
WORKING NOTES :
X.M. = 9.6*60000000/100 = 58560000
DISCOUNT VALUE = 60000000-58560000 = 1440000
INTEREST ACCRUAL = 60000000*4.30/100 = 2580000*4/ = 645000
Problem #2 (30): On July 1, 2020 GIFFCO contracted with the investment bank X. M. Retzoff...
Problem #2 (30): On July 1, 2018 GIFFCO contracted with the investment bank X. M. Retzoff et freres to issue $40 m of short-term paper at 98.6. The securities have a two-year maturity, carry a 4.10% coupon rate, and pay at the end of each quarter. Fees and commissions to Retzoff and GIFFCO's accountants came to $640,000. Required: Book the issue and the 2018 Q 3 interest accrual.
On July 1, 2018 GIFFCO contracted with the investment bank X. M. Retzoff et freres to issue $40 m of short-term paper at 98.6. The securities have a two-year maturity, carry a 4.10 % coupon rate, and pay at the end of each quarter. Fees and commissions to Retzoff and GIFFCO’s accountants came to $640,000. Required: Book the issue and the 2018 Q 3 interest accrual.
2. On July 1, 2020 Turnage Corporation issued $2,000,000, 10%, 10-year bonds for $2,271,813. This price was calculated using an 8% effective interest rate on the bonds. Turnage uses the effective interest method to amortize a bond premium or discount. The bonds pay semiannual interest on July 1 and January 1. Instructions (Round all calculations to the nearest dollar) a. Prepare the journal entry to record the issuance of the bonds on July 1, 2020. b. Prepare an amortization table...
On July 1, 2020, Indigo Inc. made two sales. 1. It sold land having a fair value of $905,820 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,425,321. The land is carried on Indigo's books at a cost of $599,100. 2. It rendered services in exchange for a 3%, 8-year promissory note having a face value of $409,970 (interest payable annually). Indigo Inc. recently had to pay 8% interest for money that it borrowed from...
On July 1, 2020, Coronado Inc. made two sales. 1. It sold land having a fair value of $904,970 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,423,984. The land is carried on Coronado's books at a cost of $596,000. 2. It rendered services in exchange for a 3%, 8-year promissory note having a face value of $409,570 (interest payable annually). Coronado Inc. recently had to pay 8% interest for money that it borrowed from...
On July 1, 2020, Metlock Inc. made two sales: 1. It sold excess land in exchange for a four-year, non–interest-bearing promissory note in the face amount of $1,244,650. The land’s carrying value is $630,000. 2. It rendered services in exchange for an eight-year promissory note having a face value of $410,000. Interest at a rate of 2% is payable annually. The customers in the above transactions have credit ratings that require them to borrow money at 12% interest. Metlock recently...
Problem 16-02 Pina Inc. issued $2,400,000 of convertible 10-year bonds on July 1, 2020. The bonds provide for 12% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $56,400, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8 shares of Pina Inc.'s $100 par value common stock for each $1,000 of bonds. On August 1, 2021, $240,000 of bonds were turned in for...
Problem 16-02
Concord Inc. issued $2,400,000 of convertible 10-year bonds on
July 1, 2020. The bonds provide for 12% interest payable
semiannually on January 1 and July 1. The discount in connection
with the issue was $56,400, which is being amortized monthly on a
straight-line basis.
The bonds are convertible after one year into 8 shares of Concord
Inc.’s $100 par value common stock for each $1,000 of bonds.
On August 1, 2021, $240,000 of bonds were turned in for...
On 2020 03 15 DIOMEDIC Inc. issued $35 m of 10-year, 7.02% bonds, priced to yield 7.15% and callable in the first five years at 100.4. The bonds carried a BBB rating and paid a semiannual coupon. 2023 03 15, after paying the coupon, DIOMEDIC refi’d the bonds with a new borrowing that had the same maturity, principal and coupon schedule as the first borrowing. For items # 1-4 on your memo, assume that transaction costs were not material. The...
On 2020 03 15 DIOMEDIC Inc. issued $35 m of 10-year, 7.02% bonds, priced to yield 7.15% and callable in the first five years at 100.4. The bonds carried a BBB rating and paid a semiannual coupon. 2023 03 15, after paying the coupon, DIOMEDIC refi’d the bonds with a new borrowing that had the same maturity, principal and coupon schedule as the first borrowing. For items # 1-4 on your memo, assume that transaction costs were not material. The...