Ask Experts Questions for FREE Help !
Ask
    Gmyers's Avatar
    Gmyers Posts: 2, Reputation: 1
    New Member
    		  
    #1

    Nov 29, 2010, 02:43 PM
    Interest on bonds with a premium or a discount.
    The total cost on thirty-nine, ten year, 6 per cent, $1000 bonds that are issued at 98 I need to see the steps on this kind of problem. Thanks
    Just Looking's Avatar
    Just Looking Posts: 1,610, Reputation: 480
    Ultra Member
    		  
    #2

    Dec 1, 2010, 05:30 PM

    These bonds were sold at a discount since they were sold at 98% of their face value.

    First compute how much you received for the bonds.

    Second compute the amount you will pay out at maturity, which will be the face value.

    Third, compute the interest which is 6% of the face value per year, times 10 years.
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Bonds issued at a discount and premium-effective interest method [ 3 Answers ]

Wayman Corporation issued bonds twice during 2007. Transacations were as follows: 2007 Jan. 1 -Issued $2,000,000 of 9.2 percent, ten year bonds dated January 1, 2007, with interest payable on June 30 and December 31. The bonds were sold at 98.1, resulting in an effective interest rate of 9.5...

Effective Interest Amortization of bond premium; retiring bonds [ 3 Answers ]

Kendall issuus $175,000 three year bonds dated January 1 2009, that pay semi-annual interest on June 30 and December 31st. They are issued at $179,439 and their market rate is 10% at the issue date. Prepare the journal entry to record the bonds' retirement on January 1, 2011 at 105. (I have the...

Bond transactions at discount premium [ 2 Answers ]

For something issued $50,000 of 10-year, 6% bonds payable on jn1 2006, pay interest each jan 1 and July 1 and amortizes discount and premium by the straight line method How would you journalize bonds and first semiannual interest payments of issue at a price of 105... I'm not grasping how this...

View more questions Search