A comapny has issued a $162, 000, 3 year, zero interest bond dated January 1, 2023. The market interest rate for similar bonds was 11 %. Assume the company used the effective interest method of amortization. Prepare a schedule of bond discount/premium amortization. (Round answers to 0 decimal places, e.g. 5, 275. Do not leave any answer field blank. Enter 0 fo

A comapny has issued a $162, 000, 3 year, zero interest bond dated January 1, 2023. The market interest rate for similar bonds was 11 %. Assume the company used the effective interest method of amortization. Prepare a schedule of bond discount/premium amortization. (Round answers to 0 decimal places, e.g. 5, 275. Do not leave any answer field blank. Enter 0 fo

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 4EA: On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated...

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tELLiy, you must enter your ID number on the first sheet! On January 1, 2020 Omsk Corporation issued Bonds pay interest each July 1 and January 1. 150,000 of 5 % bonds, due in 17 years 12 % market rate of interest. Assume Requirements (Round to 0 decimals, Rounding errors do not matter): 1. Compute market price of bonds. Provide detailed computation. Use functions in Excel 2. What is an amount of discount /premium? Indicate, what it is (discount or premium). Computation. 3. Prepare amortization schedule for first 5 years. Use formulas in Excel. 4. Prepare journal entry to record bond issue. 5. Prepare journal entry on July 1, 2020. 6. Prepare journal entry on December 31, 2020. 7. Prepare journal entry on January 1, 2021
(b) Prepare a bond amortization schedule up to and including January 1, 2028, using the effective-interest method. (Round present value factor to 5 decimal places, e.g. 1.24356 and final answers to 0 decimal places, e.g. 38,548.) Date 1/1/24 1/1/25 1/1/26 1/1/27 1/1/28 $ Cash Paid $ Interest Expense $ Premium Amortization GA Carrying Value of 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…
Sheridan Inc. is building a new hockey arena at a cost of $2,150,000. It received a down payment of $430,000 from local businesses to support the project, and now needs to borrow $1,720,000 to complete the project. It therefore decides to issue $1,720,000 of 10- year, 10.5% bonds. These bonds were issued on January 1, 2023, and pay interest annually on each January 1. The bonds yield 10.5% to the investor and have an effective interest rate to the issuer of 10.40530%. (There is an increased effective interest rate due to the capitalization of the bond issue costs.) Any additional funds that are needed to complete the project will be obtained from local businesses. Sheridan paid and capitalized $43,000 in bond issuance costs related to the bond issue. Sheridan prepares financial statements in accordance with IFRS.
Kingbird, Inc. issues $4.1 million, 10-year. 9% bonds at 102, with interest payable on January 1. The straight-line method is used to amortize bond premium (a) Your answer is partially correct Prepare the journal entry to record the sale of these bonds on January 1, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually) Date Account Tities and Explanation Jan 1 Cash Premium on Bonds Payable Bons Payable Debit 369000 82000 Credit 4100000
2. On January 1, 2020, Dawson Inc. issued bonds with a face value of $400,000 and coupon interest rate of 5%. The bonds pay interest semi-annually on July 1 and January 1. The market rate at January 1, 2020 is 4%. (a) Are the bonds being issued at a premium or a discount? (b) Prepare the journal entry for the issue, assuming the bonds are issued at 101.4. (No explanation required.) (c) Record the entry for the first interest payment at July 1, 2020. (No explanation required.)
ABC issued callable bonds on January 1, 2018. ABC's accountant has projected the following amortization schedule from issuance until maturity: What is the annual stated interest rate on the bonds? (Hint: Be sure to provide the annual rate rather than the six-month rate. (Round to nearest whole percentage and just put in the number without %) Numeric Response:??????
On January 1, 2025, Blue Company sold 11% bonds having Prepare a schedule of interest expense and bond amortization for 2025 - 2027. (Round answer to 2 decimal places, e.g . 38, 548.25.) Schedule of Interest Expense and Bond Premium Amortization Effective - Interest Method a maturity value of $500,000.00 for $518, 953.45, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2025, and mature January 1, 2030, with interest payable December 31 of each year. Blue Company allocates interest and unamortized discount or premium on the effective - interest basis.
Use the following information for the following 3 questions: (round all parts to the nearest dollar) Porter, Inc. issued $400,000, 10-year, 10% bonds for $354,200 on January 1, 2022; the bonds pay interest semiannually on June 30 and December 31. On the date of issuance, the interest rate in the bond market is 12%. Round all parts of the problem to the nearest dollar. What will Porter record as interest expense for the year ending December 31, 2022? $42,579 $40,000 $21,252 $21,327 $20,000
On January 1, 2018, Surreal Manufacturing issued 550 bonds, each with a face value of $1,000, a stated interest rate of 3 percent paid annually on December 31, and a maturity date of December 31, 2020. On the issue date, the market interest rate was 4 percent, so the total proceeds from the bond issue were $534,739. Surreal uses the simplified effective-interest bond amortization method and adjusts for any rounding errors when recording interest in the final year.
ABC company issued a 5 year $200,000 bond. The bond has a stated rate of 6% and the market rate of 8%. The company issued the bond at .91889 or $183,778 on January 1", 2019. AMORTIZATION OF BOND DISCOUNT st H J K Interest on Cash Interest Amortization Carrying Value (K + J) Carrying Year Payment. of Discount. Date Description Debit Credit Value. (A * D) (I - H) (K * E) Jan 1 2019 Jan 1, 2019 June 30, 2019 December 31, 2019 June 30, 2020 December 31, 2020 June 30, 2021 December 31, 2021 June 30, 2022 December 31, 2022 June 30, 2023 December 31, 2023 June 30, 2019 Dec 31, 2019 June 30, 2020 A Bond Par Value Discount on Bond Payable B Coupon Rate Jan 1, 2019 June 30, 2,019 Market Rate Dec 31, 2019 Dec 31, 2020 6month coupon rate (B/2) 6 month market rate (C/2) D June 30, 2020 E Dec 31, 2020 Money Received Discount (A-F) F Dec 31,2023
9. Rodriquez Corporation issued a $300,000, 9%, 8-year bond payable on January 1, 2024. Journalize the payment of the bond payable at maturity. (Give the date.) (Assume that the final payment. of interest has already been made and recorded. Record debits first, then credits. Select explanations on the last line of the journal entry) Date 2024 Jan Accounts and Explanation Debit Credit