On January 1, a company issued 2%, 20year

On January 1, a company issued 2%, 20year

bonds with a face amount of $85 million for $52,993,913 to

yield 5%. Interest is paid semiannually.

What was the interest expense at the effective interest rate on the December 31 annual income

statement? (Enter your answer in dollars not in millions. Round "PV Factor" to 5 decimal places

and final answer to the nearest dollar amount. Omit the "$" sign in your response.)

Interest expense $ 2,661,567 ± .01%

Explanation:

Interest will be the effective rate times the outstanding balance:

Date General Journal Debit Credit

June 30 Interest expense (2.5% × $52,993,913) 1,324,848

Discount on bonds payable (difference) 474,848

Cash (1.0% × $85,000,000) 850,000

Date General Journal Debit Credit

Dec. 31 Interest expense (2.5% × [$52,993,913 + 474,848]) 1,336,719

Discount on bonds payable (difference) 486,719

Cash (1.0% × $85,000,000) 850,000

Interest expense for the year: $1,324,848 + 1,336,719 = $2,661,567

On January 1, a company issued 6%, 10year bonds with a face amount of $94 million for $81,225,391 to yield 8%. Interest is paid semiannually.

On January 1, a company issued 6%, 10year

bonds with a face amount of $94 million for $81,225,391 to

yield 8%. Interest is paid semiannually.

What was interest expense at the effective interest rate on June 30, the first interest date? (Enter your

answers in dollars not in millions. Round "PV Factor" to 5 decimal places and final answer to the

nearest dollar amount. Omit the "$" sign in your response.)

Interest expense $ 3,249,016 ± .01%

Explanation:

Interest will be the effective rate times the outstanding balance:

4.0% × $81,225,391 = $3,249,016

A company issued 7%, 9year bonds with a face amount of $84 million. The market yield for bonds of similar risk and maturity is 8%. Interest is paid semiannually.

A company issued 7%, 9year

bonds with a face amount of $84 million. The market yield for bonds of

similar risk and maturity is 8%. Interest is paid semiannually.

Use (Table 2) and (Table 4)

At what price did the bonds sell? (Enter your answer in dollars not in millions. Round "PV Factor" to

5 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your

response.)

Price of the bonds $ 78,683,262 ± 0.01%

Explanation:

Interest $ 2,940,000 ¥ × 12.65930* = $37,218,342

Principal $84,000,000 × 0.49363** = 41,464,920

Present value (price) of the bonds $ 78,683,262

¥ [7 ÷ 2] % × $84,000,000

* present value of an ordinary annuity of $1: n = 18, i = 4.0%. (Table 4)

** present value of $1: n = 18, i = 4.0%. (Table 2)

Holiday Brands issued $30.8 million of 6.4%, 27year bonds for $27.5 million. What is the amount of interest that Holiday will pay semiannually to bondholders?

Holiday Brands issued $30.8 million of 6.4%, 27year

bonds for $27.5 million.

What is the amount of interest that Holiday will pay semiannually to bondholders? (Enter your answer in

dollars not in millions. Omit the "$" sign in your response.)

Interest paid $ 985,600

Explanation:

$30,800,000 × 6.4% × 6/12 = $985,600

A company issued 8%, 10year

bonds with a face amount of $83 million. The market yield for bonds of

similar risk and maturity is 9%. Interest is paid semiannually.

Use (Table 2) and (Table 4)

At what price did the bonds sell? (Enter your answer in dollars not in millions. Round "PV Factor" to

5 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your

response.)

Price of the bonds $ 77,601,481 ± 0.01%

Explanation:

Interest $ 3,320,000 ¥ × 13.00794* = $ 43,186,361

Principal $ 83,000,000 × .41464** = 34,415,120

Present value (price) of the bonds $ 77,601,481

¥ [8 ÷ 2] % × $83,000,000

* present value of an ordinary annuity of $1: n = 20, i = 4.5%. (Table 4)

** present value of $1: n = 20, i = 4.5%. (Table 2)

The classified balance sheet for a company reported current assets of $1,689,116, total liabilities of $811,540, contributed capital of $1,120,000 and retained earnings of $142,260. The current ratio was 2.6.

The classified balance sheet for a company reported current assets of $1,689,116, total liabilities of $811,540, contributed capital of $1,120,000 and retained earnings of $142,260. The current ratio was 2.6.

rev: 03-01-2011

What is the total amount of non-current assets?

rev: 03-01-2011

→	$384,684
	$877,576
	$649,660
	$426,856

Explanation 

Total Assets = Total Liabilities + Total Stockholders' Equity
Total Liabilities + Total Stockholders' Equity = $811,540 + $1,120,000 + $142,260 = $2,073,800
Total Assets = Total current assets + Total non-current assets
$2,073,800 - $1,689,116 = $384,684