Read the requirements. Requirement 1. Answer the following questions. At what type of bond price will Havens Company have total interest expense equal to the cash a. interest payments? Face value Under which type of bond price will Havens Company's total interest expense be greater than the b. cash interest payments? Discount price If the market interest rate is 10%, what type of bond price can Havens Company expect for the c. bonds? Discount price Requirement 2. Compute the price of the bonds if the bonds are issued at 86. The price of the $550,000 bond issued at 86 is $ 473,000 Requirement 3. How much will Havens Company pay in interest each year? How much will Havens Company's interest expense be for the first year? (For this scenario we are assuming that the $550,000 bonds are issued at 86. Further assume that the straight-line method is used.) If the $550,000 bonds are issued at 86, Havens Company will pay this amount of interest each year 53700

Read the requirements. Requirement 1. Answer the following questions. At what type of bond price will Havens Company have total interest expense equal to the cash a. interest payments? Face value Under which type of bond price will Havens Company's total interest expense be greater than the b. cash interest payments? Discount price If the market interest rate is 10%, what type of bond price can Havens Company expect for the c. bonds? Discount price Requirement 2. Compute the price of the bonds if the bonds are issued at 86. The price of the $550,000 bond issued at 86 is $ 473,000 Requirement 3. How much will Havens Company pay in interest each year? How much will Havens Company's interest expense be for the first year? (For this scenario we are assuming that the $550,000 bonds are issued at 86. Further assume that the straight-line method is used.) If the $550,000 bonds are issued at 86, Havens Company will pay this amount of interest each year 53700

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 3EA: Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the...

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Waterway Ltd. issued a $1,062,000, 10-year bond dated January 1, 2023. The bond was sold to yield 12% effective interest. The bond paid 10% interest on January 1 and July 1 each year. The company's year-end was December 31, and Waterway followed IFRS. Using 1.factor Tables 2. a financial calculator, or 3. Excel function PV, calculate the amount received for the bond, and any discount or premium on the bond. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1 (Round present value factor calculations to 5 decimal places, eg. 1.25124 and final answers to 0 decimal places eg. 58,971.) Proceeds from sale of bond on bond Date $ $ Prepare the journal entries for above transactions. (Round answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.…
Krystian Inc. issued 12-year bonds with a face value of $110,000 and a stated rate of 5% when the market rate was 7%. Interest was paid semi-annually. A. Calculate the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. NOTE: The requirement is referring to total interest and principal. X B. Would an investor be willing to pay more or less than face value for this bond? Less than