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On June 1,2014,Minute Controls,Inc

question 31

Essay

On June 1,2014,Minute Controls,Inc.issued $12,000,000 of 10 percent bonds to yield 12 percent.Interest is payable semiannually on May 31 and November 30.The bonds mature in 15 years.Minute Controls,Inc.is a calendar-year corporation.
(1)Determine the issue price of the bonds.Show computations.
(2)Prepare an amortization table through the first two interest periods using the effective-interest method.
(3)Prepare the journal entries to record bond-related transactions as of the following dates:
(a)June 1,2014
(b)November 30,2014
(c)December 31,2014
(d)May 31,2015


Definitions:

Cost of Equity

The return that a company must earn on the equity-financed portion of its investments to compensate its shareholders for assuming the risk of the investment.

Dividend Growth Rate

The dividend growth rate is a financial metric that measures the annualized percentage rate of growth of a company's dividend payments to its shareholders.

Market Price

The current market quote for the sale or purchase of an asset or service.

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