FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Related questions
Question
Sterling Company issued $100,000 of its 8%, five-year bonds on January 1, 2017, at 98. Interest is paid on June 30 and December 31 every year. The bonds are callable at 103 and straight-line amortization is used. The bonds are recalled on April 1, 2019. Interest expense for 2019 will be?
Answer is $2,100 how do you get this?
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 3 steps with 3 images
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
- Sheffield Company issued $400,000, 12%, 10-year bonds on January 1, 2022, for $423,557. This price resulted in an effective-interest rate of 11% on the bonds. Interest is payable annually on January 1. Sheffield uses the effective-interest method to amortize bond premium or discount. (a) Your answer is correct. Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (b) Date Jan. 1, 2022 Account Titles and Explanation Cash Premium on Bonds Payable eTextbook and Media Date Bonds Payable List of Accounts Dec. 31, 2022 Your answer is partially correct. Account Titles and Explanation Interest Expense Premium on Bonds Payable Debit Prepare the journal entry to record the accrual of interest and the premium amortization on December 31, 2022. (Round answers to O decimal places, e.g. 15,250. Credit account titles are automatically indented when amount is entered. Do not indent manually.)…arrow_forwardOn January 1, 2021, an investor paid OR291, 000 for bonds with a principal amount of OR300,000. The stated rate of interest is 8% while the current market rate of interest is 10%. Using the effective interest method, how much interest income is recognized by the investor in 2021 (assume ?annual interest payments and amortization)arrow_forwardOn January 1, 2021, Lambda, Inc. issued ten-year bonds with a face value of $1,000,000 and an annual stated interest rate of 8%. Interest payments are made semi-annually on June 30th and December 31st. The bonds were issued for $875,378, when the market rate of interest was 10%. What amount of interest expense will Lambda record for 2021? Multiple Choice $43,957 $92,462 $80,000 $87,726arrow_forward
- Tamarisk Ltd. issued a $1,076,000, 10-year bond dated January 1, 2023. The bond was sold at 98.8% interest was payable on the bond on January 1 and July 1 each year. The company's year-end was December 31, and Tamarisk followed ASPE, and chose to use the straight-line amortization method. Prepare the journal entries for the given dates. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem. List all debit entries before credit entries.) Date || | | Account Titles and Explanation Debit Credit ||arrow_forwardOn January 1, 2018, Paradiso Company issued 1,000 of its 8%, $1,000 bonds at 93. Interest is payable semiannually on June 30 and December 31. The bonds will mature on December 31, 2027. If the company uses straight-line amortization, determine the amount of interest expense for 2018. answer is 87,000 how do you get there?arrow_forwardE-Tech Initiatives Limited plans to issue $650,000, 10-year, 7.00 percent bonds. Interest is payable annually on December 31. All of the bonds will be issued on January 1, 2019. Show how the bonds would be reported on the January 2, 2019, balance sheet if they are issued at 105. How would I create a partial balance sheet with the carrying vaule for the problem above?arrow_forward
- Sheffield Corp. issues $6000000 face value of bonds at 96 on January 1, 2019. The bonds are dated January 1, 2019, pay interest semiannually at 8% on June 30 and December 31, and mature in 10 years. Straight-line amortization is used for discounts and premiums. On September 1, 2022, $3600000 of the bonds are called at 102 plus accrued interest. What gain or loss would be recognized on the called bonds on September 1, 2022? OO $216000 loss. $360000 loss. $271500 loss. $163200 loss.arrow_forwardMcDorral Corporation issued $100,000 of 10%, 11-year bonds payable on January 1, 2020, for $92,480. The market interest rate when the bonds were issued was 12%. Interest is paid semi-annually on January 1 and July 1. The first interest payment is July 1, 2020. Using the effective-interest amortization method, how much interest expense will McDorral record on July 1, 2020? A. $5,000 OB. $5,228 C. $6,772 D. $6,000 O E. $5,549arrow_forwardOn January 1, 2021, a company issues 3-year bonds with a face value of $160,000 and a stated interest rate of 7%. Because the market interest rate is 5%, the company receives $168,714 for the bonds. Required: Fill in the table assuming the company uses effective-interest bond amortization. (Round your answers to the nearest whole dollar.) Period Ended Cash Paid 01/01/2021 12/31/2021 12/31/2022 12/31/2023 Interest Expense Amortized Premium $ 0 0 0 Bonds Payable Premium on Bonds Payable Carrying Value $ 0 0 0 0arrow_forward
- At January 1, 2020, Konerko Corp. issued $40,000,000 of 6%, 12-year bonds that paid interest semiannually on June 30 and December 31. The bonds were issued at $36,788,326 to earn 7%. How much interest expense should Konerko report for these bonds on its income statement for the full year ended December 31, 2020? Please round your answer to the nearest dollar.arrow_forwardOn January 1, 2021, Shay Company issues $300,000 of 10%, 15-year bonds. The bonds sell for $293,250. Six years later, on January 1, 2027, Shay retires these bonds by buying them on the open market for $315,750. All interest is accounted for and paid through December 31, 2026, the day before the purchase. The straight-line method is used to amortize any bond discount. 1. What is the amount of the discount on the bonds at issuance?2. How much amortization of the discount is recorded on the bonds for the entire period from January 1, 2021, through December 31, 2026?3. What is the carrying (book) value of the bonds as of the close of business on December 31, 2026?4. Prepare the journal entry to record the bond retirement.arrow_forwardOn November 1, 2020, your company issued $600,000 of 5 year 9% bonds when the market interest rate was 8%. The bonds pay interest annually on October 31 each year. Your company uses the interest method of amortization. Calculate the bond selling price on November 1, 2020. Please show the factors you entered into your calculator or spreadsheet to calculate the amount. Prepare the bond entries from November 1, 2020 through December 31, 2021 (one year and two months), assuming your company’s year ends on December 31 and your company does NOT make reversing entries on January 1. Based upon the entries in part “b.” indicate any current liabilities (and the balance in the current account) your company would report on the balance sheet on December 31, 2021 (the second year). Based upon the entries in part “b.” indicate any NONcurrent liabilities (and the balance in the account) your company would report on December 31, 2021 (the second year)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