FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Related questions
Question
On January 1, 2021, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below:
| Payment | Cash Payment |
Effective Interest |
Increase in Balance |
Outstanding Balance |
|||||
| 6,047,387 | |||||||||
| 1 | 292,000 | 302,369 | 10,369 | 6,057,756 | |||||
| 2 | 292,000 | 302,888 | 10,888 | 6,068,644 | |||||
| 3 | 292,000 | 303,432 | 11,432 | 6,080,076 | |||||
| 4 | 292,000 | 304,004 | 12,004 | 6,092,080 | |||||
| 5 | 292,000 | 304,604 | 12,604 | 6,104,684 | |||||
| 6 | 292,000 | 305,234 | 13,234 | 6,117,918 | |||||
| ~ | ~ | ~ | ~ | ~ | |||||
| ~ | ~ | ~ | ~ | ~ | |||||
| ~ | ~ | ~ | ~ | ~ | |||||
| 38 | 292,000 | 355,060 | 63,060 | 7,164,267 | |||||
| 39 | 292,000 | 358,213 | 66,213 | 7,230,480 | |||||
| 40 | 292,000 | 361,520 | 69,520 | 7,300,000 | |||||
Required:
1. What is the face amount of the bonds?
2. What is the initial selling price of the bonds?
3. What is the term to maturity in years?
4. Interest is determined by what approach?
5. What is the stated annual interest rate?
6. What is the effective annual interest rate?
7. What is the total cash interest paid over the term to maturity?
8. What is the total effective interest expense recorded over the term to maturity?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution
Trending nowThis is a popular solution!
Step by stepSolved in 2 steps
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
- On January 1, 2021, Tennessee Harvester Corporation issued debenture bonds that pay Interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below. Payment ANAS!! 1 2 1. 2. 3. 38 39 48 Cash Payment 216,000 216,000 230,997 231,597 216,000 232, 221 216,000 232,869 216,000 233,544 216,000 234, 246 216,000 216,000 216,000 Effective Increase in Interest Balance 280,008 282,568 285,230 Face amount Initial selling price Term to maturity 14,997 15,597 16,221 16,869 Required: 1. What is the face amount of the bonds? 2. What is the initial selling price of the bonds? 3. What is the term to maturity in years? 17,544 18,246 4. Interest is determined by what approach? 5. What is the stated annual Interest rate? 64,008 66,568 69,230 4. Interest is determined by what approach? 5. Annual interest rate 6. Effective annual interest rate 7. Total cash interest paid 8. Effective interest expense Outstanding Balance 5,774,920 5,789,917 6. What is the effective…arrow_forwardSubject: acountingarrow_forwardN2.arrow_forward
- Legacy issues $740,000 of 7.5%, four-year bonds dated January 1, 2021, that pay interest semiannually on June 30 and December 31. They are issued at $680,186 when the market rate is 10%. 2. Determine the total bond interest expense to be recognized over the bonds' life.arrow_forwardRequired information [The following information applies to the questions displayed below.] On January 1, 2019, Drennen Inc. issued $3.1 million face amount of 7-year, 10% stated rate bonds when market interest rates were 8%. The bonds pay semiannual interest each June 30 and December 31 and mature on December 31, 2025. Table 6-4, Table 6-5 (Use appropriate factor from the table provided.) b-1. Assume instead that the proceeds were $3,052.000. Use the horizontal model to record the payment of semiannual interest and the related discount amortization on June 30, 2019, assuming that the discount of $48,000 is amortized on a straight-line basis. Indicate the financial statement effect. (Enter decreases with a minus sign to indicate a negative financial statement effect.) Balance Sheet Income Statement Assets Liabilities + Stockholders' Equity - Net Income Revenues Expensesarrow_forwardHillside issues $1,900,000 of 5%, 15-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,641,812. Required: 1. Prepare the January 1 journal entry to record the bonds’ issuance. 2(a) For each semiannual period, complete the table below to calculate the cash payment. 2(b) For each semiannual period, complete the table below to calculate the straight-line discount amortization. 2(c) For each semiannual period, complete the table below to calculate the bond interest expense. 3. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life. 4. Prepare the first two years of a straight-line amortization table. 5. Prepare the journal entries to record the first two interest payments.arrow_forward
- During 2018 and 2019, Kale Co. completed the following transactions relating to its bond issue. The company's fiscal year ends on December 31. 2018 1 Issued $200,000 of 8 year, 6 percent bonds for $194,000. The semiannual cash payment for interest is due on March 1 and September 1, beginning September 2018. Mar. Sept. 1 Recognized interest expense including the amortization of the discount and made the semiannual cash payment for interest. Dec. 31 Recognized accrued interest expense including the amortization of the discount. 2019 1 Recognized interest expense including the amortization of the discount and made the semiannual cash payment for interest. Mar. Sept. 1 Recognized interest expense including the amortization of the discount and made the semiannual cash payment for interest. Dec. 31 Recognized accrued interest expense including the amortization of the discount. Required a. When the bonds were issued, was the market rate of interest more or less than the stated rate of…arrow_forward30 and December 31. Portions of the bond amortization schedule appear below: Payment Cash Payment Interest Effective Increase in Balance Outstanding Balance 6,627,273 12345622 320,000 331,364 11,364 6,638,637 320,000 331,932 11,932 6,650,569 320,000 332,528 12,528 6,663,097 320,000 333,155 13,155 6,676,252 320,000 333,813 13,813 6,690,065 320,000 334,503 14,503 6,704,568 ~ ~ 38 320,000 389,107 69,107 7,851,247 39 40 320,000 392,562 72,562 320,000 396,191 76,191 7,923,809 8,000,000 Required: 1. What is the face amount of the bonds? 2. What is the initial selling price of the bonds? 3. What is the term to maturity in years? 4. Interest is determined by what approach? 5. What is the stated annual interest rate? 6. What is the effective annual interest rate? 7. What is the total cash interest paid over the term to maturity? 8. What is the total effective interest expense recorded over the term to maturity?arrow_forwardOn October 31, 2020, the Village of Lexington issued $1,000,000 of 3% general obligation serial bonds. The bonds pay interest on April 30 and October 31. Starting on October 31, 2021, the first of 20 equal annual serial payments of $50,000 was made. At December 31, 2022, what is the amount of accrued but unmatured interest that is not reported by the debt service fund? A. $4,875. B. $5,000. C. $4,500. D. $4,750.arrow_forward
- Net Work Corporation, whose annual accounting period ends on December 31, issued the following bonds: Date of bonds: January 1, 2021 Maturity amount and date: $270,000 due in 10 years (December 31, 2030) Interest: 8.0 percent per year payable each December 31 Date issued: January 1, 2021 Required: For each of the three independent cases that follow, provide the amounts to be reported on the January 1, 2021, financial statements immediately after the bonds were issued: (Deductions should be indicated by a minus sign.) Case A Case B Case C January 1, 2021–Financial Statements: (At 100) (at 96) (at 104) a. Bonds payable b. Unamortized premium (discount) c. Carrying valuearrow_forwardOn January 1, 2024, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Payment Cash Payment Effective Interest Increase in Balance Outstanding Balance 6,221,759 1 356,000 373,306 17,306 6,239,065 2 356,000 374,344 18,344 6,257,409 3 356,000 375,445 19,445 6,276,854 4 356,000 376,611 20,611 6,297,465 5 356,000 377,848 21,848 6,319,313 6 356,000 379,159 23,159 6,342,472 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 38 356,000 505,452 149,452 8,573,656 39 356,000 514,419 158,419 8,732,075 40 356,000 523,925 167,925 8,900,000 Required: What is the face amount of the bonds? What is the initial selling price of the bonds? What is the term to maturity in years? Interest is determined by what approach? What is the stated annual interest rate? What is the effective annual interest rate? What is the total cash interest paid over the term to maturity? What is the total effective…arrow_forwardAssume bonds payable are amortized using the straight-line amortization method unless stated otherwise. Journalizing bond transactions Wilkes Mutual Insurance Company issued a $100,000, 5%, the 10-year bond payable at 111 on January 1, 2018. Interest is paid semiannually on January 1 and July 1. Requirements Journalize the issuance of the bond payable on January 1, 2018. Journalize the payment of semiannual interest and amortization of the bond discount or premium on July 1, 2018.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education