Question
On July 1, 20Y1, Danzer Industries Inc. issued $50,000,000 of 10-year, 8% bonds at a market (effective) interest rate of 10%, receiving cash of $43,768,920.
On July 1, 20Y1, Danzer Industries Inc. issued $50,000,000 of 10-year, 8% bonds at a market (effective) interest rate of 10%, receiving cash of $43,768,920. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:
1. | Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1.* | ||||
2. | Journalize the entries to record the following:*
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3. | Determine the total interest expense for 20Y1. | ||||
4. | Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? | ||||
5. | Compute the price of $43,768,920 received for the bonds by using the present value tables. (Round to the nearest dollar.)
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3. Determine the total interest expense for 20Y1. Enter amount as a positive number.
Points:
1 / 1
4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest?
Yes
No
Points:
1 / 1
5. Compute the price of $43,768,920 received for the bonds by using the present value tables. (Round to the nearest dollar.)
Present value of the face amount | |
Present value of the semiannual interest payments | |
Price received for the bonds |
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