Question
Universal Foods issued 12% bonds, dated January 1, with a face amount of $200 million on January 1, 2013. The bonds mature on December 31,
Universal Foods issued 12% bonds, dated January 1, with a face amount of $200 million on January 1, 2013. The bonds mature on December 31, 2027 (10 years). The market rate of interest for similar issues was 14%. Interest is paid semiannually on June 30 and December 31. Universal uses the straight-line method. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) |
Required: | |
1. | Determine the price of the bonds at January 1, 2013. (Enter your answer in whole dollars.) |
2. | Prepare the journal entry to record their issuance by Universal Foods on January 1, 2013. (Enter your answers in whole dollars. If no entry is required for a transaction, select "No journal entry required" in the first account field.) |
3. | Prepare the journal entry to record interest on June 30, 2013. (Enter your answers in whole dollars. If no entry is required for a transaction, select "No journal entry required" in the first account field.) |
4. | Prepare the journal entry to record interest on December 31, 2020.(Enter your answers in whole dollars. If no entry is required for a transaction, select "No journal entry required" in the first account field.) |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started