Imported Autoparts Inc. issued $170,000 of 3%, five-year bonds at a price of 85 on January 31, 20X1 (Note: When the issue price of bonds is provided, as in this case, you do not need to calculateit yourself, just use the stated price.). The market interest rate at the date of issuance was 5%, and the standard bonds pay interest semi-annuallyRead the requirements.Requirement 1. Prepare an effective-interest amortization table for the bonds through the first three interest payments. (Round your answers to the nearest whole dollar)Imported AutopartsAmortization TableSemi-annualInterest DateJanuary 31, 20X1July 31, 20X1January 31, 20X2July 31, 20X2Interest Payment(1.5% of MaturityValue)255025502550DateJanuary 31, 2001 CashсInterest Expense (2.5% of Bond DiscountPreceding Bond Carrying Amortization (B-A)Amount)361337033769Discount on Bonds PayableBonds Payable10631153121914450025500DBond DiscountAccount Balance(Preceding D-C)25500244372328422065Requirement 2. Record imported's issuance of the bonds on January 31, 20X1, and payment of the first semi-annual interest amount and amortization of the bonds on July 31, 20x1Start by recording the issuance of bonds on January 31, 20X1. (Record debits first, then credits. Exclude explanations from journal entries)Account TitlesDebitCreditBond CarryingAmount($170,000-D)170000144500145563146716147935med dahits first then credits. Exclude explanations from journal entries) Now, record the payment of the first semi-arvual interest amount and amortization of the bends on July 31, 2001. (Recerd debits first, then credits. Exclude explanations from oumalentes/DateAccount TesCreditJuly 31, 20X1 Interest ExpenseDiscount on Bonds PayableCashDebit3613Requirement 3. How much cash did imported Autoparts bomo on January 31, 2017 How much cash will imported Autopas pay back at maturityAmount of cash imported Autoparts borrowed on January 31, 201Amount of cash imported Autoparts will pay back on January 31, 200Requirement 4. How much cash interest will imported Adoparts pay each six month?10632560interest expense imported Autoparts will report on July 31, 201Interest expense imported Autoparts will report on January 31, 2002Why does the amount of interest expense increase each period?Show Transcribed TextAmount of cash interest imported Autoparts will pay each six month7500Requirements. How much interest expense will imported Autoparts report on July 31, 231, and on January 31, 2002? Why does tdetailIn this seperter the interest expense amounts imported Autoparts will report on July 31, 2001, and on January 31, 201214450017000030133703ĆJanuary 31, 2017amount of interest expense increase each period? Explan inWild TheWhy does the amount of interest expense increase each periodinterest expens increases because the bond carrying amount increase bonds move toward naturty and the discount must be amortized over the le of the bond Theincreasing and carrying amount producescreasing amount of red experse sach pedNext

Bond valuation refers to the process of determining the fair value of a bond. Bonds are debt…

Imported Autoparts Inc. issued $170,000 of 3%, five-year bonds at a price of 85 on January 31, 20x1 (Note: When the issue price of bonds is provided, as in this case, you do it yourself, just use the stated price.). The market interest rate at the date of issuance was 5%, and the standard bonds pay interest semi-annually Read the requirements. Requirement 1. Prepare an effective-interest amortization table for the bonds through the first three interest payments (Round your answers to the nearest whole dollar) Imported Autoparts Amortization Table Semi-annual Interest Date January 31, 20X1 July 31, 20x1 January 31, 20X2 July 31, 20x2 с Interest Payment Interest Expense (2.5% of Bond Discount (1.5% of Maturity Preceding Bond Carrying Amortization (B Amount) Value) -A) 2550 2550 2150 Date January 31, 20X1 Cash 3613 3703 3769 Discount on Bonds Payabie Bonds Payable 1063 1153 1219 144500 25600 Bond Discount Account Balance (Preceding D-C) 25500 Requirement 2. Record imported's issuance of the bonds on January 31, 20X1, and payment of the first semi-annual interest amount and amorturation of the b Start by recording the issuance of bonds on January 31, 20X1. (Record debits first, then credits. Exclude explanations from journal entries) Account Titles Debit Credit 24437 232864 22065 170000 Bond Carrying Amount ($170,000-D) 144500 145563 146716 147935 July 31, 20x1

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 15MCQ