Acc201 homework

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ACC homwork due 11/22/2018 5Pm............................................................................................................................................................................................................................................

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HOMEWORK #9 Due Friday November 22, 11:59pm 10 points You should turn in your answers in ONE Excel document. Use financial formulas in Excel to show your work for Requirements #1 and #6. An assignment submitted that doesn’t demonstrate your formulas within Excel will receive an unsatisfactory grade. PART A Dantonio Corporation issued six-year, 3.5% bonds with a face value of $1,300,000 on 1/1/2018. Interest is paid annually on 12/31. The market rate of interest on 1/1/2018 was 6.0%. Dantonio uses the effective interest rate method (the method covered in class). Required: 1. Using Excel, determine the proceeds of the bond sale on 1/1/18. 2. Using the present value of a dollar table (found in Appendix E of your text), what factor would you use to calculate the present value of the face value of the bond? In other words, what factor would you use to calculate the present value of the $1,300,000 face value that will be paid to the bondholders upon maturity of the bond? 3. Using the present value of an ordinary annuity table (found in Appendix E of your text), what factor would you use to calculate the present value of the coupon payments? 4. Demonstrate that the PV amount you get using the factors your identified in #2 and #3 gives you the same proceeds of the bond sale as you calculated using Excel in #1. Note that you might be off by a few cents due to rounding. 5. Did this bond sell at a premium or discount? In 1-2 sentences explain why it sold at a premium or discount. 6. Using Excel, prepare a six-year bond amortization schedule for these bonds. There are examples in your notes and posted on D2L. Use formulas and reference cells in Excel to show how you calculate your numbers. 7. Prepare journal entries to record (1) the sale of the bonds on January 1, 2018, (2) the interest payment for the period ended December 31, 2018 and, (3) the final interest and face value payment at maturity on December 31, 2023. 8. Show how the balance sheet would report the bond liability and related premium/discount on December 31, 2019. PART B Gupta Corporation issued four-year, 12% bonds with a total face value of $800,000 on January 1, 2018. Interest is paid semi-annually on June 30 and December 31. The market rate of interest on this date was 8%. Gupta uses the effective interest rate method. Required: 1. Using Excel, determine the proceeds of the bond sale on 1/1/18. 2. Using the present value of a dollar table (found in Appendix E of your text), what factor would you use to calculate the present value of the face value of the bond? In other words, what factor would you use to calculate the present value of the $800,000 face value that will be paid to the bondholders upon maturity of the bond? 3. Using the present value of an ordinary annuity table (found in Appendix E of your text), what factor would you use to calculate the present value of the coupon payments? 4. Demonstrate that the PV amount you would get using the factors your identified in #2 and #3 gives you the same proceeds of the bond sale as you calculated using Excel in #1. Note that you might be off by a few cents due to rounding. 5. Did this bond sell at a premium or discount? In 1-2 sentences explain why it sold at a premium or discount. 6. Using Excel, prepare a four-year (or eight-six month) bond amortization schedule for these bonds. Use formulas and reference cells in Excel. Your TA should be able to follow how you calculate your numbers. 7. Prepare journal entries to record (1) the sale of the bonds on January 1, 2018, (2) the interest payment for the period ended June 30, 2019 and, (3) the final interest and face value payment at maturity on December 31, 2021. 8. Show how the balance sheet would report the bond liability and related premium/discount on June 30, 2019.
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Explanation & Answer

Here is your assignment :)

HOMEWORK #9
DueFriday November 22, 11:59pm
10 points
You should turn in your answers in ONE Excel document.Use financial formulas in Excel to show your work
for Requirements#1 and #6. An assignment submitted that doesn’t demonstrate your formulas within Excel
will receive an unsatisfactory grade.

PART A
Dantonio Corporation issued six-year, 3.5% bonds with a face value of $1,300,000 on 1/1/2018. Interest is paid
annually on 12/31. The market rate of interest on 1/1/2018 was 6.0%. Dantonio uses the effective interest rate
method (the method covered in class).
Required:
1. Using Excel, determine the proceeds of the bond sale on 1/1/18.
Maturity = 6 years
Face value = $1,300,000
Coupon rate paid annually = 3.5%
Annual coupon amount = $1,300,000 * 3.5% = $45,500
Market rate of interest = 6%
2. Using the present value of a dollar table (found in Appendix E of your text), what factor would you use to
calculate the present value of the face value of the bond?In other words, what factor would you use to calculate
the present value of the $1,300,000 face value that will be paid to the bondholders upon maturity of the bond?
Answer:
Using Excel function PV to determine the proceeds of the bond sale :
PV (rate, nper, pmt, fv, type)
PV (6%, 6, -45500, -1300000, 0)
3. Using the present value of an ordinary annuity table (found in Appendix E of yo...


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