2. (10 points) Mazeltox Corporation issued $100,000 3-year, 8% stated rate bonds on January 1, 2004.The bonds pay interest semi-annually and were sold when the market rate was 10%.a. Calculate the issue price of the bonds.b. Prepare an amortization schedule for the bonds (use the table below):Payment Carrying Value,AmortizationDatebeginning6/30/0412/31/046/30/0512/31/056/30/0612/31/06C.CashInterestInterestExpenseRecord the interest expense entry for the 6/30/05 interest payment:AccountsDebitsCreditsCarrying Value,ending

A bond is a debt security representing a loan made by an investor to a borrower, typically a…

2. (10 points) Mazeltox Corporation issued $100,000 3-year, 8% stated rate bonds on January 1, 2004. The bonds pay interest semi-annually and were sold when the market rate was 10%. a. Calculate the issue price of the bonds.

2. (10 points) Mazeltox Corporation issued $100,000 3-year, 8% stated rate bonds on January 1, 2004. The bonds pay interest semi-annually and were sold when the market rate was 10%. a. Calculate the issue price of the bonds.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 14MC: Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the...

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Concept explainers

Debenture Valuation

A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.

Note Valuation

It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:

Question

2. (10 points) Mazeltox Corporation issued $100,000 3-year, 8% stated rate bonds on January 1, 2004.
The bonds pay interest semi-annually and were sold when the market rate was 10%.
a. Calculate the issue price of the bonds.
b. Prepare an amortization schedule for the bonds (use the table below):
Payment Carrying Value,
Amortization
Date
beginning
6/30/04
12/31/04
6/30/05
12/31/05
6/30/06
12/31/06
C.
Cash
Interest
Interest
Expense
Record the interest expense entry for the 6/30/05 interest payment:
Accounts
Debits
Credits
Carrying Value,
ending

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Step 1: Meaning and explanation of Bond.

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Step 2: a. Calculation of the issue price of the bonds.

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Step 3: b. Preparation of amortization schedule of bonds.

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Step 4: c. Preparation of journal entry to record interest expenses.

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