(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 appropriete 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 decrenses with a minus sign to indicate a negative financial statement effect.) Balance Sheet Income Statement Assets Liabilities + Stockholders' Equity Net Income Revenues Expenses

(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 appropriete 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 decrenses with a minus sign to indicate a negative financial statement effect.) Balance Sheet Income Statement Assets Liabilities + Stockholders' Equity Net Income Revenues Expenses

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 7P: Wilbury Corporation issued 1 million of 13.5% bonds for 985,071.68. The bonds are dated and issued...

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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.
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?
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
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
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
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?
Required information [The following information applies to the questions displayed below.] Alexi Co. issued $3.60 million face amount of 9%, 10-year bonds on June 1, 2019. The bonds pay interest on an annual basis on May 31 each year. b-1. Independent of your answer to part a, assume that the proceeds were $3,235,000. Use the horizontal model to show the effect of issuing the bonds. Indicate the financial statement effect. (Enter your answers in whole dollars, not in millions. Enter decreases with a minus sign to indicate a negative financial statement effect.) Balance Sheet Liabilities Income Statement Revenues Stockholders' Equity Net Income Assets Expenses
Required information [The following information applies to the questions displayed below.] Alexi Co. issued $3.60 million face amount of 9%, 10-year bonds on June 1, 2019. The bonds pay interest on an annual basis on May 31 each year. Required: a. Assume that the market interest rates were slightly higher than 9% when the bonds were sold. Would the proceeds from the bond issue have been more than, less than, or equal to the face amount? Multiple Choice The bonds will sell for less than their face amount. The bonds will sell for more than their face amount. The bonds will sell for equal to their face amount.
Present Value for the question listed below, while the issue price is correct, I need help understanding why the PVIAF was raised to ^-20 and the PVF was ^20. January 1, 2019, Drennen Inc. issued $5 million face amount of 10-year, 14% stated rate bonds when market interest rates were 12%. The bonds pay semiannual interest each June 30 and December 31 and mature on December 31, 2028. Table 6-4, Table 6-5 (Use appropriate factor from the table provided.) I appreciate your assistance, thank you.
On January 1, 2019, Drennen Inc. issued $5 million face amount of 10-year, 14% stated rate bonds when market interest rates were 12%. The bonds pay semiannual interest each June 30 and December 31 and mature on December 31, 2028. Table 6-4, Table 6-5 (Use appropriate factor from the table provided.) Required:a. Calculate the proceeds (issue price) of Drennen Inc.'s bonds on January 1, 2019, assuming that the bonds were sold to provide a market rate of return to the investor. (Round PV factor to 4 decimal places.) b-1.Assume instead that the proceeds were $4,820,000. 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 $180,000 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.) b-2. Assume instead that the proceeds were $4,820,000. Record the journal entry to show the…
Record the issue of the bonds on July 31,2024. (List debit entry before credit entry. Record the payment of interest on January 31, 2025, assuming the semi-annual amortization amount for this interest period is \$895. (list all debit entries before credit entries Please answer all three requirements without image format answer thanku
On April 1, 2019, Ellison Co. issued 4-year, 7%, $100,000 face value bonds. The bonds were issued at 107.0919 , the interest payable annually on April 1. The bonds were sold to yield 5%. a) Complete the following table: Carrying Cash Interest Premium Date amount of Paid Expense Amortization bonds April 1 2019 April 1 2020 April 1 2021 April 1 2022 April 1 2023 b) Journalize the required entries on the following dates April 1, 2019 December 31, 2019 – adjusting entry April 1, 2020 2