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Compute for the issue price of the bonds payable

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Question: Problem 1: On Jan. 1, 2007, Cobb company issued ten-year bonds with a face amount of 7,500,000 and a stated interest rate of 8% payable annually on Jan. 1. The bonds were priced to yield 10%. Present value factors are as follows: Present value of 1 for 10 periods at 10% 0.3855 Present value of an ordinary annuity of 1 for 10 periods at 10% 6.145

Required: Compute for the issue price of the bonds payable and the gain or loss on extinguishment of the bonds assuming that the bonds is prematurely retired at 98 excluding accrued interest on April 1, of year 5.

Compute for the total issue price of the bonds _____________

Prepare the amortization table until 5th year.

Prepare the entries for 3 years.

Reference no: EM132728890

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