On January 1, 2018, Instaform, Inc., issued 14% bonds with aface amount of $50 million, dated January 1. The bonds mature in2037 (20 years). The market yield for bonds of similar risk andmaturity is 16%. Interest is paid semiannually. (FV of $1, PV of$1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Useappropriate factor(s) from the tables provided.)
Required:
1-a. Determine the price of the bonds at January 1,2018.
1-b. Prepare the journal entry to record theirissuance by Instaform.
2-a. Assume the market rate was 12%. Determine theprice of the bonds at January 1, 2018.
2-b. Assume the market rate was 12%. Prepare thejournal entry to record their issuance by Instaform.
3. Assume Broadcourt Electronics purchased theentire issue in a private placement of the bonds. Using the data inrequirement 2, prepare the journal entry to record the purchase byBroadcourt.
- Req 1A
- Req 1B
- Req 2A
- Req 2B
- Req 3
Determine the price of the bonds at January 1, 2018. (Enter youranswer in whole dollars.)
2B
repare the journal entry to record their issuance by Instaform.(If no entry is required for a transaction/event, select "Nojournal entry required" in the first account field. Enter youranswers in whole dollars.)
2A
Assume the market rate was 12%. Determine the price of the bondsat January 1, 2018. (Enter your answer in whole dollars.)
2B
ransaction/event, select "No journal entry required" in thefirst account field. Enter your answers in whole dollars.)
3
Assume Broadcourt Electronics purchased the entire issue in aprivate placement of the bonds. Using the data in requirement 2,prepare the journal entry to record the purchase by Broadcourt. (Ifno entry is required for a transaction/event, select "No journalentry required" in the first account field. Enter your answers inwhole dollars.)
