Your answer is partially correct. Try again. Presented below are four independen

ID: 2516273 • Letter: Y

Question

Your answer is partially correct. Try again. Presented below are four independent situations. | (a) on March 1, 2018, Grouper Co. issued at 103 plus accrued interest $4,080,000, 996 bonds. The bonds are dated January 1, 2018, and pay interest semiannually on July 1 and January 1. In addition, Grouper Co. incurred $26,000 of bond issuance costs. Compute the net amount of cash received by Grouper Co. as a result of the issuance of these bonds. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275.) Net amount of cash received (b) On January 1, 2017, Monty Co. issued 9% bonds with a face value of $755,000 for $666,069 to yield 11%. The bonds are dated January 1, 2017, and pay interest annually. What amount is reported for interest expense in 2017 related to these bonds, assuming that Monty used the effective-interest method for amortizing bond premium and discount? 4176400 (Round answer to 0 decimal places, e.g. 38,548.) Interest expense to be reported for 2017 36634

Explanation / Answer

Grouper co.

Selling price of the bonds ($4080000 x 103%)

$4202400

Accrued interest from January 1 to February 28, 2018 ($4080000 x 9% x 2/12)

61200

Total cash received from issuance of the bonds

4263600

Less: Bond issuance costs

(26000)

Net amount of cash received

$4237600

Monty Co.

Carrying amount of the bonds on 1/1/17

$666069

Effective-interest rate (11%)

x 0.11

Interest expense to be reported for 2017

$73268

Flounder Building Co.

Maturities and sinking fund requirements on long-term debt for the next five year are as follows:

2018

$421000

2019

357000

2020

210000

2021

213000

2022

360000

Culver Inc.

Here mentioned 3 bonds are secured by either real estate securities of other corporations or plant equipment. None of the bonds are classified as debenture bonds.