Hopkins Ltd. issued five-year bonds with a face value of $200,000 on January 1. The bonds have

Question:

Hopkins Ltd. issued five-year bonds with a of $200,000 on January 1. The bonds have a interest rate of 6% and interest is paid semi-annually on June 30 and December 31. The market interest rate was 7% when the bonds were issued at a price of 96. Using this information, determine
(a) The proceeds received by the company when the bonds were issued,
(b) The interest expense recorded for the six months ending June 30 when the first interest payment is made, and
(c) The balance in the Bonds Payable account immediately following the first interest payment.
Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...