Sunland Company received proceeds of $533000 on 10-year, 8% bonds issued on January 1, 2019. The bonds had a face value of$500000, pay interest annually on December 31, and have a call price of 102. Sunland uses the straight-line method of amortization.What is the amount of interest Sunland must pay the bondholders in 2019?O $40800O $42640O $40000O $4264 Five thousand bonds with a face value of $1000 each, are sold at 91. The entry to record the issuance isOCashPremium on Bonds PayableBonds PayableCashDiscount on Bonds PayableBonds PayableCashDiscount on Bonds PayableBonds PayableCashBonds Payable45500005000000455000045000045500004500005000000450000455000050000004550000

Bond interest is a monthly payment provided to bondholders by a bond issuer as compensation for…

Five thousand bonds with a face value of $1000 each, are sold at 91. The entry to record the issuance is O O Cash Premium on Bonds Payable Bonds Payable Cash Discount on Bonds Payable Bonds Payable Cash Discount on Bonds Payable Bonds Payable O Cash Bonds Payable 4550000 5000000 4550000 450000 4550000 450000 5000000 450000 4550000 5000000 4550000

Five thousand bonds with a face value of $1000 each, are sold at 91. The entry to record the issuance is O O Cash Premium on Bonds Payable Bonds Payable Cash Discount on Bonds Payable Bonds Payable Cash Discount on Bonds Payable Bonds Payable O Cash Bonds Payable 4550000 5000000 4550000 450000 4550000 450000 5000000 450000 4550000 5000000 4550000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 1MC

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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.