(a)
Introduction:
Under
To prepare:
Amortization table.
(b)
Introduction:
A bond is long term liability wherein the issuer is entitled to pay the face value of the bond at the time of maturity and make interest payments periodically. It is a breakdown of large debt to borrow as it may be too large for an individual lender.
To discuss:
If the constructed factory will be recorded as an asset in the company’s books.
(c)
Introduction:
A bond is long term liability wherein the issuer is entitled to pay the face value of the bond at the time of maturity and make interest payments periodically. It is a breakdown of large debt to borrow as it may be too large for an individual lender.
To discuss:
If the bonds are to be recorded as a liability in the company’s books.
Want to see the full answer?
Check out a sample textbook solutionChapter 9 Solutions
Cornerstones of Financial Accounting
- The Town of Presho had the following transactions related to the construction of a new courthouse. (a) 1/2/2020: 20 year 4% General Obligation Serial Bonds with a face value of $6,000,000 are issued at 101. Interest and principle payments are made on Jan. 1 and July 1 of each year. The premium was transferred into the Debt Service Fund. The General Fund will fully fund each payment as they become due. (b) 3/1/2020: Land is purchased for a new courthouse at a cost of $250,000. (c) 3/1/2020: A contract is signed for construction of the new courthouse in the amount of $5,400,000. (d) 6/15/2020: Cash ($210,000) sufficient to cover interest and principal payments for the year less the premium is transferred from the General Fund. (e) 7/1/2020: Interest ($120,000) and principal ($150,000) are paid on the courthouse fund serial bonds. (f) 12/1/2020: Receive an invoice for progress completed to date on the courthouse construction project in the amount of $4,700,000. (g) 12/27/2020: $117,000 is…arrow_forwardDengerarrow_forwardSubject : Accountingarrow_forward
- Current Attempt-in Progress Swifty Co. is building a new hockey arena at a cost of $2,360,000. It received a downpayment of $510,000 from local businesses to support the project, and now needs to borrow $1,850,000 to complete the project. It therefore decides to issue $1,850,000 of 11.0%, 10-year bonds. These bonds were issued on January 1, 2024, and pay interest annually on each January 1. The bonds yield 10%. Click here to view factor table. (a) Prepare the journal entry to record the issuance of the bonds on January 1, 2024. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places, e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Date January 1, 2024 Account Titles and Explanation Debit Creditarrow_forwardSolve in text formarrow_forwardJian Kang Co. is building a new hockey arena at a cost of $6,000,000. It received a down payment of $2,000,000 from local businesses to support the project and now needs to borrow $4,000,000 to complete the project. It therefore decides to issue $4,000,000 of 10.5%, 10-year bonds. These bonds were issued on January 1, 2018, and pay interest annually on each January 1. The bonds yield 10%. Instructions:a. Prepare a bond amortization schedule.b. Prepare the journal entries needed in 2018 and 2019. Assume that on July 1, 2021, Jian Kang Co. retires half of the bonds at a cost of $1,065,000 and the accrued interest. Prepare the journal entry to record this retirement.arrow_forward
- Required information [The following information applies to the questions displayed below.] On January 1, 2021, Splash City issues $360,000 of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 8%, the bonds will issue at $335,539. Required: 1. Complete the first three rows of an amortization table. (Round your intermediate and final answers to the nearest whole dollar.) Change in Carrying Value Carrying Value Interest Date Cash Paid Expense 1/1/21 $ 335,539 6/30/21 12/31/21arrow_forwardRequired information [The following information applies to the questions displayed below.] On January 1, 2021, Frontier World issues $40.3 million of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. The proceeds will be used to build a new ride that combines a roller coaster, a water ride, a dark tunnel, and the great smell of outdoor barbeque, all in one ride. 3-a. If the market rate is 9%, calculate the issue price. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors. Enter your answers in dollars not in millions. Round "Market interest rate" to 1 decimal place. Round your final answers to the nearest whole dollar.) Bond Characteristics Face amount Interest payment Periods to maturity Market interest rate Issue price 3-b. The bonds will issue at A Discount A Premium O Face amount $ Amount 40,300,000arrow_forwardPlease do not give image formatarrow_forward
- Subject: acountingarrow_forward(B) The City of Presho had the following transactions related to the construction of a new courthouse. (1) 1/2/2017: 20 year 4% General Obligation Serial Bonds with a face value of $5,000,000 are issued at 102. Interest and principle payments are made on Jan. 1 and July 1 of each year. The premium was transferred into the Debt Service Fund. The General Fund will fully fund each payment as they become due. (2) 3/1/2017: Land is purchased for a new courthouse at a cost of $300,000. (3) 3/1/2017: A contract is signed for construction of the new courthouse in the amount of $4,300,000. (4) 6/15/2017: Cash ($225,000) sufficient to cover interest and principal payments for the year less the premium is transferred from the General Fund. (5) 7/1/2017: Interest ($100,000) and principal ($125,000) are paid on the courthouse fund serial bonds. (6) 12/1/2017: Receive an invoice for progress completed to date on the courthouse construction project in the amount of $3,700,000. (7) 12/27/2017: $97,500…arrow_forwardSubject: acountingarrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningFinancial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning