FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- PB6. 13.3 Edward Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $480,000. Interest is payable semiannually. The discount is amortized using the straightline 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 discountarrow_forwardDogarrow_forwardRoarie LLC issued 10,000, $1,000 bonds on January 1, 2020. The bonds have a 10-year term and pay interest semiannually. This is a partial bond amortization schedule for the bonds: Cash Payment Interest A. $4,261,329 B. $7,738,658 C. $4,000,000 D. $3,738,658 Effective Decrease in Interest Balance Disct Cash 1 200,000 313,067 113,067 2 200,000 318,720 118,720 3 200,000 324,657 124,657 4 200,000 330,889 130,889 What would be the total interest cost of the bonds over their full term? Outstanding Balance 10,000,000 (6,261,343) 3,738,658 4,000,000 7,738,658 6,261,343 6,374,410 6,493,130 6,617,787 6,748,676arrow_forward
- On January 1, 2018, Nebal Manufacturing Corporation issued $5,000,000, 10%, 6-year bonds dated January 1, 2018, at 105. The bonds pay semi-annual interest on January 1 and July 1. The company uses the straight-line method of amortization and has a December 31, year end. Instructions: Prepare the journal entries to record the following: The issuance of bonds on January 1, 2018. The payment of interest and the discount (or premium) amortization on July 1, 2018. The accrual of interest and the discount (or premium) amortization on December 31, 2018. The payment of interest on January 1, 2019.arrow_forwardSheridan Inc. issues $5,000,000, 5-year, 10% bonds at 101, with interest payable annually on January 1. The straight-line method is used to amortize bond premium. a) Prepare the journal entry to record the sale of these bonds on January 1, 2022 b)arrow_forwardOn January 1, 2020, Joe Construction issued $350,000, 3-year bonds for $320,000. The stated rateof interest was 7% and interest is paid annually on December 31.1. Calculate the amount of discount that will be amortized each period. Discount/period:2. Calculate the amount of interest expense for each period.Interest/period:3. Complete the amortization table below for Joe Constructions bonds. Joe ConstructionAmortization for BondsPeriod Cash Payment (credit)Interest Expense(debit)Discount onBondsPayable(Credit)Discount onBondsPayableBalance Book ValueAt issue $ - $ - $ - $ 320,00012/31/202012/31/202112/31/2022arrow_forward
- Great Lake Glassware Company issues $1,050,000 of its 16%, 10-year bonds at 94 on February 28, 2024. The bonds pay interest on February 28 and August 31. Assume that Great Lake uses the straight-line method for amortization The journal entry to record the first interest payment on August 31, 2024 includes a OA. debit to Interest Expense for $87,150. OB. debit to Cash for $84,000. OC. debit to Discount on Bonds Payable for $3,150 OD. debit to Interest Expense for $80,850arrow_forwardOn January 1, 2021, Solo Securities issued a $600, 000, 6%, three-year bonds payable. The market rate was 4% at issuance. Interest is paid semi-annually each June 30 and December 31. Solo Securities uses the effective interest method of amortization. create amortization tablearrow_forwardLennar Inc. issued $100,000 of 10% bonds dated May 1, 2021 for $239,588. The bonds mature in 20 years. The effective interest rate for these bonds was 8%. Interest is paid semiannually on October 31 and April 30. Lennar's fiscal year is the calendar year. Lennar uses the effective interest method of amortization. Required: 1. Prepare the journal entry to record the bond issuance on May 1, 2021. 2. Prepare the necessary journal entry on October 31, 2021 (1st payment). 3. Prepare the adjusting entry for the accrued interest (for 2 months) on December 31, 2021arrow_forward
- On April 1, 2021, Marigold Corporation issued $352.000, 5-year bonds. On this date, Shoreline Corporation puurchased the bonds from Marigold to earn interest. Interest is received semi-annually on April 1 and October 1 and Shoreline's year end is March 31 Below is a partial amortization schedule for the first three interest periods of the bond issue Semi-Annual Interest Received Interest Interest Period Revenue Amortization Bond Amortized Cost April 1. 2021 $368.231 October 1, 2021 $7.040 $5.523 $1.517 366.714 April 1.2022 7.040 5.501 1.539 365,175 October 1, 2022 7.040 5,478 1,562 363,613 Were the bonds purchased at a discount or at a premium? Bonds purchased at a What is the face value of the bonds? Face value of the bonds s eTextbook and Media What will the bonds' amortized cost be at the maturity date? Bonds' amortized cost at the maturity date eTextbook and Media /1 E What is the bonds' contractual interest rate? The market interest rate? (Round answers to 2 decimal places, eg…arrow_forwardAn accounting example: Otter Products inc issued bonds on January 1, 2019. Interest to be paid semi-annually. Term in years is 2; Face value of bonds issued is $200,000; Issue Price $206,000; Specified Interest Rate each payment period is 6% Question. Calculate a. the amount of interest paid in cash every payment period. b. The amount of amortization to be recorded at each interest payment date (use straight-line method) c. complete amoritzation table by calculating interest expense and beginning and ending bond carrying amounts at the each period over 2 years. The term is for 2 years however 3 years is showing on the workbook. How do I calcuate the 3rd year if the problem only says the term is 2 years?arrow_forwardLincoln Company issued $110,000 of 10-year, 8% bonds payable on January 1, 2025. Lincoln Company pays interest each January 1 and July 1 and amortizes discount or premium by the straight-line amortization method. The company can issue its bonds payable under various conditions. Read the requirements. Requirement 1. Journalize Lincoln Company's issuance of the bonds and first semiannual interest payment assuming the bonds were issued at face value. Explanations are not required. (Record debits first, then credits. Exclude explanations from any journal entries.) Journalize the issuance of the bond payable at face value. Date Jan. 1, 2025 Accounts Debit Creditarrow_forward
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