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none of these answers are correct.
2. Forrest Company issued $200,000 of 5-year bonds, with a stated rate of interest of 8%, payable semiannually. The market rate for such securities is 10%. How much did Forrest receive from the sale of these bonds? (Round to the nearest dollar.)
3. Justine Company is considering purchasing machinery. The machinery will produce the following cash flows:
Year 1 $100,000
Year 2 $140,000
Justine requires a minimum rate of return of 12%. What is the maximum price Justine should pay for this machinery?
4. If a bond has a stated interest rate of 6%, but the market interest rate is 7%, the bond
5.Presented below are long-term liability items for Lind Company at December 31, 2014.
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Bonds payable, due 2016
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$460,000
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Lease liability
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62,520
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Notes payable, due 2019
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72,720
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Discount on bonds payable
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36,800
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Prepare the long-term liabilities section of the balance sheet for Lind Company.
6.. What is the present value of $13,950 due 7 periods from now, discounted at 12%?
7. Presented below is the partial bond discount amortization schedule for Ferree Corp. Ferree uses the effective-interest method of amortization.
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Semiannual Interest Periods
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Interest to Be Paid
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Interest Expense to Be Recorded
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Discount Amortization
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Unamortized Discount
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Bond Carrying Value
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Issue date
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$84,240
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$1,319,760
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1
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$63,180
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$65,988
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$2,808
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81,432
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1,322,568
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2
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63,180
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66,128
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2,948
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78,484
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1,325,516
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(a) Prepare the journal entry to record the payment of interest and the discount amortization at the end of period
8. Sweetwood Company issues $4,200,000, 10-year, 12% bonds at 95, with interest payable on July 1 and January 1. The straight-line method is used to amortize bond discount.
Prepare the journal entry to record the sale of these bonds on January 1, 2014.
9. Golden Inc. issues $2,600,000, 5-year, 12% bonds at 104, with interest payable on July 1 and January 1. The straight-line method is used to amortize bond premium.
Prepare the journal entry to record the sale of these bonds on January 1, 2014.
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