Reference no: EM131793663
Berol Corporation sold 20-year bonds on January 1, 2016. The face value of the bonds was $600,000, and they carry a 6% stated rate of interest, which is paid on December 31 of every year. Berol received $536,436 in return for the issuance of the bonds when the market rate was 7%. Any premium or discount is amortized using the effective interest method.
Required:
1. Prepare the journal entry to record the sale of the bonds on January 1, 2016, and the proper balance sheet presentation on this date.
2. Prepare the journal entry to record interest expense on December 31, 2016, and the proper balance sheet presentation on this date.
3. Explain why it was necessary for Berol to issue the bonds for only $536,436 rather than $600,000.
3. The bonds were issued for less than face value because the interest rate on the bonds is (A. less than, B. greater than) what can be earned on the market. Berol Corporation had to sell the bonds at a (A. discount, B. premium) to bring the (A. effective, B. stated) rate of interest in line with the market interest rate.
|
What change in price the bond will experience in dollars
: A 6.75 percent coupon bond with fifteen years left to maturity is priced to offer a 8.5 percent yield to maturity.
|
|
What total amount should houghton company report
: Houghton Company has the following items: common stock, $900,000; What total amount should Houghton Company report as stockholders' equity
|
|
Social and environmental responsibility for synlait milk
: Explain the importance of social and environmental responsibility for Synlait Milk.
|
|
How do i come up with the correct calculations to record
: How do I come up with the correct calculations to record in a journal entry? I know how to record the expense - I can't figure out what number to write.
|
|
Prepare the journal entry to record the sale of the bonds
: Prepare the journal entry to record the sale of the bonds on January 1, 2016, and the proper balance sheet presentation on this date
|
|
How will the total dividend be divided
: The company declares a total dividend of $ 200,000. How will the total dividend be divided between the common and preferred stock
|
|
What is alices cost recovery
: Alice purchased business office furniture on September 20, 2015, for$55,000. What is Alice's cost recovery for 2016?
|
|
How much cash flow is lost due to the reduced depreciation
: Assume a corporation has earnings before depreciation and taxes of $104,000, depreciation of $42,000, and that it has a 30 percent tax bracket.
|
|
What is their current ordering quantity
: A produce distributor uses 800 packing crates a month, which it purchases at a cost of $10 each. What is their current ordering quantity?
|