Hartford Research issues bonds dated January 1, 2013, that pay interest semiannu
ID: 2477841 • Letter: H
Question
Hartford Research issues bonds dated January 1, 2013, that pay interest semiannually on June 30 and December 31. The bonds have a $22,000 par value and an annual contract rate of 12%, and they mature in 10 years. (Table B.1, Table B.2, Table B.3, and Table B.4
1. The market rate at the date of issuance is 10%.
(a)
Complete the below table to determine the bonds' issue price on January 1, 2013.
Prepare the journal entry to record their issuance. (Record the issue of bonds with a par value of $22,000 cash on January 1, 2013. Assume that the market rate of interest at the date of issue is 10%.)
Complete the below table to determine the bonds' issue price on January 1, 2013.
Prepare the journal entry to record their issuance.
Record the issue of bonds with a par value of $22,000 cash on January 1, 2013. Assume that the market rate of interest at the date of issue is 12%.
Complete the below table to determine the bonds' issue price on January 1, 2013.
Prepare the journal entry to record their issuance. (Record the issue of bonds with a par value of $22,000 cash on January 1, 2013. Assume that the market rate of interest at the date of issue is 14%)
n= i= Cash Flow Table value Amount present value par (maturity) value interest (annuity) Price of BondsExplanation / Answer
Answer: 1 (a) Bond Price=$22000*6%*PVIFA(5%,20)+$22000*PVIF(5%,20)
=$24741.69
Answer:(b)
Dr Cash $24741.69
Cr Bond premium $2,741.69
Cr Bonds payable $22,000.00
Answer:2 (a) Bond Price=$22000*6%*PVIFA(6%,20)+$22000*PVIF(6%,20)
=$22000
Answer:(b) Dr Cash $22,000
Cr Bonds payable $22,000
Answer:3 (a) Bond Price=$22000*6%*PVIFA(7%,20)+$22000*PVIF(7%,20)
=$19669.32
Answer:(b) Dr Cash $19669.32
Dr Bond discount $2330.68
Cr Bonds payable $22,000.00
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