Very confused how to fill out this table. Please help Computing bond price and r

Question

Very confused how to fill out this table. Please help Computing bond price and recording issuance P1 Flagstaff Systems issues bonds dated January 1, 2016, that pay interest s June 30 and December 31. The bonds have a $90,000 par value and an annual contract rate of 12%, and they mature in five years. emiannually on Required For each of the following three separate situations (a) determine the bonds' issue price on January 1, 2013, and (b) prepare the journal entry to record their issuance 1· 2· The market rate at the date of issuance is 10%. The market rate at the date of issuance is 14%. BRIEF EXPLANATION REQUIRED FOR THE TWO JOURNAL ENTRIES

Explanation / Answer

Solution 1:

Par Value of bond = $90,000

Coupon rate = 12% or 6 % semi annual

Market rate = 10% or 5% semi annual

Time period = 5 years or 10 half years

Solution 2:

Market rate = 14% or 7% semi annual

Computation of Bonds' Issue Price 1-a Cash Flow Table Table Value @ 5% Amount Present Value Par Value PVIF 0.6139 $90,000.00 $55,251.00 Interest (Annuity) ($90,000*12%*6/12) PVIFA 7.7217 $5,400.00 $41,697.18 Price of the bond $96,948.18 Bond Premium (price - par value) $6,948.18

Related Questions

Navigate

• Browse (All)
• Browse V
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.