Prepare a bond amortization schedule using the effective-interest method for discount and premium amortization. Amortizepremium or discount on interest dates and at year-end. (Round answers to O decimal places, e.g. 38,548.)Schedule of Bond Discount AmortizationEffective-Interest MethodBonds Sold to YieldCarryingCashInterestPremiumAmount ofPaidExpenseAmortizedBondsi$2$489,03625,86019,5616,299495,33525,86019,8136,047501,38225,86020,0555,805507,18725,86020,2875,573512,76025,86020,5105,350518,11025,86020,7245,13653.24625,86020,9304,930528,17625,86021,1274,733532,909* Difference due to rounding (b)Bonita Co. sells $431,000 of 12% bonds on June 1, 2020. The bonds pay interest on December 1 and June 1. The due date of thebonds is June 1, 2024. The bonds yield 8%. On October 1, 2021, Bonita buys back $137,920 worth of bonds for$144,920 (includes accrued interest). Give entries through December 1, 2022.Prepare a bond amortization schedule using the effective-interest method for discount and premium amortization. Amortizepremium or discount on interest dates and at year-end. (Round answers to 0 decimal places, e.g. 38,548.)

Bond Accounting refers to the recording of bond related transactions i.e. issuance of bond at par,…

(b) Bonita Co. sells $431,000 of 12% bonds on June 1, 2020. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2024. The bonds yield 8%. On October 1, 2021, Bonita buys back $137,920 worth of bonds for $144,920 (includes accrued interest). Give entries through December 1, 2022. Prepare a bond amortization schedule using the effective-interest method for discount and premium amortization. Amortize premium or discount on interest dates and at year-end. (Round answers to 0 decimal places, e.g. 38,548.)

(b) Bonita Co. sells $431,000 of 12% bonds on June 1, 2020. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2024. The bonds yield 8%. On October 1, 2021, Bonita buys back $137,920 worth of bonds for $144,920 (includes accrued interest). Give entries through December 1, 2022. Prepare a bond amortization schedule using the effective-interest method for discount and premium amortization. Amortize premium or discount on interest dates and at year-end. (Round answers to 0 decimal places, e.g. 38,548.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 1, 2018, Paradiso Company issued 1,000 of its 8%, $1,000 bonds at 93. Interest is payable semiannually on June 30 and December 31. The bonds will mature on December 31, 2027. If the company uses straight-line amortization, determine the amount of interest expense for 2018. answer is 87,000 how do you get there?
Donner Corporation issues 4-year bonds with a face value of $5,000,000 and a stated rate of 5% on January 1, 2022. Interest is payable semiannually on June 30 and December 31. The market rate of interest is 6%. Donner's controller prepares the first two lines of the effective interest amortization table and asks you to prepare the third line. What is the company's INTEREST EXPENSE amount for this June 30, 2023 interest payment? Interest Cash Decrease Payment Date Payment Interest in Вook Amount Expense $144,735 $145,327 ???? Discount Discount Value June 30, 2022 $125,000 $125,000 $19,735 $20,327 $155,757 $4,844,243 Dec 31, 2022 $135,430 $4,864,570 June 30, 2023 Dec 31, 2023 June 30, 2024 Dec 31, 2024 June 30, 2025 Dec 31, 2025 $291,874 O $121,614 $125,000
On July 1, 2019, Cyclic Inc issued $1,000,000 in principal of 6% bonds due in July 2024. The bond pays interest quarterly on January 2, April 1, July 1, and October 1. On July 1, 2020, immediately following an interest payment. Epimetheus Bank purchased $5000 in face value of these bonds for $4501. Epimetheus Bank intends to trade this bond as part of its business operations. When Epimetheus Bank purchased the bond, it calculated that the historical market rate was 9%. When Epimetheus Bank received the interest payment on October 1,2020, what were the journal entries? Select all that apply. Cr. Interest revenue $75 Dr. Amortization of discount on trading debt $26 Cr. Interest revenue $101 Dr Cash $75 Dr Cash $101 Cr. Trading debt receivable $26
Ike issues $180,000 of 11%, three-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31. They are issued at $184,566 when the market rate is 10%. Required 1. Prepare the January 1 journal entry to record the bonds’ issuance. 2. Determine the total bond interest expense to be recognized over the bonds’ life. 3. Prepare an effective interest amortization table for the bonds’ first two years. 4. Prepare the journal entries to record the first two interest payments.
Spurrier Corp. has 10-year bonds with a face value of $400,000 and a carrying value of $420,345 as of 12/31/19. On June 30, 2020, they pay their bondholders $12,000 and recognize $10,509 in interest expense. Please provide the June 30, 2019 carrying value of the bonds after the interest payment.
On May 1, 2018, Green Corporation issued $1,100,000 of 12% bonds, dated January 1, 2018, for $1,074,000 plus accrued interest. The bonds mature on December 31, 2032, and pay interest semiannually on June 30 and December 31. Green's fiscal year ends on December 31 each year. Required: 1. Determine the amount of accrued interest that was included in the proceeds received from the bond sale. 2. Prepare the journal entry for the issuance of the bonds. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the amount of accrued interest that was included in the proceeds received from the bond sale. Accrued interest
On January 1, 2021, Shay Company issues $300,000 of 10%, 15-year bonds. The bonds sell for $293,250. Six years later, on January 1, 2027, Shay retires these bonds by buying them on the open market for $315,750. All interest is accounted for and paid through December 31, 2026, the day before the purchase. The straight-line method is used to amortize any bond discount. 1. What is the amount of the discount on the bonds at issuance?2. How much amortization of the discount is recorded on the bonds for the entire period from January 1, 2021, through December 31, 2026?3. What is the carrying (book) value of the bonds as of the close of business on December 31, 2026?4. Prepare the journal entry to record the bond retirement.
On November 1, 2020, your company issued $600,000 of 5 year 9% bonds when the market interest rate was 8%. The bonds pay interest annually on October 31 each year. Your company uses the interest method of amortization. Calculate the bond selling price on November 1, 2020. Please show the factors you entered into your calculator or spreadsheet to calculate the amount. Prepare the bond entries from November 1, 2020 through December 31, 2021 (one year and two months), assuming your company’s year ends on December 31 and your company does NOT make reversing entries on January 1. Based upon the entries in part “b.” indicate any current liabilities (and the balance in the current account) your company would report on the balance sheet on December 31, 2021 (the second year). Based upon the entries in part “b.” indicate any NONcurrent liabilities (and the balance in the account) your company would report on December 31, 2021 (the second year)
On December 31, 2021, Danny purchased $23,000 of newly issued bonds of Howard Corporation for $19,045. The bonds are dated December 31, 2021. The bonds are 9%, 10-year bonds paying interest semiannually on June 30 and December 31. The bonds are priced to yield 12% compounded semiannually. Read the requirement. Requirement a. What is the amount of the original issue discount? Start by completing the bond amortization table for the first year. (Round all amounts to the nearest dollar.) Year Interest Received December 31, 2021 June 30, 2022 December 31, 2022 Amortization of Original Issue Discount Taxpayers Basis Interest Income for the Bond The amount of the original issue discount is Requirement b. For the first semiannual period, what is the amount of the original issue discount Danny must recognize as ordinary income? (Round the amount to the nearest dollar.) The amount of the original issue discount Danny must recognize as ordinary income for the first semiannual period is…
Fountain Limited sells $300,000 of 10% bonds on March 1,2020. The bonds pay interest on September 1 and March 1. The bonds yield 12%, selling for $283,250. Required – Give entries from March 1, 2020 to March 1, 2021 as it relates to this bond.
Aggies Inc. issued bonds with a $450,000 face value, 8% interest rate, and a 4-year term on July 1, 2018, and received $510,000. Interest is payable semi-annually. The premium is amortized using the straight-line method. 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 Prepare journal entries for the above transactions. If an amount box does not require an entry, leave it blank. A. fill in the blank 2 fill in the blank 3 fill in the blank 5 fill in the blank 6 fill in the blank 8 fill in the blank 9 B. fill in the blank 11 fill in the blank 12 fill in the blank 14 fill in the blank 15 C.
On December 31, 2020, Phil purchased $20,000 of newly issued bonds of Texas Corporation for $16,568. The bonds are dated December 31, 2020. The bonds are 9%, 10-year bonds paying interest semiannually on June 30 and December 31. The bonds are priced to yield 12% compounded semiannually. Read the requirements. Requirement a. What is the amount of the original issue discount? Start by completing the bond amortization table for the first year. (Round all amounts to the nearest dollar.) Amortization of Original Issue Discount Taxpayers Basis for the Bond Year Interest Received Interest Income December 31, 2020 June 30, 2021 December 31, 2021 The amount of the original issue discount is Requirement b. For the first semiannual period, what is the amount of the original issue discount Phil must recognize as ordinary income? (Round the amount to the nearest dollar.) The amount of the original issue discount Phil must recognize as ordinary income for the first semiannual period is Requirement…