Problem 5-Bond-Related Amounts Enter the answer to each question regarding bond
ID: 2595827 • Letter: P
Question
Problem 5-Bond-Related Amounts Enter the answer to each question regarding bond transactions. bonds at a discount of $544,537. How much cash was received? 1. A company issued $4,900,000, 7-year, 8% A company issued $5,900,000, 20-year, 12% bonds for ss,788 549 with interest payable semi-annually when the market rate was 13 How many payments will the company make in the future to the bondholders? 2. On January 1 , a company issued $623,000, 10-year, 9% bonds for $606,000 with interest payable semi-annually. What is the debit balance of Discount on Bonds Payable after 6 full years? 3. On January 1, a company issued $336,000, 10-year, 7% bonds for $324,000 with interest payable semi-annually. What is the carrying amount of the bonds after 4 full years of amortizat 4 5. Bonds Payable has a balance of $898,000 and Discount on Bonds Payable has a balance of $20,170 If the issuing corporation redeems the bonds at 97, what is the amount of gain or loss on redemption? Enter a loss as a negative amountExplanation / Answer
As per chegg guidelines required to answer only first four sub parts of the question 1) Cash received = Face value of bonds - Discount on issue of bonds = 4900000-544537 = $4355463 2) Life of the bonds = 20 years Interest is paid semi-annually Total number of payments to bondholders = 20*2 = 40 3) Total Discount on issue of bonds = 623000-606000 = $17000 Life of the bonds = 10 years Semi-annual amortization of discount on issue of bonds = 17000/20 = $850 Debit balance of bonds payable after 6 years = $17000 - ($850*12) = $6800 4) Total Discount on issue of bonds = 336000-324000 = $12000 Life of the bonds = 10 years Semi-annual amortization of discount on issue of bonds = 12000/20 = $600 Debit balance of bonds payable after 4 years = $12000 - ($600*8) = $7200 Carrying amount of bonds after 4 years = $336000-$7200 = $328800