Compute the present value of the bond’s remaining cash flows

Reference no: EM131427432

Coral Sands Marina issued 100 ten-year bonds on July 1, 2012. The interest payments are due semiannually (January 1 and July 1) at an annual rate of 8 percent. The effective rate on the bonds is 6 percent. The face value of each bond is $1,000.

a. Prepare the journal entry that would be recorded on July 1, 2012, when the bonds are issued.

b. Prepare the journal entries that would be recorded on December 31, 2012.

c. Compute the balance sheet value of the bond liability as of December 31, 2012.

d. Compute the present value of the bond's remaining cash flows as of December 31, 2012, using the effective rate at the time the bonds were issued. Explain the relationship between the balance sheet value of the liability and the present value of the future cash payments.

Reference no: EM131427432

Questions Cloud

Problem regarding the it policy and strategy : Please read the following chapters that describe how information can be used strategically, which is the topic for this week's paper:

How were the principles of persuasion studied : How were the principles of persuasion studied? Was the research valid? Why or why not? What was learned through these studies that can be applied to the creation of the above PSA?

Problem regarding the it policy and strategy : Please read the article Value Disciplines that explains how companies create value for their customers. After reading the article, identify a company that is focused on either:

Reduces the chance of bias in a performance evaluation : Since you are new as a Human Resource Manager, and the Claims Supervisor is a new position, you need to have a plan for a performance management system of the position. You are aware, from the job description, that it will require performance meas..

Compute the present value of the bond’s remaining cash flows : Compute the present value of the bond's remaining cash flows as of December 31, 2012, using the effective rate at the time the bonds were issued. Explain the relationship between the balance sheet value of the liability and the present value of th..

Critical fundamental skills from the it professions : Resources: "Presentation Fundamentals" with Tatiana Kolovou on Lynda.com, Instructions for Completing a Video Technology managers look for three critical fundamental skills from the IT professions hired today:

What is the intuition underlying such gains and losses : Treadway Company issued bonds with a face value of $20,000 on January 1, 2011. The bonds were due to mature in five years and had a stated annual interest rate of 8 percent. The bonds were issued at face value. Interest is paid semiannually.

Analyze the major functions of the articular-nervous system : The articular is the connection between two bones. There are many functions the joints have but one of the main functions would be movement. The joints also help bear our body's weight as well as give us stability. The joints contain synovial flui..

Finalize your business plan for new hwe accessories website : Finalize your business plan for the new HWE Accessories website. Incorporate your instructor's feedback into a well-integrated, cohesive 5- to 10-page document using Microsoft Word including segments from Weeks Two, Three, Four, and Five.

User Account

All Pages