On January 1, 2021, Loop Raceway issued 590 bonds, each with a face value of $1,000, a stated interest rate of 7 percent paid annually on December 31, and a maturity date of December 31, 2023. On the issue date, the market interest rate was 8 percent, so the total proceeds from the bond issue were $574,776. Loop uses the straight-line bond amortization method and adjusts for any rounding errors when recording interest in the final year. Required: 1. Prepare a bond amortization schedule. 2-5. Prepare the journal entries to record the bond issue, the interest payments on December 31, 2021 and 2022, the interest and face value payment on December 31, 2023 and the bond retirement. Assume the bonds are retired on January 1, 2023, at a price of 99.

On January 1, 2021, Loop Raceway issued 590 bonds, each with a face value of $1,000, a stated interest rate of 7 percent paid annually on December 31, and a maturity date of December 31, 2023. On the issue date, the market interest rate was 8 percent, so the total proceeds from the bond issue were $574,776. Loop uses the straight-line bond amortization method and adjusts for any rounding errors when recording interest in the final year. Required: 1. Prepare a bond amortization schedule. 2-5. Prepare the journal entries to record the bond issue, the interest payments on December 31, 2021 and 2022, the interest and face value payment on December 31, 2023 and the bond retirement. Assume the bonds are retired on January 1, 2023, at a price of 99.

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, 2020, Blindo Corp. issued ten - year, 12% bonds with a face value of $ 500,000, with interest payable semi-annually on June 30 and December 31. At the time, the market rate was 10%. Required: a) Find PMT and Use your calculator to calculate the issue price of the bonds. Round the answer to the nearest dollar. b) Independent of your solution to part a), assume that the issue price was $ 562, 000. Prepare the amortization table for 2020. Round values to the nearest dollar.
On January 1, 2021, Methodical Manufacturing issued 100 bonds, each with a face value of $1,000, a stated interest rate of 6 percent paid annually on December 31, and a maturity date of December 31, 2023. On the issue date, the market interest rate was 5.50 percent, so the total proceeds from the bond issue were $101,347. Methodical uses the effective-interest bond amortization method and adjusts for any rounding errors when recording interest in the final year. Required: 1. Prepare a bond amortization schedule. 2-5. Prepare the journal entry to record the bond issue, interest payments on December 31, 2021 and 2022, interest and face value payment on December 31, 2023 and the bond retirement. Assume the bonds are retired on January 1, 2023, at a price of 103. Complete this question by entering your answers in the tabs below. Req 2 to 5 Prepare a bond amortization schedule. (Round your answers to the nearest whole dollar. Make sure that the Carrying value equals face value of the bond…
answer in text form please (without image
On January 1, 2023, ABC Company issued $60,000,000 of 20-year, 9.5% bonds when the market rate of interest was 10.25%. Interest is paid semi-annually on June 30 and December 31. Required: Using Excel compute the price at which the bond was issued. Using Excel and the effective interest method of bond amortization prepare an amortization table for the entire life of the bond issue. You are expected to do all calculations in Excel (What are the excel Formulas) Prepare ALL journal entries for the following dates: January 1, 2023, June 30, 2023, December 31, 2023, and December 31, 2042
On January 1, 2023, Teal Corporation purchased a newly issued $1,425,000 bond. The bond matured on December 31, 2025, and paid interest at 6% every June 30 and December 31. The market interest rate was 8%. Teal's fiscal year-end is October 31, and the company had the intention and ability to hold the bond until its maturity date. The bond will be accounted using the amortized cost model. Click here to view Table A.2 - PRESENT VALUE OF 1- (PRESENT VALUE OF A SINGLE SUM) Click here to view Table A.4 - PRESENT VALUE OF AN ORDINARY ANNUITY OF 1 (a) X Your answer is incorrect. Calculate the price paid for the bond using a financial calculator or Excel functions. (Round answers to 2 decimal places, e.g. 52.75.) PV $ -1062917.95 4
(b) Prepare an effective-interest amortization table for the first eight interest payments for these bonds. (c) The Bonds were redeemed on January 1, 2026 (after the interest had been paid and recorded) at 102. Prepare the journal entry for the redemption of the bonds.
On January 1, 2015, Loop Raceway issued 600 bonds, each with a face value of $1,000, a statedinterest rate of 5% paid annually on December 31, and a maturity date of December 31, 2017. Onthe issue date, the market interest rate was 6 percent, so the total proceeds from the bond issuewere $583,950. Loop uses the straight-line bond amortization method and adjusts for any roundingerrors when recording interest in the final year.Required:1. Prepare a bond amortization schedule.2. Give the journal entry to record the bond issue.3. Give the journal entries to record the interest payments on December 31, 2015 and 2016.4. Give the journal entry to record the interest and face value payment on December 31, 2017.5. Assume the bonds are retired on January 1, 2017, at a price of 98. Give the journal entries torecord the bond retirement.
On October 31, 2021, Flowing Wind Company issued a $3,500,000, 10-year bond at 7% when the market rate was 8%. It was sold at 93, and they will account for interest on the bond using the effective interest rate calculation method. Interest payments are made on April 30, and October 31 of each year. Party Décor Company's year-end is December 31. Required: 1) Prepare the appropriate journal entries related to this bond for 2021, including all calculation 2) Show the bonds payable net value reported on the balance sheet as of December 31, 2021 3) Prepare the journal entry related to the first interest payment in 2022, including all calculations. 4) Assume the bond is redeemed at 94 on May 1, 2022. Record the redemption of the bond with the calculations included
On June 30, 2020, Wayne's Company issued $4,000,000 face value of 13%, 20-year bonds at $4,300,920, a yield of 12%.Wayne uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. #1. Set up a schedule of interest expense and premium/discount amortization under the effective-interest method. (Hint: The eff ective-interest rate must be computed.) (Please use excel & show all formulas)
On January 1, 2013, Noble, Inc. issued 9% bonds in the face amount of $5, 000, 000, which mature on July 1, 2019. The bonds were issued for $4,695,000 when the market rate was 10.5 %, resulting in a bond discount of $305,000. Noble uses the effective - interest method of amortizing bond discount. Interest is payable quarterly. Record the appropriate journal entries and prepare the amortization schedule. Note, the company made all the interest payments 2013. Record the appropriate journal entries.
Quatro issues bonds dated January 1, 2021, with a par value of $900,000. The bonds' annual contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 10%, and there was bonds Issuance costs of $29, 850 1. What is the price of these bonds at issuance? 2. Prepare the journal entries to record how much total bond interest expense will be recognized over the life of these bonds and the Bond issuance costs 3 Prepare an amortization table for these bonds using the effective interest method.
Temptation Vacations issues $60 million in bonds on January 1, 2021, that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below:Required:1. Were the bonds issued at face amount, a discount, or a premium?2. What is the original issue price of the bonds?3. What is the face amount of the bonds?4. What is the stated annual interest rate?5. What is the market annual interest rate?6. What is the total cash paid for interest assuming the bonds mature in 20 years?