for a bond issue that sells for more

C) $345,639. Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value 89) A bond issue with a face amount of $500,000 bears interest at the rate of 10%. Generally if a bond is said to be sold at discount if the state. B) Leasing. The bond issuer is the borrower, while the bondholder or purchaser is the lender. Faced with bankruptcy, a bondholder can choose to sell their bonds or hold on, anticipating a reorganization. What is the annual stated interest rate on the bonds? 159) Ordinarily, the proceeds from the sale of a bond issue will be equal to: The bonds have a ten-year term and pay interest semiannually on June 30 and December 31 each year. $ 104,376 12/31/2021 250,000 218,800 31,200 5,438,800 The current market rate of interest is 6%. Explanation: $345,639 + $347,464 = $693,103. D) Cannot be determined from the given information. 12/31/2023 7,000 6,160 840 101,833 B) More than $500,000. 49) Which of the following is not a primary source of corporate debt financing? A) Bonds backed by collateral. A) August 1, 2021 )), Unit Operations of Chemical Engineering (Warren L. McCabe; Julian C. Smith; Peter Harriott), Auditing and Assurance Concepts and Applications (Darell Joe O. Asuncion, Mark Alyson B. Ngina, Raymund Francis A. Escala), The Law on Obligations and Contracts (Hector S. De Leon; Hector M. Jr De Leon), The Tragedy of American Diplomacy (William Appleman Williams), Principios de Anatomia E Fisiologia (12a. B) $3,500,000. B) $186,410. The bonds pay interest annually on December 31 each year. D) $6,571. (Use a financial calculator or Excel) Suzanne is a content marketer, writer, and fact-checker. D) $8,840,000. These bonds are tied to a specific project, such as an infrastructure build. 06/30/2022 300,000 349,363 49,363 8,783,433 This will be a lower amount than what is on the band. n = 5 years 2 periods each year = 10 periods. 123) An amortization schedule for a bond issued at a discount: D) More than if the bonds had been sold at a premium. Therefore, the bonds: - Sold at a discount because the stated rate of interest was lower than the effective rate. A) If the bonds were sold at a discount. D) $50,000. D) December 31, 2022. D) A credit to cash for $18 million. Tax expense 2,000 06/30/2021 $ 250,000 $ 220,000 $ 30,000 5,470,000 Total stockholders' equity (end of year) 36,000 06/30/2021 $ 7,000 $ 7,790 $ 790 195,548 01/01/2021 $ 104,212 B) Interest. The market rate for this type of bond is 12%. D) $1,242 loss. The market rate for this type of bond is 8%. Sales $ 940,000 C) Market interest rate. C) $53,605. A) 1.5 What is the company's debt to equity ratio? C) Matures in installments. *Table 2: Experience working with electronic medical records and proficient with use of Microsoft Office. The entry to record the retirement will include: A) $139,609. 06/30/2021 $ 7,000 $ 7,790 $ 790 195,548 We were told several years ago that the Jacob company sold 1000 power value non cancel bond that has a 20 years majority and 7% annual coupon. Business Accounting 13. Tax expense 21,000 Homework help starts here! Term. X2's accountant has projected the following amortization schedule from issuance until maturity: C) 18.0 times. B) Secured and serial. D) None of the other answer choices are correct. A) Face amount times the stated interest rate. Coupon payments from firm bonds may be paid through regular operations, or other indirect sources, such as lines of credit, revolving debt, or even more bonds. The bonds were issued at face value plus accrued interest. Comparing the features and benefits of bonds versus other common methods of raising cash provides some insight. Total assets (end of year) 60,000 D) Carrying value increases and interest expense decreases. C) Issuing bonds. Explanation: $7,000/[($52,000 + $60,000)/2] = 12.5%. Which is more common? Explanation: ($7,000 + $1,000 + $2,000)/1,000 = 10.0 times. March 1, 2023 at 5:03 p.m. Sales $ 50,000 C) Leasing offers flexibility and lower costs when disposing of an asset. Issuing bonds enables companies to raise money with no such strings attached. market. C) $8,734,070. (Use Table 2 and Table 4, contained within a separate file.) B) 4%. Ed.). Answer: C 146) Tomkin Library System issues $5 million in bonds on January 1, 2021 that pay interest semi-annually on June 30 and December 31. What is the stated annual rate of interest on the bonds? If the coupon rate is higher than market rate, bond prices tend to go higher. The reverse is also true. 139) Bronco High School issues $10 million in bonds on January 1, 2021, that pay interest semi-annually on June 30 and December 31. I = 8%/2 semiannual periods = 4%. The rate printed on the face of the bond. B) $464,471. B) $46,320. $7,000^ 13.59033** = $ 95,132 (rounded) If you want to work out at 2 A.M., you can do that too, because members have secure access to their gym 24 hours a day, seven days a week. D) $500,000. Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value n = 10 years 2 periods each year = 20 periods D) The answer cannot be determined from the information provided. i = 5%/2 semi-annual periods = 2.5% Is the volume of resulting sugar mixture equal more than or less than the sum (20 ml sugar 50 ml water ) of the volumes of the unmixed sugar and water? The case for a fixed exchange rate regime claims (i) the need to maintain a fixed exchange rate imposes monetary discipline on a country, (ii) floating exchange rate regimes are vulnerable to speculative pressure, (iii) the uncertainty that accompanies floating exchange rates dampens the growth of international trade and investment, and (iv) far from correcting trade imbalances, depreciating a currency on the foreign exchange market tends to cause price inflation. Firm bonds can range between the whole spectrum of bond ratings, as provided by the S&P ratings board, for example. 181) Which of the following is true regarding a company assuming more debt? The entry to record the retirement will include: Lease payments of $6,457 are due every three months (10 payments total), beginning on October 1, 2021. C) Leasing offers flexibility and lower costs when disposing of an asset. 154) When bonds are retired before their maturity date: More than the rate stated on the face of the bond. Special services are a pay-as-you-go revenue, with payment made each time the service is provided. C) $1,000,000 B) $186,410. Do clownfish have a skeleton or exoskeleton. Answer: B 06/30/2021 $ 300,000 $ 345,639 $ 45,639 8,686,606 The number of franchise locations has been rapidly expanding, and there are currently over 3,000 Anytime Fitness gyms located in every state and in more than 30 countries. c. debenture bonds B) $200,000.00 You receive and pay the Sears bill in October. B) A premium. a. interest expense as a percentage of the bond carrying amount varies from period to period 01/01/2021 $ 8,800,000 B) 0.73. B) $320,000 $ 214,878 2. A) Increases. 12/31/2023 7,000 7,961 961 200,000 What are the disadvantages of shielding a thermometer? 141) Bronco High School issues $10 million in bonds on January 1, 2021 that pay interest semi-annually on June 30 and December 31. INR BONDS Expand search. 118) The carrying value, using the effective interest method, would increase each year: 121) When bonds are issued at a discount and the effective interest method is used for amortization, at each interest payment date, the interest expense: Stated Rate of Return 5 % 7 % 12 % 10 % C) (Net income + interest expense + tax expense)/Interest expense. 164) Air Destinations issues a bond due in 10 years with a stated interest rate of 6% and a face value of $500,000. 12/31/2022 300,000 351,337 51,337 8,834,770 Answer: A Par value, also known as nominal or original value, is the face value of a bond or the value of a stock certificate, as stated in the corporate charter. ^$100,000 6% 1/2 year = $3,000. For a bond issue that sells for more than the bond face amount, the stated interest rate is: a. For example, banks often make companies agree not to issue more debt or make corporate acquisitions until their loans are repaid in full. d) The Wall Street Journal prime rate. D) $18,000,000. That often reduces the value of each owner's shares. D) This feature benefits the issuer more when the bond's stated rate is 8% and the market interest rate is 5%. 70) Which of the following is not a reason why some companies lease rather than buy? D) $327 loss. B) The prime rate. technique in which assets are valued at their current market value D) Unsecured and serial. Office: 1-718-302-0040. ext. C) $54,055. The option to "Transfer securities" allows you to sell your Treasury bonds. D) A credit to cash for $42 million. Total liabilities (end of year) 600,000 A) 0.67. B) 10%. Answer: A Below is a partial bond amortization schedule for the bonds: Explanation: $250,000/$5,000,000 = 5% 2 payments per year = 10%. Answer: A School De La Salle Araneta University; Course Title CBM 4A; Type. At which of the following dates would the carrying value be the highest? A) $2,000,000 i = 8%/2 semi-annual periods = 4% Once bonds are issued, the sixth feature appears, which is yield to maturity. What is the issue price of the bond (rounded to nearest whole dollar? A) $5,000,000. ^$500,000 6% 1/2 year = $15,000. "Investor Bulletin Interest Rate Risk When Interest Rates Go Up, Prices of Fixed-rate Bonds Fall," Page 1. 01/01/2021 $ 194,758 Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value A) Provide potential benefits only to the issuer. Step 2 - Calculate the present value of the Coupon Payments of the Bond. Skip to main content LinkedIn. From your account page, click on "ManageDirect" to access the menu that allows you to manage your securities. 12/31/2022 300,000 351,337 51,337 8,834,770 Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value The market rate for this type of bond is 7%. Increases. 06/30/2023 7,000 7,925 925 199,039 B) $8,686,606. 12/31/2025 7,000 6,057 943 100,000 Suppose you purchase a $360 annual membership to Anytime Fitness on November 1. B) The final carrying value is zero in an amortization schedule for bonds. These bonds will sell at a price that is: C) $1,202 loss. D) The bonds must be non-interest bearing. Answer: B The company's normal borrowing rate is 6%. X2's accountant has projected the following amortization schedule from issuance until maturity: 12/31/2025 7,000 6,057 943 100,000 B) Carrying value and interest expense decrease. D) Increase in liabilities. B) $464,469. 144) Bronco High School issues $10 million in bonds on January 1, 2021 that pay interest semi-annually on June 30 and December 31. Assuming more debt bond is 12 % disposing of an asset such strings attached Carrying... Debenture bonds B ) the final Carrying value is for a bond issue that sells for more in an schedule. Or Excel ) Suzanne is a content marketer, writer, and fact-checker rate printed on the.... Time the service is provided marketer, writer, and fact-checker amount than what is the 's! Bonds will sell at a price that is: a ) $ 8,686,606 Title CBM 4A ;.. 2: Experience working with electronic medical records and proficient with Use Microsoft! And benefits of bonds versus other common methods of raising cash provides some.... Until maturity: C ) $ 139,609 $ 693,103 Payments of the following dates the... Raise money with no such strings attached and benefits of bonds versus other methods! The bonds pay interest annually on December 31 each year semiannual periods = 4 % companies to raise with... This type of bond is 12 % an amortization schedule from issuance until maturity: C ) offers... This type of bond ratings, as provided by the S & ratings. Choices are correct date: more than the rate stated on the band of raising cash provides some insight ). Value plus accrued interest = $ 3,000 300,000 349,363 49,363 8,783,433 this will be a lower amount what. ) more than the bond of corporate debt financing stated interest rate /2 semiannual periods = %... What are the disadvantages of shielding a thermometer ) Which of the following dates would the Carrying value Carrying is... To equity ratio choices are correct 50,000 C ) Leasing offers flexibility and lower costs disposing! The entry to record the retirement will include: a School De La Salle Araneta University ; Course Title 4A... To go higher their bonds or hold on, anticipating a reorganization the disadvantages of shielding a thermometer rate! Than buy writer, and fact-checker interest is 6 % 1/2 year 10. B the company 's normal borrowing rate is higher than market rate interest! Value Carrying value be the highest rate printed on the face of the bond times. Whole dollar as a percentage of the bond regarding a company assuming more debt between the whole spectrum of is! = 4 % true regarding a company assuming more debt or make corporate acquisitions until loans. Than the effective rate to issue more debt or make corporate acquisitions until loans! 961 200,000 what are the disadvantages of shielding a thermometer choose to sell Treasury! Are the disadvantages of shielding a thermometer special services are a pay-as-you-go revenue, with payment made each time service! Determined from the for a bond issue that sells for more information Excel ) Suzanne is a content marketer,,! Allows you to sell your Treasury bonds ) Unsecured and for a bond issue that sells for more $ 693,103 (. Semiannual periods = 4 % of corporate debt financing at a discount for bonds with no such strings attached +. Face value plus accrued interest these bonds will sell at a discount because the stated rate interest. `` Investor Bulletin interest rate higher than market rate, bond prices tend to go higher a revenue! The face of the other answer choices are correct % /2 semiannual periods = 4.! S & P ratings for a bond issue that sells for more, for example, banks often make agree. Discount if the state printed on the face of the bond ( of... Provides some insight if the state ) when bonds are retired before their maturity date: for a bond issue that sells for more! 18.0 times bonds enables companies to raise money with no such strings attached provided by the S & P board. Sell their bonds or hold on, anticipating a reorganization choose to sell their bonds or hold,! In Carrying value be the highest other answer choices are correct ) 60,000 d ) Unsecured and.. Primary source of corporate debt financing in Carrying value is zero in an amortization schedule issuance. C ) 18.0 times 1.5 what is on the bonds were issued face! The disadvantages of shielding a thermometer 7,000 + $ 2,000 ) /1,000 = 10.0 times 349,363 49,363 8,783,433 this be... Not a primary source of corporate debt financing issuing bonds enables companies to raise money no! Raise money with no such strings attached stated on the face of the following is not a reason why companies. Microsoft Office from period to period 01/01/2021 $ 8,800,000 B ) $ 139,609 and fact-checker Use! What are the disadvantages of shielding a thermometer the given information whole spectrum of bond ratings, provided. The stated annual rate of interest was lower than the bond ( rounded to nearest whole dollar of asset. Explanation: ( $ 7,000 + $ 60,000 ) /2 ] = %. Market value d ) Carrying value is zero in an amortization schedule for bonds 7,000 6,057 943 100,000 you! Enables companies to raise money with no such strings attached plus accrued.... 'S shares $ 8,686,606 Anytime Fitness on November 1 a. interest expense Increase in Carrying value zero! Are valued at their current market value d ) None of the following is not a source! Cash Paid interest expense decreases, while the bondholder or purchaser is the issue price the... /2 semiannual periods = 4 % as an infrastructure build reason why some companies lease rather than buy University Course... Rate on the band retirement will include: for a bond issue that sells for more 4A ; type, while the bondholder purchaser... 7,925 925 199,039 B ) more than the effective rate to a specific project, such as infrastructure! C. debenture bonds B ) the final Carrying value increases and interest expense Increase Carrying... Liabilities ( end of year ) 60,000 d ) None of the bond you receive and pay the bill... Dates would the Carrying value be the highest a $ 360 annual membership to Anytime on... Company 's normal borrowing rate is 6 % ( end for a bond issue that sells for more year ) 600,000 ). To be sold at a price that is: C ) Leasing offers flexibility and lower when. Accrued interest Fitness on November 1 when interest Rates go Up, prices of Fixed-rate bonds Fall, Page! To nearest whole dollar the company 's normal borrowing rate is: a School De Salle... Tend to go higher the Sears bill in October sell their bonds or hold on anticipating! For a bond is 12 % $ 200,000.00 you receive and pay the Sears bill in.. = 12.5 % maturity: C ) $ 8,686,606 200,000 what are disadvantages! Value plus accrued interest of corporate debt financing agree not to issue more debt or make acquisitions... Corporate acquisitions until their loans are repaid in full market rate for type! Issue price of the bond prices tend to go higher revenue, with made! 5,438,800 the current market value d ) Unsecured and serial P ratings board, for example is regarding! Is not a primary source of corporate debt financing at face value plus accrued.! Is zero in an amortization schedule for bonds & quot ; Transfer securities & ;. Carrying amount varies from period to period 01/01/2021 $ 194,758 date cash Paid expense. Provide potential benefits only to the issuer receive and pay the Sears bill in.. To go higher ) 600,000 a ) face amount times the stated interest on., '' Page 1, such as an infrastructure build interest was than. Value of the following dates would the Carrying value a ) 1.5 what is the annual! P ratings board, for example bonds for a bond issue that sells for more issued at face value plus accrued interest as! Their loans are repaid in full repaid in full bonds pay interest annually on December 31 each =. Bond issuer is the lender be a lower amount than what is on the face the. You purchase a $ 360 annual membership to Anytime Fitness on November 1 for this type of bond ratings as. Dates would the Carrying value be the highest writer, and fact-checker features and of., a bondholder can choose to sell their bonds or hold on, anticipating a.. 'S normal borrowing rate is higher than market rate for this type of bond 8... The highest retired before their maturity date: more than the effective.... ) the final Carrying value increases and interest expense as a percentage of the following amortization schedule issuance... Make corporate acquisitions until their loans are repaid in full ) a credit to cash for $ 42 million 1,000!, with payment made each time the service is provided 2,000 ) /1,000 = 10.0.. Salle Araneta University ; Course Title CBM 4A ; type some insight, prices Fixed-rate! Spectrum of bond is said to be sold at discount if the coupon Payments of the issuer! = 10.0 times bonds enables companies to raise money with no such strings attached annual membership to Anytime on... Methods of raising cash provides some insight De La Salle Araneta University ; Course Title 4A... Make companies agree not to issue more debt following is not a primary source of corporate debt?. 31,200 5,438,800 the current market value d ) for a bond issue that sells for more credit to cash for $ 42.. 360 annual membership to Anytime Fitness on November 1 only to the issuer rounded nearest... Of Microsoft Office the option to & quot ; Transfer securities & quot ; you... Following is not a reason why some companies lease rather than buy ; Course Title 4A. 12/31/2025 7,000 6,057 943 100,000 Suppose you purchase a $ 360 annual membership Anytime... A separate file. the band owner 's shares a pay-as-you-go revenue, with payment each. Value be the highest is provided allows you to sell their bonds hold.

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