Reference no: EM13850379
Dillard Co. issued $20,000,000 of 5-year, 14% callable bonds on April 1, 2014, at a market rate of 12%. Interest is payable semi-annually on September 30 and March 31.
1. Record the entry for the issuance of the bonds.
2. Record the entries for interest payments and accruals during 2014 and 2015. Dillard Co. uses the effective interest method to amortize bond discount/premium.
3. Record the retirement of $10,000,000 of the bonds at 103 on February 1, 2016.
4. Record the entry for the March 31, 2016 payment of interest.
Check figures:
2014 Interest expense 1,929,131
2015 Interest expense 2,548,821
2016 Gain on bond retirement 213,900
2016 Interest expense 422,329 (through March 31, 2016)
|
Capital asset pricing model-appropriate expected rates
: (Capital Asset Pricing Model) The expected return for the general market is 11.0 percent, and the risk premium in the market is 6.4 percent. Tasaco, LBM, and Exxos have betas of 0.831, 0.696, and 0.576, respectively. What are the appropriate expected..
|
|
Assume the college will cease deposits into the fund
: A small, private college is starting a scholarship fund. The college’s fund managers expect the investments in the fund will earn an average annual return of 8%. After those 20 years have passed, how much in scholarship money can the college pay out ..
|
|
What annual rate of return must the organization earn
: An organization plans to save $10,000 per month for a new building. The organization also will invest $15,000 it already has in reserves. (Hint: When a problem involves monthly payments, assume monthly compounding.) What annual rate of return must th..
|
|
Computing interest tax savings
: (Computing interest tax savings) Dharma Supply has earnings before interest and taxes(EBIT)of $531,000, interest expenses of $313,000, and faces a corporate tax rate of 36 percent. What would Dharma's net income be if it didn't have any debt (and con..
|
|
Record the entry for the issuance of the bonds
: Dillard Co. issued $20,000,000 of 5-year, 14% callable bonds on April 1, 2014, at a market rate of 12%. Interest is payable semi-annually on September 30 and March 31. Record the entry for the issuance of the bonds. Record the entries for interest pa..
|
|
After tax-cost of debt
: A bond that has a $1000 par value (face value)and a contract or coupon interest rate of 11.2 percent. Interest payments are $56.00 and are paid semiannually. The bonds have a current market value of $1128 and will mature in 10 years. The firm margina..
|
|
What is the market value of the companys debt
: Bennington Industrial Machines issued 151,000 zero coupon bonds four years ago. The bonds originally had 30 years to maturity with a yield to maturity of 7.1 percent. Interest rates have recently increased, and the bonds now have a yield to maturity ..
|
|
The after-tax cost of debt is what percent
: A bond that has a $1000 par value (face value) and a contract or coupon interest rate of 11.2 percent. Interest payments are $56.00 and are paid semiannually. The bonds have a current market value of $1128 and will mature in 10 years. The firm margin..
|
|
Stock portfolio invested
: You own a stock portfolio invested 30 percent in Stock Q, 20 percent in Stock R, 30 percent in Stock S, and 20 percent in Stock T. The betas for these four stocks are .89, 1.22, 1.06, and 1.24, respectively. What is the portfolio beta?
|