Problem 1: On January 1, 2011, an entity issues bonds with face amount of P5,000,00 for P5,733,129. The bonds mature on December 31, 2013 and pay annual interest of 14%, The effective interest rate is 8%. a. Prepare the amortization table for the bonds and the required journal entries. Prepare all the journal entries during the term of the bonds. b.
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- Volunteer 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 annually. The premium is amortized using the straightline method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. June 30, 2019: entry to record payment of interest to bondholders C. June 30, 2019: entry to record amortization of premium D. June 30, 2020: entry to record payment of interest to bondholders E. June 30, 2020: entry to record amortization of premiumEdward Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $480,000. Interest is payable semiannually. The discount 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 discountOn January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
- Wilbury Corporation issued 1 million of 13.5% bonds for 985,071.68. The bonds are dated and issued October 1, 2019, are due September 30, 2020, and pay interest semiannually on March 31 and September 30. Assume an effective yield rate of 14%. Required: 1. Prepare a bond interest expense and discount amortization schedule using the straight-line method. 2. Prepare a bond interest expense and discount amortization schedule using the effective interest method. 3. Prepare adjusting entries for the end of the fiscal year December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. If income before interest and income taxes of 30% in 2020 is 500,000, compute net income under each alternative. 5. Assume the company retired the bonds on June 30, 2020, at 98 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight line method of amortization b. effective interest method of amortization 6. Compute the companys times interest earned (pretax operating income divided by interest expense) for 2020 under each alternative.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?Dixon Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $480,000. Interest is payable annually. The discount 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. June 30, 2019: entry to record payment of interest to bondholders C. June 30, 2019: entry to record amortization of discount D. June 30, 2020: entry to record payment of interest to bondholders E. June 30, 2020: entry to record amortization of discount
- On Jan. 1, Year 1, Foxcroft Inc. issued 100 bonds with a face value of $1,000 for $104,000. The bonds had a stated rate of 6% and paid interest semiannually. What is the journal entry to record the issuance of the bonds?The following situations are independent of each other. Instructions For situation (a) and situation (b), prepare the entry to "redeem" the bonds. a) MCo. redeemed $140,000 face value, 9% bonds on April 30, 2022, at 101. The carrying value of the bonds at the redemption date was $126,500. The bonds pay annual interest, and the interest payment due on April 30, 2022, has been made and recorded. To create the journal entry: (1) Bonds are "redeemed" at face value (DR "Bonds R"). (2) calculate CASH paid out to redeem bonds (a $1,000 bond redeemed at 102 means cash paid out (a CR) of $1,020). (3) calculate "premium" or "discount" on bonds payable by (face value - carrying value). If carrying value LESS THAN face value = a "discount" (CR "discount on..."). If carrying value GREATER THAN face value = a "premium" (DR "premium on..."). (4) Calculate gain or loss on redemption by plugging in DR $ ("loss...") or CR $ ("gain...") so that total $ DR = total $ CR. Situation (a) journal entry (Read…2. Swisher Company issued $2,000,000 of bonds on January 1, 2020. Instructions a. Prepare the journal entry to record the issuance of the bonds if they are issued at (1) 100, (2) 98, and (3) 103. b. Prepare the journal entry to record the redemption of the bonds at maturity, assuming the bonds were issued at 100. c. Prepare the journal entry to record the redemption of the bonds before maturity at 98. Assume the balance in Premium on Bonds Payable is $9,000.
- On January 1, 2018, Technicians Credit Union (TCU) issued 5%, 20-year bonds payable with face value of $100,000. These bonds pay interest on June 30 and December 31. The issue price of the bonds is 106. Journalize the following bond transactions: a (Click the icon to view the bond transactions.) (Assume bonds payable are amortized using the straight-line amortization method. Record debits first, then credits. Select explanations on the last line of the journal entry. Round your answers to the nearest whole dollar.) - X a. More Info a. Issuance of the bonds on January 1, 2018. b. Payment of interest and amortization on June 30, 2018. c. Payment of interest and amortization on December 31, 2018. d. Retirement of the bond at maturity on December 31, 2037, assuming the last interest payment has already been recorded. Print Done2 January 2018, MAYA Bhd issued RM1,500,000 of 10% bond at 106.231 with market interest 11% due 31 December 2018. Interest on the bonds is payable annually each 31 December. Required: i. Prepare the journal entries for the issuance of the bonds. ii. Prepare an amortisation schedule/table for 2018 - 2021 for the bonds. iii. Prepare the journal entry to record the interest payment and the amortization for 2018 and 2019.Cucumber Electric sold $3,300,00, 8%, 10-year bonds on January 1, 2022. The bonds were dated January 1 and pay interest annually on January 1. Cucumber Electric uses the straight-line method to amortize bond premium or discount. The bonds were sold at 104. Prepare the journal entry to record the issuance of the bonds on January 1, 2022. Date Account Titles and Explanation Debit Credit 01/01/22 Cash 3,432,000 Bonds Payable 3,300,000 Premium on Bonds Payable 132,000 A) Prepare a bond premium amortization schedule for the first 4 interest periods. Annual Interest Periods Interest to Be Paid Interest Expense to be recorded Premium Amortization Unamortized Premium Bond Carrying Value Issue Date 1 2 3 4 B) Prepare the journal entries for interest and the amortization of the premium in 2022…