User Account

All Pages

Compute the amount required to purchase this bond

Assignment Help Accounting Basics
Reference no: EM131932440

Question - Magenta Inc., on January 1, 2016, purchased a bond with a maturity value of $150,000. The bonds had a 2% per year coupon rate payable annually on December 31. The bond matures in 4 years. The market yield for bonds with equivalent risk and maturity was 4% per year.

Required:

1. Is this a discount bond or premium? Explain why you think so.

2. Compute the amount required to purchase this bond at the beginning of the 4 year period. Provide the journal entry to record the purchase.

3. Provide the amortization schedule for the 4 years. Provide the journal entry required at December 31, 2016, the year of acquisition.

4. If bond interest was payable on January 1, 2017, for the 1st time, how would your entry on December 31, 2016, change (if at all)?

5. If the company followed ASPE and followed the straight line alternative permitted under ASPE, what would the amortization schedule look like for 2016? How would this change your entry on December 31, 2016?

Reference no: EM131932440

Questions Cloud

Multiple-choice test that asked about historical events : Twenty-one individuals from a rural Midwestern town took a multiple-choice test that asked about historical events
At what amount would land be reported at on balance sheet : Jackson's incremental borrowing rate is 10%. At what amount would the land be reported at on the balance sheet
Examine the fundamental impact of demographics : Examine the fundamental impact of demographics and technology on contemporary adult learning overall. Speculate on the potential impact that either demographics
Estimate a relationship between two variables : What is the procedure one would use to estimate a relationship between two variables using computer software and it's output?
Compute the amount required to purchase this bond : Compute the amount required to purchase this bond at the beginning of the 4 year period. Provide the journal entry to record the purchase
Create a case for the importance of email in workplace : Create a case for the importance of email in workplace OR present an alternative form of communication that could replace email in professional environment.
What is mr solomans leadership success : How did Mr. Soloman build his career at Goldman Sachs? Offer two ideas from the article.What is Mr. Soloman's leadership success?
Developing a health food concept : To decide whether or not to proceed developing a health food concept, a company carried out a concept test. The company decided it will 'go
How would the income be allocated to each shareholder : Tip Corporation is a calendar-year S corporation with 10,000 shares outstanding, How would the income be allocated to each shareholder

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd