Business, 26.12.2019 22:31 jaystitt1152683

On january 1, 2017, bridgeport corporation issued $620,000 of 9% bonds, due in 8 years. the bonds were issued for $586,402, and pay interest each july 1 and january 1. bridgeport uses the effective-interest method.

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Answer from: jaylennkatrina929

cash 586,402 debit

discount on BP 33,598 debit

bonds payable 620,000 credit

--to record issuance of bonds--

interest expense29320.1debit

discount on BP 1420.1 credit

cash 27900 credit

--to record first interest payment--

Explanation:

procceds 586,402

face value (620,000)

discount on bonds payable (33,598)

We need to solve for the effective market rate, which is done with excel or trial and error, we need to find which discount rate generates the coupon and maturity of the bond equal 586,402 dollars

As this is a discount we know it has to be higher than the bond rate.

We try and solve:

$C \times \frac{1-(1+r)^{-time} }{rate} = PV\\$

C620,000 x 9% / 2 = 27,900.00

time16 ( 8 years x 2 payment per year)

rate0.05

$27900 \times \frac{1-(1+0.05)^{-16} }{0.05} = PV\\$

PV$302,373.7707

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity 620,000.00

time 16.00

rate 0.05

$\frac{620000}{(1 + 0.05)^{16} } = PV$

PV 284,029.14

PV c$302,373.7707

PV m $284,029.1436

Total$586,402.9144

Using goal seek we find out a rate of 5% semiannually will make it.

Now we solve for thefirst interest payment:

we apply the market rate to the carrying value to know the interest expense

586,402 x 5% = 29,320.1

then we subtract the cash proceds to kwno the amortization

29,320.1 - 27,900 = 1,420.1

The carrying value is adjusted:

586,402 + 1,420.1 = 587,822.10

and the process repeat in the next payment.

Answer from: Quest

start by isolating the variable on one side by adding 43w^2 to both sides. the equation will read:

25w^2+5=0

*subtract 5 from both sides*

25w^2=-5

*divide both sides by 25*

w^2=-1/5

*take the square root of both sides*

w=√(-1/5)

the square root of -1 is i. the square root of 5 remains √5

the answer is i/√5.

hope this

Answer from: Quest

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On january 1, 2017, bridgeport corporation issued $620,000 of 9% bonds, due in 8 years. the bonds we...

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