Fundamentals of Financial Accounting
5th Edition
ISBN: 9780078025914
Author: Fred Phillips Associate Professor, Robert Libby, Patricia Libby
Publisher: McGraw-Hill Education
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Question
Chapter 10, Problem 10.14E
1.
To determine
To prepare:
2.
To determine
To prepare: Journal entry to record the first interest payment on December 31.
3.
To determine
To prepare: Bond discount amortization schedule for the bonds.
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On January 1, when the market interest rate was 9 percent, Seton Corporation completed a$200,000, 8 percent bond issue for $187,163. The bonds pay interest each December 31 andmature in 10 years. Seton amortizes the bond discount using the straight-line method.Required:1. Prepare the journal entry to record the bond issuance.2. Prepare the journal entry to record the first interest payment on December 31.3. Prepare a bond discount amortization schedule for these bonds. Round calculations to thenearest dollar.
On the first day of the fiscal year, a company issues a $8,500,000, 10%, 9-year bond that pays semiannual interest of $425,000 ($8,500,000 x 10 % x V), receiving cash
of $8,022,042.
Using straight-line amortization, journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box
does not require an entry, leave it blank.
Interest Expense
Discount on Bonds Payable
Cash
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8,022,042 X
8,022,042 X
425,000
Check My Work
Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. The straight-line method of
amortization provides equal amounts of amortization over the life of the bond.
On the first day of the fiscal year, a company issues an $416,000, 10%, 5-year bond
that pays semiannual interest of $20,800 ($416,000 x 10 % x 1/2), receiving cash of
$391,000. Journalize the entry to record the first interest payment and the
amortization of the related bond discount using the straight-line method.
If an amount box does not require an entry, leave it blank.
BD
Chapter 10 Solutions
Fundamentals of Financial Accounting
Ch. 10 - Prob. 1QCh. 10 - Prob. 2QCh. 10 - What three factors influence the dollar amount...Ch. 10 - Prob. 4QCh. 10 - Prob. 5QCh. 10 - Prob. 6QCh. 10 - Prob. 7QCh. 10 - If a company has a long-term loan that has only...Ch. 10 - What are the reasons that some bonds are issued at...Ch. 10 - Prob. 10Q
Ch. 10 - Will the stated interest rate be higher than the...Ch. 10 - What is the carrying value of a bond payable?Ch. 10 - What is the difference between a secured bond and...Ch. 10 - Prob. 14QCh. 10 - Prob. 15QCh. 10 - Prob. 16QCh. 10 - Prob. 17QCh. 10 - Which of the following best describes Accrued...Ch. 10 - Prob. 2MCCh. 10 - Prob. 3MCCh. 10 - Prob. 4MCCh. 10 - Which of the following does not impact the...Ch. 10 - Which of the following is false when a bond is...Ch. 10 - To determine if a bond will be issued at a...Ch. 10 - A bond is issued at a price of 103 and retired...Ch. 10 - In a recent year. Land O Lakes, Inc., reported (in...Ch. 10 - Prob. 10MCCh. 10 - Recording Unearned Revenues A local theater...Ch. 10 - Prob. 10.2MECh. 10 - Prob. 10.3MECh. 10 - Reporting Payroll Tax Liabilities Refer to M10-3....Ch. 10 - Prob. 10.5MECh. 10 - Prob. 10.6MECh. 10 - Prob. 10.7MECh. 10 - Prob. 10.8MECh. 10 - Prob. 10.9MECh. 10 - Prob. 10.10MECh. 10 - Recording Bonds Issued at Face Value Schlitterbahn...Ch. 10 - Prob. 10.12MECh. 10 - Computing the Debt-to-Assets Ratio and the Times...Ch. 10 - Analyzing the Impact of Transactions on the...Ch. 10 - Prob. 10.15MECh. 10 - Prob. 10.16MECh. 10 - Prob. 10.17MECh. 10 - Prob. 10.1ECh. 10 - Recording a Note Payable through Its Time to...Ch. 10 - Recording Payroll Costs McLoyd Company completed...Ch. 10 - Recording Payroll Costs with and without...Ch. 10 - Prob. 10.5ECh. 10 - Determining and Recording the Financial Statement...Ch. 10 - Preparing Journal Entries to Record Issuance of...Ch. 10 - Preparing Journal Entries to Record Issuance of...Ch. 10 - Prob. 10.9ECh. 10 - Prob. 10.10ECh. 10 - (Supplement 10A) Recording the Effects of a...Ch. 10 - Prob. 10.12ECh. 10 - Prob. 10.13ECh. 10 - Prob. 10.14ECh. 10 - (Supplement 10B) Recording the Effects of a...Ch. 10 - Prob. 10.16ECh. 10 - Determining Financial Effects of Transactions...Ch. 10 - Recording and Reporting Current Liabilities with...Ch. 10 - Recording and Reporting Current Liabilities...Ch. 10 - Prob. 10.4CPCh. 10 - Determining Financial Statement Reporting of...Ch. 10 - Prob. 10.6CPCh. 10 - (Supplement 10B) Recording Bond Issuance and...Ch. 10 - Prob. 10.8CPCh. 10 - (Supplement 10A) Completing an Amortization...Ch. 10 - (Supplements 10B or 10C) Completing an...Ch. 10 - Prob. 10.1PACh. 10 - Prob. 10.2PACh. 10 - Recording and Reporting Current Liabilities...Ch. 10 - Prob. 10.4PACh. 10 - Prob. 10.5PACh. 10 - Prob. 10.6PACh. 10 - Prob. 10.7PACh. 10 - Prob. 10.8PACh. 10 - Prob. 10.1PBCh. 10 - Recording and Reporting Current Liabilities with...Ch. 10 - Prob. 10.3PBCh. 10 - Prob. 10.4PBCh. 10 - Recording and Explaining the Early Retirement of...Ch. 10 - Prob. 10.6PBCh. 10 - (Supplement 10B) Recording Bond Issue, Interest...Ch. 10 - (Supplement 10C) Recording Bond Issue, Interest...Ch. 10 - Prob. 10.1COPCh. 10 - Prob. 10.1SDCCh. 10 - Prob. 10.2SDCCh. 10 - Prob. 10.4SDCCh. 10 - Prob. 10.5SDCCh. 10 - Prob. 10.6SDCCh. 10 - Prob. 10.7SDCCh. 10 - Prob. 10.8SDCCh. 10 - (Supplement 10C) Preparing a Bond Amortization...Ch. 10 - Prob. 10.1CC
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