On January 1, 2014, Tango-In-The-Night, inc., issued $75 million of bonds with a 9% coupon interest rate.

Question:

On January 1, 2014, Tango-In-The-Night, inc., issued $75 million of bonds with a 9% interest rate. The bonds mature in 10 years and pay interest semiannually on June 30 and December 31 of each year. The market rate of interest on January 1, 2014, for bonds of this type was 11%. The company closes its books on December 31.

Required:
1. At what price were the bonds issued?
2. What is the book value of the bonds on January 1, 2016?
3. On January 1, 2016, the market interest rate for bonds of this type is 10%. What is the market value of the bonds on this date?
4. Suppose that the bonds were repurchased for cash on January 1, 2016, at the market price. 1f you ignore taxes, what journal entry would the company make to record the debt retirement?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...