Walker Corporation Issued 14%,five-Year Bonds with a Par Value of $5,000,000

question 10

Essay

Walker Corporation issued 14%,five-year bonds with a par value of $5,000,000 on January 1,2013.Interest is to be paid semiannually on each June 30 and December 31.The bonds were issued at $5,368,035 cash when the market rate for this bond was 12%.
(a) Prepare the general journal entry to record the issuance of the bonds on January 1,2013.
(b) Show how the bonds would be reported on Walker's balance sheet at January 1,2013.
(c) Assume that Walker uses the effective interest method for amortizing any discount or premium on bonds.Prepare the general journal entry to record the first semiannual interest payment on June 30,2013.
(d) Assume instead that Walker uses the straight-line method for amortizing any discount or premium on bonds.Prepare the general journal entry to record the first semiannual interest payment on June 30,2013.

Calculate the amount of principal and interest in repayments.

Use mathematical skills to solve complex financial problems without direct formulae.

Understand the concept of time value of money and its application in financial calculations.

Apply compound interest rate formulas to calculate future and present values of loans and investments.

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Definitions:

Portfolio Analysis

The process of evaluating the performance of an investment portfolio to meet specific financial objectives, often by assessing risk versus return.

Strategic Goods

Items considered crucial for national security and subject to specific regulatory restrictions regarding their export and import.

Supplier Switching Costs

The costs associated with changing from one supplier to another, including financial, time, and effort expenses.

Acquisition Costs

The total costs incurred to acquire an asset or service, including the purchase price and all associated expenses.