Smile Corp. Issued 16% p.a., 10-year Debenture bond, P6,000 face value,interest due every four (4) months. On October 1, Hapi purchased 20 bonds at par.On May 31, she sold 8 bonds to Honey at 105-3/4. Again on September 30, Hapisold another 6 bonds to Sweet at 96-1/2.Required:1. Assuming when the bond is offered to Honey, it as a remaining life of 6 years.Honey wants a 15% p.a.rate of return on her bond investment:a. Compute for the value of each bond? How much is the total value of the bondsoffered?b. Based on the offered price, what is the bond exactyield to maturity?c. Would you recommend to Honey to buy the bonds? Why?

Bond: A bond represents a financial debt security issued by the issuer to raise capital in debt.…

Answered: Smile Corp. Issued 16% p.a., 10-year…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

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Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 9EA: On Jan. 1, Year 1, Foxcroft Inc. issued 100 bonds with a face value of $1,000 for $104,000. The...

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Pinas Corporation issued 16% p.a., 10-year Debenture bond, P6,000 face value, interest due every 4 months. On March 31, Fely purchased 20 bonds at par. On May 1, she sold 8 bonds to Pinky at 105-3/4. Again in September 30, Fely sold another 6 bonds to Bingbing at 96-1/2. Required: 1. Assuming when the bond is offered to Pinky, it has a remaining life of 6 years. Pinky wants a 15% p.a. rate if return on her bond investment: a. Compute for the value of each bond? How much is the total value of the bonds offeredto Pinky? b. Based on the offered price, what is the bond exact yield to maturity? c. Would you recommend to Pinky to buy the bonds? Why?
Pinas Corporation issued 16% p.a., 10-year Debenture bond, P6,000 face value, interest due every 4 months. On March 31, Fely purchased 20 bonds at par. On May 1, she sold 8 bonds to Pinky at 105-3/4. Again in September 30, Fely sold another 6 bonds to Bingbing at 96-1/2. Required: Assuming when the bond is offered to Bing-bing, it has a remaining life 4 years. Bingbing required rate of return for her bond investment is 18% p.a.: a. Compute for the value of each bond? How much is the total value of the bonds offered? b. Based on the offered price, what is the bond approximate yield to maturity? c. Would you recommend to Bing-bing to buy the bonds? Why?
Pinas Corporation issued 16% p.a., 10-year Debenture bond, P6,000 face value, interest due every 4 months. On March 31, Fely purchased 20 bonds at par. On May 1, she sold 8 bonds to Pinky at 105-3/4. Again in September 30, Fely sold another 6 bonds to Bing- bing at 96-1/2. Required: Assuming when the bond is offered to Pinky, it has a remaining life of 6 years. Pinky wants a 15% p.a. rate if return on her bond investment: Compute for the value of each bond? How much is the total value of the bonds offered to Pinky? Based on the offered price, what is the bond exact yield to maturity? Would you recommend to Pinky to buy the bonds? Why?
On May 1, Early Company sells $500,000 face amount, 12% bonds. The bonds pay interest semi-annually on June 30 and December 31. The effective rate for this company is also 12%. When the bonds are sold, Early will receive cash in amount of Multiple choice question. $500,000. $520,000. $560,000.
Your company sells $41,000 of one-year, 12% bonds for an issue price of $39,500. The journal entry to record this transaction will include a credit to Bonds Payable in the amount of: Multiple Choice $39,500. $41,000. $44,420. $45,920.
On January 1, the Ryan Company issued $400,000 of 6%, 6-year bonds when the market rate of interest was 8%. The bonds pay interest semiannually on June 30 and December 31. How much are the proceeds that Ryan will receive from the bond issue date? Select one: A. $360,032 B. $399,800 C. $362,460 D. $280,400 *if there is excel function/shortcut show it
Webber Corp. issued $5,000,000 of 5% bonds on May 1 at par value. The bonds were dated January 1. The company pays interest on June 30 and December 31 each year. How much will the buyer need to pay the company in accrued interest at purchase and how much will the buyer receive in interest on June 30? Group of answer choices pay May 1 $125,000; receive June 30 $125,000 pay May 1, $0; receive June 30 $125,000 pay May 1 $125,000; receive June 30 $83,333 pay May 1 $83,333; receive June 30 $125,000
On January 1, Year 1, Hanover Corporation issued bonds with a $46,500 face value, a stated rate of interest of 8%, and a 5-year term to maturity. The bonds were issued at 97. Hanover uses the straight-line method to amortize bond discounts and premiums. Interest is payable in cash on December 31 each year. How much interest expense wil Hanover report on its income statement on December 31, Year 1? Multiple Choice $279 $1.395 $3.720 566ES
On January 2, Year 1, Kampai Sushi Bar sold $800,000 of bonds for $785,000. The bonds will mature in 10 years and pay interest annually on December 31. The company properly recorded the payment of interest and the amortization of the discount using the effective interest method. What will be the carrying value of the bonds at the end of Year 1? a.$800,000 b.less than $785,000 c.$785,000 d.greater than $785,000, but less than $800,000
On January 1, Year 1, A Company purchased P500,000, 12% bonds of Erika Company for P464,882, a price that yields 14%. Interest on these bonds is payable every June 30 and December 31. The bonds mature on December 31, Year 5. On May 31, Year 4, to pay the maturing obligation, Tina sold P200,000 face value bonds at 102 (including accrued interest). Market value of the bonds on different dates is as follows:December 31, Year 1 110December 31, Year 2 108December 31, Year 3 106December 31, Year 4 98Assume that the Company intended to collect the principal and interest over the term of the bonds and did not choose the fair value option. 2.What amount of gain or loss should Tina Company recognize on the sale of investments on May 1, Year 4? P497 loss 9,503 gain 14,254 gain None of the above
On January 1, Year 1, Sheffield Company issued bonds with a face value of $500,000, a term of ten years, and a stated interest rate of 5%. The bonds were issued at 104, and interest is payable each December 31. Sheffield uses the straight-line method to amortize bond discounts and premiums. What is the carrying value of the bonds at December 31, Year 4? Multiple Choice O O O O $508,000 $500,000 $512,000 $510,000
On July 1, 2002, Roger Co. paid P1,198,000 for 10% 20-year bonds with a face amount of P1,000,000. Interest is paid on December 31 and June 30. The bonds were purchased to yield 8%. Roger uses the effective interest method to recognize interest income from investment. What should be reported as carrying amount of the bonds in Roger’s December 31, 2002 balance sheet? P1,207,000 P1,198,000 P1,195,920 P1,193,050

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