Quatro Company issues bonds dated January 1, 2021, with a par value of $740,000. The bonds' annual contract rate is 13%, andinterest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date ofissuance is 12%, and the bonds are sold for $758,222.1. What is the amount of the premium on these bonds at issuance?2. How much total bond interest expense will be recognized over the life of these bonds?3. Prepare a straight-line amortization table for these bonds.Complete this question by entering your answers in the tabs below.Required 1 Required 2 Required 3Prepare a straight-line amortization table for these bonds.Note: Round your intermediate calculations to the nearest dollar amount.Semiannual Interest UnamortizedPremiumPeriod-End01/01/202106/30/202112/31/202106/30/202212/31/202206/30/202312/31/2023CarryingValue0 Quatro Company issues bonds dated January 1, 2021, with a par value of $740,000. The bonds' annual contract rate is 13%, andinterest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date ofissuance is 12%, and the bonds are sold for $758,222.1. What is the amount of the premium on these bonds at issuance?2. How much total bond interest expense will be recognized over the life of these bonds?3. Prepare a straight-line amortization table for these bonds.Complete this question by entering your answers in the tabs below.Required 1 Required 2 Required 3How much total bond interest expense will be recognized over the life of these bonds?Total Bond Interest Expense Over Life of Bonds:Amount repaid:payments ofPar value at maturityTotal repaidLess amount borrowedTotal bond interest expense00

Issue Price$758,222Less: Par Value$740,000Premium ($758,222 - $740,000)$18,222

Answered: Quatro Company issues bonds dated…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 15MCQ

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Similar questions

Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market rate of 4%. The bonds paid interest semi-annually on June 30 and Dec. 31. How much money did the company receive when the bonds were issued? The bonds would be quoted at what rate?
On July 1, a company sells 8-year $250,000 bonds with a stated interest rate of 6%. If interest payments are paid annually, each interest payment will be ________. A. $120,000 B. $60,000 C. $7,500 D. $15,000
On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%. The bonds paid interest semi-annually. Assuming the bonds sold at 58.55, what was the selling price of the bonds? Explain why the cash received from selling this bond is different from the $200,000 face value of the bond.
A company issued bonds with a $100,000 face value, a 5-year term, a stated rate of 6%, and a market rate of 7%. Interest is paid annually. What is the amount of interest the bondholders will receive at the end of the year?
Diana Inc. issued $100,000 of its 9%, 5-year bonds for $96,149 when the market rate was 10%. The bonds pay interest semi-annually. Prepare an amortization table for the first three payments.
Charleston Inc. issued $200,000 bonds with a stated rate of 10%. The bonds had a 10-year maturity date. Interest is to be paid semi-annually and the market rate of interest is 8%. If the bonds sold at 113.55, what amount was received upon issuance?
Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018, and received $540,000. Interest is payable semi-annually. The premium is amortized using the straight-line method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. Dec. 31, 2018: entry to record payment of interest to bondholders C. Dec. 31, 2018: entry to record amortization of premium
On January 1, a company issued a 5-year $100,000 bond at 6%. Interest payments on the bond of $6,000 are to be made annually. If the company received proceeds of $112,300, how would the bonds issuance be quoted? A. 1.123 B. 112.30 C. 0.890 D. 89.05

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