Vanguard Corporation issued $7,000,000 of 11% bonds on January 1, 2023, due on January 1, 2031. The
Fantastic news! We've Found the answer you've been seeking!
Question:
Vanguard Corporation issued $7,000,000 of 11% bonds on January 1, 2023, due on January 1, 2031. The interest is to be paid twice a year on January 1 and July 1. The bonds were sold to yield 8% effective annual interest. Grove Corporation closes its books annually on December 31. | ||||
Present value of 1 for 16 periods at 4.0% | 0.53391 | |||
Present value of 1 for 16 periods at 5.5% | 0.42458 | |||
Present value of an ordinary annuity for 16 periods at 4.0% | 11.65230 | |||
Present value of an ordinary annuity for 16 periods at 5.5% | 10.46216 | |||
Instructions | ||||
(a) Calculate the issuing price of the bonds (show your work). | ||||
(b) Prepare the journal entries for the second year (January 1, 2024 - January 1, 2025) using the effective-interest method. | ||||
(c) Compute the interest expense to be reported in the income statement for the year ended, December 31, 2024. |
Related Book For
Posted Date: