Danno Company issued $700,000, 8% bonds payable on January 1, 2023. The bonds mature in four...
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Danno Company issued $700,000, 8% bonds payable on January 1, 2023. The bonds mature in four years on January 1, 2027 and pay interest semi-annually on June 30th and December 31st. Danno's fiscal year ends October 31st. On January 1, 2023, the market rate of interest for similarly risky investments was 7%. Danno retired 30% of the bond issue on January 1, 2025 by purchasing bonds in the open market. The market rate of interest on January 1, 2025 was 6%. This problem requires the use of the Excel spreadsheet template provided to compute answers to the questions. Present all numbers as whole numbers (i.e. no decimal places). Below is a list of the cells in which you will input numbers (cells are highlighted in yellow). Remaining cells should use formulas or references to other cells. ● Cell D4-face value of bonds Cell E4 relevant PV factor from textbook for Question 1 Cell E5-relevant PV factor from textbook for Question 1 Cell C11 - the semi-annual cash interest rate Cell D11 the semi-annual market interest rate Cell F59- the relevant PV factor from textbook for Question 4 Cell F60- the relevant PV factor from textbook for Question 4 1) 2) 3) 4) 5) 6) ● ● ● Complete the chart to compute the issue (selling) price of the bonds on January 1, 2023. (1 point) Prepare an amortization schedule for the life of the bond issue. If done correctly, final book value should be within $1-$2 of $700,000 (due to rounding in the PV tables) (3 points) Prepare journal entries for the dates indicated. Type account titles, use cell references for debit and credit amounts. You do not need to indent account title credits as long as the numerical amounts are in the correct (debit or credit) column. Be sure credits come after all debits in a given entry. Also- no entries can contain negative numbers (i.e. a negative credit indicates the account should be debited and vice versa). (3 points) Compute the bonds' market value on January 1, 2025 (for cell E56, use cell reference D4, rather than $700,000 so the question recomputes when the original issue price is changed). (1 point) Prepare the entry to retire 30% of the bonds on January 1, 2025. (2 points) Working spreadsheet - when grading the spreadsheet, I will replace the $700,000 face value of the bonds in cell D4 with $800,000 and verify the spreadsheet correctly recalculates amounts. Danno Company issued $700,000, 8% bonds payable on January 1, 2023. The bonds mature in four years on January 1, 2027 and pay interest semi-annually on June 30th and December 31st. Danno's fiscal year ends October 31st. On January 1, 2023, the market rate of interest for similarly risky investments was 7%. Danno retired 30% of the bond issue on January 1, 2025 by purchasing bonds in the open market. The market rate of interest on January 1, 2025 was 6%. This problem requires the use of the Excel spreadsheet template provided to compute answers to the questions. Present all numbers as whole numbers (i.e. no decimal places). Below is a list of the cells in which you will input numbers (cells are highlighted in yellow). Remaining cells should use formulas or references to other cells. ● Cell D4-face value of bonds Cell E4 relevant PV factor from textbook for Question 1 Cell E5-relevant PV factor from textbook for Question 1 Cell C11 - the semi-annual cash interest rate Cell D11 the semi-annual market interest rate Cell F59- the relevant PV factor from textbook for Question 4 Cell F60- the relevant PV factor from textbook for Question 4 1) 2) 3) 4) 5) 6) ● ● ● Complete the chart to compute the issue (selling) price of the bonds on January 1, 2023. (1 point) Prepare an amortization schedule for the life of the bond issue. If done correctly, final book value should be within $1-$2 of $700,000 (due to rounding in the PV tables) (3 points) Prepare journal entries for the dates indicated. Type account titles, use cell references for debit and credit amounts. You do not need to indent account title credits as long as the numerical amounts are in the correct (debit or credit) column. Be sure credits come after all debits in a given entry. Also- no entries can contain negative numbers (i.e. a negative credit indicates the account should be debited and vice versa). (3 points) Compute the bonds' market value on January 1, 2025 (for cell E56, use cell reference D4, rather than $700,000 so the question recomputes when the original issue price is changed). (1 point) Prepare the entry to retire 30% of the bonds on January 1, 2025. (2 points) Working spreadsheet - when grading the spreadsheet, I will replace the $700,000 face value of the bonds in cell D4 with $800,000 and verify the spreadsheet correctly recalculates amounts.
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Answer rating: 100% (QA)
Here are the stepbystep calculations for each question 1 Original Bond Issue Face value of bonds giv... View the full answer
Related Book For
Financial Accounting
ISBN: 978-1259222139
9th edition
Authors: Robert Libby, Patricia Libby, Frank Hodge
Posted Date:
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