On January 1, 2021, Instaform, Inc., issued 12% bonds with a face amount of $45 million,...

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Accounting

On January 1, 2021, Instaform, Inc., issued 12% bonds with aface amount of $45 million, dated January 1. The bonds mature in2040 (20 years). The market yield for bonds of similar risk andmaturity is 14%. 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 1,2021.
1-b. Prepare the journal entry to record theirissuance by Instaform.
2-a. Assume the market rate was 11%. Determine theprice of the bonds at January 1, 2021.
2-b. Assume the market rate was 11%. 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.
Please answer all questions from Req1A, 1B,2A,2B and Req3. Thankyou.

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3.6 Ratings (476 Votes)

1a Determine the price of the bonds at January 1 2021 Determine the price of the bonds at January 1 2021 Semi annual cash intrest 4500000012612 2700000 Due at maturity 45000000 Present value of intrest 40 payments 7 Present value intrest factor Annuity40 periods 7 13332 Present Value of intrest 270000013332 35996400 Present value intrest factor 40th period 7 00668 Present See Answer

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