Hernandez Corporation issues 2,000, 10-year, 8%, $1,000 bonds dated January 1, 2
ID: 2422820 • Letter: H
Question
Hernandez Corporation issues 2,000, 10-year, 8%, $1,000 bonds dated January 1, 2015, at 98. Interest payments on these bonds are made semi-annually. The total borrowing cost of the bond issue is
The discount on bonds payable or premium on bonds payable is shown on the balance sheet as an adjustment to bonds payable to arrive at the carrying value of the bonds. Indicate the appropriate addition or subtraction to bonds payable:
On January 1, Runner Corporation issued $2,000,000, 13%, 5-year bonds with interest payable on January 1. The bonds sold for $2,197,080. The market rate of interest for these bonds was 11%. On the first interest date, using the effective-interest method, the debit entry to Interest Expense is for:
A company issues bonds with a par value of $800,000 on their issue date. The bonds mature in 5 years and pay 6% annual interest in two semiannual payments. On the issue date, the market rate of interest is 8%. Using the following information taken from present value tables, the price of the bonds on their issue date is.
0.6756
Indicate the respective effects of the declaration of a cash dividend on the following balance sheet sections:
Increase
Art, Inc., has 5,000 shares of 4%, $100 par value, cumulative preferred stock and 20,000 shares of $1 par value common stock outstanding at December 31, 2015. There were no dividends declared in 2013. The board of directors declares and pays a $45,000 dividend in 2014 and in 2015. What is the amount of dividends received by the common stockholders in 2015?
$1,960,000Explanation / Answer
Answer to the 1st question:
(ans)
In $ In $ Interest on bond 2000*$1000*8%/2*10 years 1600000 Discount on Bond 2000*($1000-$980) 40000 Total borrowing cost = 1640000