Golden inc issues 2600000 5-year 12 bonds at 104 with

Assignment Help Accounting Basics

Reference no: EM13574461

1.When determining the proceeds received when issuing a bond, the factor applied to the amount of the bond principal is determined from the table for the

present value of 1.

present value of annuity of 1.

future value of 1.

none of these answers are correct.

2. Forrest Company issued $200,000 of 5-year bonds, with a stated rate of interest of 8%, payable semiannually. The market rate for such securities is 10%. How much did Forrest receive from the sale of these bonds? (Round to the nearest dollar.)

3. Justine Company is considering purchasing machinery. The machinery will produce the following cash flows:
Year 1 $100,000
Year 2 $140,000
Justine requires a minimum rate of return of 12%. What is the maximum price Justine should pay for this machinery?

4. If a bond has a stated interest rate of 6%, but the market interest rate is 7%, the bond

5.Presented below are long-term liability items for Lind Company at December 31, 2014.

Bonds payable, due 2016		$460,000
Lease liability		62,520
Notes payable, due 2019		72,720
Discount on bonds payable		36,800

Prepare the long-term liabilities section of the balance sheet for Lind Company.

6.. What is the present value of $13,950 due 7 periods from now, discounted at 12%?

7. Presented below is the partial bond discount amortization schedule for Ferree Corp. Ferree uses the effective-interest method of amortization.

Semiannual Interest Periods	Interest to Be Paid	Interest Expense to Be Recorded	Discount Amortization	Unamortized Discount	Bond Carrying Value
Issue date				$84,240	$1,319,760
1	$63,180	$65,988	$2,808	81,432	1,322,568
2	63,180	66,128	2,948	78,484	1,325,516

(a) Prepare the journal entry to record the payment of interest and the discount amortization at the end of period

8. Sweetwood Company issues $4,200,000, 10-year, 12% bonds at 95, with interest payable on July 1 and January 1. The straight-line method is used to amortize bond discount.

Prepare the journal entry to record the sale of these bonds on January 1, 2014.

9. Golden Inc. issues $2,600,000, 5-year, 12% bonds at 104, with interest payable on July 1 and January 1. The straight-line method is used to amortize bond premium.

Prepare the journal entry to record the sale of these bonds on January 1, 2014.

Reference no: EM13574461

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