Financial Accounting
15th Edition
ISBN: 9781337272124
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 14, Problem 25E
(a)
To determine
Calculate the amount of cash proceeds (present value) from the sale of the bonds.
(b)
To determine
Calculate the amount of premium to be amortized for the first semiannual interest payment period.
(c)
To determine
Calculate the amount of premium to be amortized for the second semiannual interest payment period.
(d)
To determine
Calculate the amount of bond interest expense for first year.
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Boyd Co. produces and sells aviation equipment. On the first day of its fiscal year, Boyd Co. issued $80,000,000 of five-year, 9% bonds at a market (effective) interest rate of 12%, with interest payable semiannually. compute the following, presenting figures used in your computations:
a. The amount of cash proceeds from the sale of the bonds. Use the tables of present values in Exhibits 8 and 10. Round to the nearest dollar.
Boyd Co. produces and sells aviation equipment. On the first day of its fiscal year, Boyd Co. issued $70,000,000 of three-year, 11% bonds at a market (effective) interest rate of 13%, with interest payable semiannually. Compute the following:
a. The amount of cash proceeds from the sale of the bonds. Use the tables of present values in Exhibit 5 and Exhibit 7. Round to the nearest dollar
b. The amount of discount to be amortized for the first semiannual interest payment period, using the interest method. Round to the nearest dollar
c. The amount of discount to be amortized for the second semiannual interest payment period, using the interest method. Round to the nearest dollar
d. The amount of the bond interest expense for the first year. Round to the nearest dollar.
Ware Co. produces and sells motorcycle parts. On the first day of its fiscal year, Ware Co. issued $35,000,000 of five-year, 12% bonds at a market (effective) interest rate of 10%, with interest payable semiannually. Compute the following, presenting figures used in your computations:a. The amount of cash proceeds from the sale of the bonds. Use the tables of present values in Exhibits 8 and 10. Round to the nearest dollar.b. The amount of premium to be amortized for the first semiannual interest payment period, using the interest method. Round to the nearest dollar.c. The amount of premium to be amortized for the second semiannual interest payment period, using the interest method. Round to the nearest dollar.d. The amount of the bond interest expense for the first year.
Exhibits 8 and 10 attached
Chapter 14 Solutions
Financial Accounting
Ch. 14 - Describe the two distinct obligations incurred by...Ch. 14 - Explain the meaning of each of the following terms...Ch. 14 - If you asked your broker to buy you a 12% bond...Ch. 14 - A corporation issues 26,000,000 of 9% bonds to...Ch. 14 - If bonds issued by a corporation are sold at a...Ch. 14 - Prob. 6DQCh. 14 - Bonds Payable has a balance of 5,000,000, and...Ch. 14 - What is a mortgage note?Ch. 14 - Fleeson Company needs additional funds to purchase...Ch. 14 - In what section of the balance sheet would a bond...
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