Exam 12: Non-Current Financial Liabilities

A $100,000 5-year 6% bond is issued on January 1,2012.The bond pays interest annually.The market rate is 7%.What is the selling price of the bonds,rounded to nearest dollar?

What are "debentures"?

Which statement is correct about offsetting?

On April 1,2017,a company sold $3,500,000 of ten year,6% bonds for $2,222,400. From the proceeds,the company paid $200,000 sales commission.Interest is payable semi-annually on April 1 and October 1.What is the effective rate of interest (round to 2 decimal places)?

Cindy Corp sold $400,000 of three-year bonds for $300,500.Interest is of 7.5% is payable annually.What is the effective rate of interest (round to 2 decimal places)?

Which statement is correct about financial leverage?

Which statement is correct about the derecognition of a matured obligation?

Ginny Inc.sold $800,000 of two-year bonds for $701,500 less commissions of $50,500.Interest is of 5.5% is payable semi-annually.What is the effective rate of interest (round to 2 decimal places)?

Define the following: a)Financial liabilities b)A Mortgage c)A bond indenture d)Secured bonds e)Debentures f)Stripped bonds g)Serial bonds h)Callable bonds i)Convertible bonds j)Inflation-linked or real-return k)Perpetual bonds

Stay Fit for Life Inc.issues three series of $10,000,000 ten-year bonds dated January 1,2015 on the issue date.Interest is payable on June 30 and December 31 each year.Series A has a coupon rate of 7%;series B is 8%;and series C is 11 %.The market rate of interest at time of issue is 8%. Required: a.Prior to making any numerical calculations,comment on whether: i.Series A will sell at a discount,par,or premium and briefly explain why. ii.Series B will sell at a discount,par,or premium and briefly explain why. iii.Series C will sell at a discount,par,or premium and briefly explain why. b.Prepare journal entries to record the issuance of: i.The series A bonds. ii.The series B bonds. iii.The series C bonds.

Based on the characteristics provided below,what kind of bond is being discussed? 1.________ permit the issuing company to redeem before maturity. 2.________ are bonds backed by specific collateral such as a mortgage on real estate. 3.________ are unsecured bonds. 4.________ are bonds that do not pay interest and are sold at a discount and mature at face value.

What is a bond indenture?

What is the coupon rate?

What are "serial bonds"?

What does an "AAA" credit rating mean?

A company is required to disclose information that enables users to evaluate the significance of financial liabilities on its financial position and performance. Required: List 8 essential aspects that disclosure over financial liabilities should cover:

On July 1,2014,Club Country Golf Corp.issued $20,000,000 of five-year,12%,semi-annual bonds for $20,075,000.At time of issue,Club Country paid its investment bank a $75,000 sales commission.On July 31,2017,Club Country calls $12,000,000 of the bonds,paying 104 plus accrued interest,and retires them.On March 31,2018,Club Country purchases the remaining bonds on the open market for $8,180,000 including accrued interest and retires them.Club Country's year-end is August 31.The company does not use reversing entries. Required: a.Prepare journal entries to record: i.The issuance of the bonds on July 1,2014. ii.Repurchase of the bonds on July 31,2017. iii.Payment of interest on December 31,2017. iv.Retirement of the remaining bonds on March 31,2018. b.Provide a brief explanation as to the most likely reasons that Club Country was able to repurchase its bonds at a discount.

What are the qualitative considerations in determining a safe level of debt?

Flint Corporation issues a $2,000,five-year,6% bond,dated January 1,2017,that pays interest on June 30 and December 31 and is sold at par on March 1,2017.Provide the journal entry on March 1,2017,and June 30,2017.

On November 1,2017,FastCare sold $5,000,000 of three-year bonds for $4,750,325. From the proceeds,the company paid accounting fees of 50,000.Interest of 5% is payable annually.What is the effective rate of interest to 2 decimal places?