Finiancial Accounting

ABC issues $1,100,000 of 9%, 15-year bonds dated January 1, Year 1, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $950,524 (market rate = 10.855%).

Question 1

On January 1, Year 1, how much cash is received from the bonds issuance?

Question 2

For each semiannual period, calculate the cash payment.

Question 3

For each semiannual period, calculate the discount amortization.

Question 4

For each semiannual period, calculate the bond interest expense.

Question 5

What is the carrying value of the bond after the first year?

Question 6

What is the carrying value of the bond after the second year?

Question 7

How much is the total bond value on January 1, Year 1, if the market rate = 12%?

Question 8

Based on the bond value from question 7, is this a premium or discount bond?

Group of answer choices

A) Discount

B) Premium

C) Par

Question 9

How much is the total bond value on January 1, Year 1, if the market rate = 8%?

Question 10

Based on the bond value from question 9, is this a premium or discount bond?

Group of answer choices

A) Discount

B) Premium

C) Par