FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- The notes to the Thorson Ltd.financial statements reported the following data on December 31, Year 1 (end of the fiscal year): Thorson amortizes bond discounts using the effective-interest method and pays all interestamounts at December 31. Requirements1. Assume the market interest rate is 6% on January 1 of year 1, the date the bonds are issued.a. Using the PV function in Excel, what is the issue price of the bonds?b. What is the maturity value of the bonds?c. What is Thorson’s annual cash interest payment on the bonds?d. What is the carrying amount of the bonds at December 31, year 1?2. Prepare an amortization table through the maturity date for the bonds using Excel. (Roundall amounts to the nearest dollar.) How much is Thorson’s interest expense on the bonds forthe year ended December 31, Year 4?3. Show how Thorson would report these bonds and notes at December 31, Year 4.arrow_forward5 On January 1, Ruiz Company issued bonds as follows: Face Value: Number of Years: Stated Interest Rate: Interest payments per year 7 B 9 0 1 2 AWN IC $500,000 a) Required: 1) Calculate the bond selling price given the two market interest rates below. Use formulas that reference data from this worksheet and from the appropriate future or present value tables (found by clicking the tabs at the botto this worksheet). Note: Rounding is not required. 15 7% 2 Annual Market Rate Semiannual Interest Payment: PV of Face Value: +PV of Interest Payments: Bond Selling Price: Annual Market Rate Semiannual Interest Payment: PV of Face Value: +PV of Interest Payments: = Bond Selling Price: 9% $17,500 133,500.01 285,055.55 418,555.56 6.00% $17,500 205,993.38 5343,007.72 $549,001.10 +arrow_forwardCompute bond proceeds, amortizing premium by interest method, and interest expense Ware Co. produces and sells motorcycle parts. On the first day of its fiscal year, Ware issued $44,000,000 of 5-year, 13% bonds at a market (effective) interest rate of 10%, with interest payable semiannually. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. X Open spreadsheet Compute the following: a. The amount of cash proceeds from the sale of the bonds. Round your answer to the nearest dollar. b. The amount of premium to be amortized for the first semiannual interest payment period, using the interest method. Round your answer to the nearest dollar. c. The amount of premium to be amortized for the second semiannual interest payment period, using the interest method. Round your answer to the nearest dollar. d. The amount of the bond interest expense for the first year. Round your…arrow_forward
- On January 1, Year 1, Residence Company issued bonds with a $50,000 face value. The bonds were issued at face value. They had a 20 year term and a stated rate of interest of 7%. Which of the following shows how the payoff of the bond liability will affect Residence's financial statements on December 31, Year 20 (the maturity date)? A. B. C. D. Balance Sheet Assets = Liabilities + ΝΑ = ΝΑ + NA = ΝΑ 50,000 50,000 (50,000) = (50,000) = Multiple Choice Option A Option B Option C Option D + + Equity Revenues ΝΑ ΝΑ ΝΑ ΝΑ ΝΑ ΝΑ ΝΑ NA Income Statement Expenses = ΝΑ ΝΑ ΝΑ ΝΑ ||| || || || || = = = = Net Income ΝΑ ΝΑ ΝΑ ΝΑ Statement of Cash Flows (50,000) IA (50,000) IFA 50,000 IA (50,000) FAarrow_forwardwill thumb up if correct. only need (b). please show the work too (FV-PV)arrow_forward1. On January 1, 2024, Lansing Group issued $1,000,000 of 6% bonds, dated January 1. Interest is payable semiannually on June 30 and December 31. The bonds mature in five years. The market yield for bonds of similar risk and maturity is 8%. INSTRUCTIONS: 1. Determine the price of these bonds that are issued to yield the 8% market rate using the Time Value of Money Tables. Include the table and relevant components for each factor used. 2. Record the issuance of these bonds by Lansing Group. 3. Prepare an amortization schedule that determines interest at the effective rate through the maturity date of the bonds. 4. Prepare the entries to record the interest on June 30, 2024, and December 31, 2024. 5. Assume that Lansing Group retires the bonds on January 1, 2026, paying $1,027,544. Prepare the entry to record the retirement.arrow_forward
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- Answer full question.arrow_forward< Compute bond proceeds, amortizing premium by interest method, and interest expense Ware Co. produces and sells motorcycle parts. On the first day of its fiscal year, Ware issued $29,000,000 of three-year, 10% bonds at a market (effective) interest rate of 9%, with interest payable semiannually. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. X Open spreadsheet Compute the following: a. The amount of cash proceeds from the sale of the bonds. Round your answer to the nearest dollar. $ b. The amount of premium to be amortized for the first semiannual interest payment period, using the interest method. Round your answer to the nearest dollar. $ c. The amount of premium to be amortized for the second semiannual interest payment period, using the interest method. Round your answer to the nearest dollar. $ d. The amount of the bond interest expense for the first year.…arrow_forwardHansabenarrow_forward
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