What the amortization of the bond premium or discount

Assignment Help Financial Accounting
Reference no: EM132758700

On January 2012, Lower Under Co announced an offer to issue bonds with a $200,000 par value, a 10% annual contract rate with interest payable semi-annually, and with a three-year life to gain some liquidity given the current market conditions. Interest payments are due on April 1 and October 1 of each year. Lower Under agrees to make six payments over the three years of the bond. Bonds are issue on April 1st 2012, maturity date is April 1, 2015 and the market rate on April 1st 2012 is 8%. Lower Under Co. closes its books annually on December 31 and uses the effective interest method.

Problem 1: The amortization of the bond premium or discount on period 3 is (round to the nearest dollar):

a. $2,000
b. None of the other alternatives are correct / Not enough data provided to calculate it
c. No amortization because bonds were issued at par
d. $1,710
e. $1,581

Reference no: EM132758700

Questions Cloud

What is the expected rate of return-standard deviation : You are the investment manager in Texaco Ltd, and you are considering the investments in POP Ltd and SOS Ltd. The following projected performance
What is the outstanding balance of the lease liability : Lease payments: $2,590,091 semiannually; first payment at January 1, 2018; What is the outstanding balance of the lease liability in Lone Star's June 30, 2018
What are the operating cash flows in each year : The grill will have no effect on revenues but will save Johnny's $22,500 in energy expenses. The tax rate is 30%. What are the operating cash flows in each year
What means a dollar today worth more than dollar tomorrow : What means "a dollar today is worth more than a dollar tomorrow" and what or what are the differences between simple interest and compound interest?
What the amortization of the bond premium or discount : On January 2012, Lower Under Co announced an offer to issue bonds with a $200,000 par value,What the amortization of the bond premium or discount on period 3 is
Calculate the before-tax cost of debt : Tomtom Co. issued a 30-year bond, with a coupon of 4.3%, making semiannual payments and a par value of $1,000. Calculate the before-tax cost of debt
Prepare the amortization schedule to be used for the loan : Prepare the amortization schedule to be used for this loan. What is the unpaid balance of the mortgage loan at the end of the second month?
What the net profit for abc for the period was : What the net profit for ABC for the period was? ABC Restaurant started the year with total assets of $60,000 and total liabilities of $40,000.
Calculate the market value weighted average cost : Calculate the market value weighted average cost of capital of the company. State clearly any assumptions that you make.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Determine short-run average variable cost and marginal cost

For a plant size equal to 150,000 kilowatts, determine the output level that minimizes short-run average variable costs. e. Determine the short-run average variable cost and marginal cost at the out- put level obtained in Part (d).

  What is the after-tax income

In late December, he performed $33,000 of legal services for a client. What is the after-tax income if Hank sends his client the bill in January

  Prepare an income statement and retained earnings statement

Prepare an income statement, retained earnings statement, and balance sheet analyzing your findings using the questions below, in a total of 1,050 words.

  Calculate the total cost of the job and the profit

A company has established the following annual budgets:- Calculate the total cost of the job and the profit as a percentage of costs if the selling price is £500.

  How classify the events as either adjusting or non-adjusting

How Classify the events as either adjusting or non-adjusting events after the end of the reporting period. Justify your classification.

  Which statement is true in case of political cost hypothesis

Which statement is true in case of political cost hypothesis of positive accounting theory? Small firms are more likely to use accounting choices that reduce

  How much income should the company report

A company sold goods in 2016 for $30,000, How much income should the company report in 2016 under the accrual basis of accounting?

  Analyze the discounted payback and npv

Analyze the Discounted Payback and NPV and IRR and Profitability Index. Excel margaritaville hotel properties is opening a new beach resort

  Total payroll tax liability for the period

Suppose Jim worked 75 hours during this payroll period and is paid $11.00 per hour. Assume FICA is 6.2%, Medicare is 1.45% and withholding tax is 10%.Calculate Jim's net paycheck for the period which i already answered as 679.39.Calculate Jim's emplo..

  Prepare a schedule of expected cash receipts from debtors

Accounting and Finance for Executives – UUAC5300 - Prepare a schedule of expected cash receipts from debtors for January and February, 2018, support your answer

  Prepare the journal entry to record interest on december 21

The market yield for bonds of similar risk and maturity is 12%. Interest is paid semiannually on December 31 and June 30. Prepare the journal entry to record.

  What is the cross-rate of swiss francs to euros

What is the cross rate between the Japanese yen and the Canadian dollar? That is, solve for ¥ per C$ - What is the cross-rate of Swiss francs to euros

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!

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