, 10-year bonds with a par value of $100,000.
On July 1, 2011, Jackson Company exercises a $5,000 call option on its outstanding bonds that have a carrying value of $208,000 and par value of $200,000.
If you know the par value of bonds, the contract rate, and the market rate, how do you compute the bonds' price?
What obligation does an entrepreneur have to investors that purchase bonds to finance the business?
What total amount of bond interest expense will be recognized over the life of these bonds?
What is the amount of bond interest expense recorded on the first interest payment date?
Compare and contrast an operating lease with a capital lease.
Kemper Company plans to issue 6% bonds on January 1, 2011, with a par value of $1,000,000.
Lauren Wright, an employee of ETrain.com, leases a car at O'Hare airport for a three-day business trip.
What is the par value of the 4.625% bond issuance? What is its book (carrying) value?
How much interest will Kidman pay to the bondholders every six months?
Matchbox Company issues 6%, four-year bonds, on December 31, 2011, with a par value of $100,000 and semiannual interest payments.
Oneil Company issues 5%, two-year bonds, on December 31, 2011, with a par value of $100,000 and semiannual interest payments.
How many semiannual interest payments will be made on these bonds over their life?
What is the amount of the recorded gain or loss from retiring the bonds?
How much accrued interest do the bond purchasers pay Fellenger on May 1, 2011?
Evaluate and discuss the level of risk involved if Ramirez borrows the funds to pursue the project.
Determine the total bond interest expense to be recognized over the bonds' life.
Sedona Systems issues bonds dated January 1, 2011, that pay interest semiannually on June 30 and December 31.
Comment on your results and discuss what they imply about the relative riskiness of these companies.
What are some factors Santana Rey should consider before borrowing the funds?