38. On October 1, Dennis Company purchased P200,000 face value, 12% bonds at 98 plus accrued interest and brokerage fees and classified them as amortized cost assets. Interest is paid semiannually on January 1 and July 1. Brokerage fees for this transaction were $700. At what amount should this acquisition of bonds be recorded? a. 196,000 b. 196,700 c. 202,000 d. 202,700
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- Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the market of interest was 9%. The company uses the effective-interest method of amortization. At the end of the year, the company will record ________. A. a credit to cash for $28,733 B. a debit to interest expense for $31,267 C. a debit to Discount on Bonds Payable for $1,267 D. a debit to Premium on Bonds Payable for $1.267Wilbury 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.Bats Corporation issued 800,000 of 12% face value bonds for 851,705.70. The bonds were dated and issued on April 1, 2019, are due March 31, 2023, and pay interest semiannually on September 30 and March 31. Bats sold the bonds to yield 10%. Required: 1. Prepare a bond interest expense and premium amortization schedule using the straight-line method. 2. Prepare a bond interest expense and premium amortization schedule using the effective interest method. 3. Prepare any 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. Assume the company retires the bonds on June 30, 2020, at 103 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
- Irving Inc. sold bonds with a $50,000, 10% interest, and 10-year term at $52,000. What is the total amount of interest expense over the life of the bonds?27.On October 1, Dennis Company purchase P200,000 face value 12% bonds for 98 plus accrued interest and brokerage fees and classified them as amortized cost assets. Interest is paid semiannually on January 1 and July 1. Brokerage fees for this transaction were P700. At what amount should this acquisition of bonds be recorded? 196,000 196,700 202,000 202,7003. On October 1, Dennis Company purchased P200,000 face value 12% bonds for 98 plus accrued interest and brokerage fees and classified them as held-to-maturity securities. Interest is paid semiannually on January 1 and July 1. Brokerage fees for this transaction were P700. At what amount should this acquisition of bonds be recorded? a. P196,000 b. P196,700 c. P202,000 d. P202,700
- On October 1, Dennis Company purchase P200,000 face value 12% bonds for 98% plus accrued interest and brokerage fees and classified them as amortized cost assets. Interest is paid semiannually on January 1 and July 1. Brokerage fees for this transaction were P700. At what amount should this acquisition of bonds be recorded? On October 1, Dennis Company purchase P200,000 face value 12% bonds for 98 plus accrued interest and brokerage fees and classified them as amortized cost assets. Interest is paid semiannually on January 1 and July 1. Brokerage fees for this transaction were P700. At what amount should this acquisition of bonds be recorded? a. 196,000 b. 196,700 c. 202,000 d. 202,700Oblivion Company purchased bonds at a discount of P100,000. Subsequently, the entity sold bonds at a premium of P140,000. During the period that the entity held this investment, amortization of the discount amounted to P20,000. What amount should be reported as gain on sale of bonds? a.120,000b.220,000c.240,000d.260,000On January 1, $853,000, 5-year, 10% bonds were issued for $827,410. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize a discount on bonds payable, the semiannual amortization amount is a. $42,650 Ob. $2,559 Oc. $25,590 d. $5,118 Woxt
- On January 1, 2018, West Company purchased $600,000 of 6%, 5-year bonds, as an available-for-sale security, with interest payable on July 1 and January 1. The bonds sell for $623,625, which results in a premium of $23,625 and an effective interest of 4%. Instructions Complete the Interest Revenue Received and Bond Amortization Schedule. Date Cash Received Interest Revenue Bond Premium Amortization Carrying Amount Of Bonds 1/1/18 $623,625 7/1/18 1/1/19 7/1/19 1/1/20 7/1/20 1/1/21 7/1/21 1/1/22 7/1/22 1/1/23 7/1/23Bonds Payable has a balance of $1,184,000 and Discount on Bonds Payable has a balance of $11,840. If the issuing corporation redeems the bonds at 97.5, what is the amount of gain or loss on redemption? a. $17,760 loss b. $11,840 loss c. $11,840 gain Od. $17,760 gainOn January 1, 20x1, Eduard Co. acquired 12%, P4,000,000 bonds for P4,198,948. The principal is due on December 31, 20x3 but interest is made annually starting December 31, 20x1. The effective interest rate on the bonds is 10%.13. How much is the interest income recognized in 20x1?a. 419,895b. 413,884c. 407,273d. 480,00014. How much is the carrying amount of the investment on December 31, 20x1?a. 4,198,948b. 4,138,843c. 4,072,727d. 4,000,000