1. How much is the purchase price of the bonds?2. Assuming that the nominal interest is 11% and the bonds were acquired to yield 13%, how much is the purchase price of the bonds?3. Assume that the interest is payable every June 30 and December 31, how much is the purchase price of the bonds? On January 1, 2021, CCC Company acquired 13% bonds in the face amount of P1,300,000 to beappropriately classified as FA at amortized cost. The bonds mature on December 31, 2024. The bondswere required to yield 11%. Interest is payable every December 31.

Solution-1 Cash Flow at the time of maturity = P1300000 Interest (Annuity) annually = (P1300000…

On January 1, 2021, CCC Company acquired 13% bonds in the face amount of P1,300,000 to be appropriately classified as FA at amortized cost. The bonds mature on December 31, 2024. The bonds were required to yield 11%. Interest is payable every December 31.

On January 1, 2021, CCC Company acquired 13% bonds in the face amount of P1,300,000 to be appropriately classified as FA at amortized cost. The bonds mature on December 31, 2024. The bonds were required to yield 11%. Interest is payable every December 31.

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...

See similar textbooks

Related questions

Q: On January 1, 2021, M&M company purchased P1,000,000, 12% bonds for P1,065,000, a price that yields…

A: Under Amortized cost method we use yield as interest rate for recognizing investment income

Q: Webb Company had outstanding a 7%, 10-year bond payable with face amount of P5,000,000. The bond was…

A: The carrying amount of the bond payable was P5,250,000 Less : The face value of 7% bond…

Q: On January 1, 2021, Ruzak Co. sold five-year, 6% bonds with a face value of $700,000. Interest is…

Q: On January 1, 2021, Peru Company purchased P5,000,000 face amount, 17% bonds. The bonds were…

A: Interest income recorded for the year is based on the carrying value of bonds at the beginning of…

Q: 20, Teal Company purchased 9% bonds having a maturity value of $370,000, for $400,342.96. The bonds…

A: The amount of interest expense, interest payment, and discount or premium amortization of a bond in…

Q: On January 1, 2020, Sage Company purchased 11% bonds, having a maturity value of $ 301,000 for $…

A: Bond purchased: In order to obtain money from investors who are prepared to lend them money for a…

Q: 9. On January 1, 2020, HIBISCUS Company purchased 4,000 of P1,000 face value, 10% bonds of IXORA…

A: Bonds are the debt security which is offered or issued by the corporates or the governments to…

Q: On August 1, 2021, Excel Company purchased at par P5million bonds with stated interest rate of 12%…

A: Lets understand the basics. We all know that bond can be purchased at the issue time or at mid of…

Q: On July 1, 2023, AAA Company issued P1,198,000 of 10%, 20 year bonds with a face amount of…

A: The bonds are issued at premium when market rate is lower than coupon rate of bonds.

Q: On January 1, 2021, Mirakulo Company acquired P4,000,000 of 12% face amount bonds for P3,767,000 to…

A: Carrying amount of the bond = Present value of principal + Present value of interest payments where,…

Q: On January 1, 20x1, SPEED Company purchased 12% bonds, having a face value of P800,000. The bonds…

A: Bond is an investment security which is issued by large organizations to raise the fund. The bond…

Q: On May 1, 2018, Luzon Company issued P2,000,000, 5 year, 10% bonds for P2,300,000. Each P1,000 bonds…

A: Share warrants means rights attached with the issue of bonds by which person has the right to…

Q: On January 1, 2019, Odeng Company purchased P1,000,000, 12% bonds of Myeongdong Company for P1,063,…

A: The bond is an investment security which are issued by the large organisation in order to raise…

Q: In 2022, Dvorak Company issued $200,000 of bonds for $189,616. If the stated rate of interest was 6%…

A: Note: Under effective interest method, interest expense is calculated by multiplying the yield or…

Q: 1. On January 1, 20X2, Tanangonan Company acquired all the assets and assumed all the liabilities of…

A: Journal Entries are the entries to be recorded in the accounting books of the business for all the…

Q: On May 31, 2020, VIOLET Company issued 6% bonds with face amount of ₱4,000,000 for net proceeds of…

A: Solution carrying amount of the bonds payable on December 31, 2020 = Fair value of bond on December…

Q: If Intervale Railway invests $100,000 in 5% bonds at face value that the company intends to hold…

A: Given is: Intervale Railway invests $100,000 in 5% bonds at face value that the company intends to…

Q: On January 1, 2020, Lucas Company purchased P1,200,000, 14% bonds of Andres Company for P1,381,934,…

A: Ending balance of Bond Investment = Beginning Balance + Interest Accrued at Effective rate -…

Q: Presented below are two independent situations. a. George Gershwin Co. sold $2,000,000 of 10%,…

A: a. Determine the amount of interest expense to be reported on July 1, 2020, and December 31, 2020.…

Q: On January 1, 2020, Oriole Company purchased 12% bonds, having a maturity value of $ 310,000 for $…

A: Bonds- Bonds are those monetary securities that are issued by banks, governments, companies so as to…

Q: On January 1, 2021, Braburt Co. sold six-year, 5% bonds with a face value of $700,000. Interest is…

A: Introduction:- A bond is a document of the bond issuer's obligation to the bondholders. Municipal…

Q: A company paid $33,800 to acquire 11% bonds with a $36,000 maturity value. The company intends to…

A: The cash proceeds from the bond that the company receives at maturity is the face value or maturity…

Q: If the company issued RO 100,000 , 5% interest, 10-year bonds at 98 on January 1, 2021, which of the…

A: Answer Bond issued = RO98 Face value per BOND = RO100 Discount price per BOND = (RO100 - RO98) = RO2…

Q: On January 1, 2020, HIBISCUS Company purchased 4,000 of ₱1,000 face value, 10% bonds of IXORA…

A: The coupon interest rate is always paid on the face value of the bonds and is independent of the…

Q: On January 1, 2020, Sage Company purchased 11% bonds, having a maturity value of $ 301,000 for $…

A: The question is based on the concept of Financial Accounting.

Q: What amount should Dayrit report as interest receivable in its December 31, 2022 balance sheet?

A: Interest receivable on the bond is the amount of interest which has been computed on the basis of…

Q: On July 1, 2020, Morales Corp acquired P4,000,000 face value of X Corporation bonds with a nominal…

A: Held to Maturity securities are the securities held by the entry with the intention to retain it…

Q: 1. Determine the goodwill or gain on bargain purchase from the above acquisition. 2. Give the…

A: 1. Any excess of the purchase consideration over the net assets acquired of an entity, is first…

Q: Small Ltd acquired a portfolio of corporate bonds on 1 July 2019. The bonds will generate…

A: The issuer of bonds is the borrower and the holder is the lender. The bondholder will also receive…

Q: On January 1, 2021, Rare Bird Ltd. purchased 15% bonds dated January 1, 2021, with a face amount of…

A: Given in the question: Face Value = $22 million Face Value = $22,000,000 Coupon Rate = 15% Market…

Q: On Jan. 1, 2021, ABC bought serial bonds with a face value of P2,400,000 for P2,160,000 cash. The…

A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: On January 1, 2021, for $18 million, Monument Company purchased 10 year, 10% bonds, dated January 1,…

A: Semiannually interest receipt = Face value of bonds x rate of interest x 6/12 months = $20,000,000 x…

Q: On January 1, 2021, Canada Corp. purchased bonds with a face value of P7,500,000 and a stated…

A: Purchase Price of Bond: The price of a bond is the current discounted value of the future cash flow…

Q: On January 1, 2023, Baker Company purchased, as an investment, 5% bonds, having a maturity value of…

A: The Baker Co. purchased 5% bonds at discount of 11,600 [150,000-138,400]. The…

Q: On January 1, 2019, QQQ Company purchased bonds with face amount of P5,000,000 for P4,760,000…

A: Given: On January 1, 2019, QQQ Company purchased bonds with face amount of P5,000,000 for P4,760,000…

Q: On January 1, 2020, Monty Company purchased 12% bonds, having a maturity value of $310,000 for…

A: a. Prepare the journal entry at the date of the bond purchase. b. Prepare the journal entries to…

Q: On January 1, 2018, CEBU Company purchased 12% bonds, having a maturity value of P800,000, for…

A: As per PFRS 9 the Financial assets shall be initially record at Fair value and add or subtract any…

Q: On January 1, 2023, Wei Ling Company purchased bonds with face amount of P6250.000 for PS,950,000…

A: Calculation of Interest income for the year 2023:- P 714,000 is the correct answer Interest income…

Q: On January 1, 2019, QQQ Company purchased bonds with face amount of P5,000,000 for P4,760,000…

A: On 01.01.2019, QQQ company purchased bonds = P4760000 Including transaction cost = P160000 Face…

Q: On January 1, 20X2, Tanangonan Company acquired all the assets and assumed all the liabilities of…

A: Adjusting Entries- Adjusting entries refers to the entries made in the accounts at the end of the…

Q: The following are two independent situations. 1. Sandhill Corporation redeemed $130,500 face…

A: Journal entry is a recording of a financial transaction of a business with debit and credit columns…

Q: On January 1, 2026, ABC purchased serial bonds with face amount of P5M and stated interest at 12%.…

A: The market price of the bond is the price at which the market is purchased by the bondholders. The…

Q: On January 1, 2019,CalderetaCompany purchased 5-year bonds with face value of P8,000,000 and stated…

A: >Bonds Payable are the source of finance for the companies. >The bondholders are…

Q: On January 1, 2020, Teal Company purchased 9% bonds having a maturity value of $370,000, for…

A: Increase in assets should be debited and decrease in assets should be credited.

Q: AI Tool and Dye issued 8% bonds with a face amount of $160 million on January 1, 2021. The bonds…

A: Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money…

Q: n January 1, 2019, Odeng Company purchased P1,000,000, 12% bonds of Myeongdong Company for P1,063,…

A: Date Interest Collected Interest Income Amortization Carrying Amount 1/1/2019…

Q: On January 1, 2020, Lucas Company purchased P1,200,000, 14% bonds of Andres Company for P1,381,934,…

A: Financial asset held for earning contractual cash flow and to held the asset till maturity, is…

Question

1. How much is the purchase price of the bonds?

2. Assuming that the nominal interest is 11% and the bonds were acquired to yield 13%, how much is the purchase price of the bonds?

3. Assume that the interest is payable every June 30 and December 31, how much is the purchase price of the bonds?

On January 1, 2021, CCC Company acquired 13% bonds in the face amount of P1,300,000 to be
appropriately classified as FA at amortized cost. The bonds mature on December 31, 2024. The bonds
were required to yield 11%. Interest is payable every December 31.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market rate of 4%. The bonds paid interest semi-annually on June 30 and Dec. 31. How much money did the company receive when the bonds were issued? The bonds would be quoted at what rate?
Volunteer Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $540,000. Interest is payable annually. The premium is amortized using the straightline method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. June 30, 2019: entry to record payment of interest to bondholders C. June 30, 2019: entry to record amortization of premium D. June 30, 2020: entry to record payment of interest to bondholders E. June 30, 2020: entry to record amortization of premium
Bats Corporation issued 800,000 of 12% face value bonds for 851,705.70. The bonds were dated and issued on April 1, 2019, are due March 31, 2023, and pay interest semiannually on September 30 and March 31. Bats sold the bonds to yield 10%. Required: 1. Prepare a bond interest expense and premium amortization schedule using the straight-line method. 2. Prepare a bond interest expense and premium amortization schedule using the effective interest method. 3. Prepare any 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. Assume the company retires the bonds on June 30, 2020, at 103 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
Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018, and received $540,000. Interest is payable semi-annually. The premium is amortized using the straight-line method. Prepare journal entries for the following transactions. 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
On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
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.