Answered: (1) (2) Cash Paid (3) Interest (4)…

(1) (2) Cash Paid (3) Interest (4) Decrease in (5) Carrying Value Period for Interest Expense Carrying Value Issue date $76,860 1 $2,450 $2,306 $144 76,716 2,450 2,301 149 76,567 2.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Presented below is a partial amortization schedule for Discount Pizza.1. Record the bond issue assuming the face amount of bonds payable is $70,000. 2. Record the first interest payment. 3. Explain why interest expense increases each period.
The debt is amortized by the periodic payment shown. Compute (a) the number of payments required to amortize the debt; (b) the outstanding principal at the time indicated. Payment Interval Conversion Debt PrincipalDebt Payment $14,000 Outstanding Principal After: 7th payment Interest Rate Period $875 1 month 12% monthly (a) The number of payments required to amortize the debt is. (Round the final answer up to the nearest whole number. Round all intermediate values to six decimal places as needed.) (b) The outstanding principal is $. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
Calculate the monthly payments for each of the following $119,600 mortgage loans. Assume no prepayments. a. 30-year fixed at 7.25 percent b. 15-year fixed at 6.25 percent c. 20-year fixed at 6.75 percent Note: Round intermediate computations to at least five (5) decimal places. Click on the table icon to view the Monthly Installment Loan Payment Factor (MILPF) table: a. The monthly payment, PMT, on the 30-year loan is $ (Round to the nearest cent.)
Question 6: What is the earnings threshold over which an employee whose filing status is Married Filing Separately will be subject to the additional Medicare tax? Answer: А. O $117,000 В. O $125,000 С. O S200,000 D. O $250,000
On the first day of its fiscal year, Jacinto Company issued $14,700,000 of five-year, 8% bonds to finance its operations of producing and selling home improvement products. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 9%, resulting in Jacinto Company receiving cash of $14,118,450. a. Journalize the entries to record the following: 1. Issuance of the bonds. 2. First semiannual interest payment. The bond discount amortization is combined with the semiannual interest payment. 3. Second semiannual interest payment. The bond discount amortization is combined with the semiannual interest payment. If an amount box does not require an entry, leave it blank. Round your answers to the nearest dollar. Cash 1. 14,118,450 Discount on Bonds Payable 581,550 Bonds Payable 14,700,000 2. Interest Expense 529,845 Discount on Bonds Payable v 581,155 Cash V 588,000 Interest Expense 3. 529,845 Discount on Bonds Payable 58,155 Cash 588,000
7.Compute the principal (in $) for the loan. Use ordinary interest when time is stated in days. Principal Rate (%) Time Interest $ 7 1 1 2 years $735
What account would be debited (1), what account would be credit (2), and what amount would be paid to record the journal entry for each interest payment based on a $200,000 five-year, 10% bond and the bond was issued at $192,462 (11%) and interest is paid semiannually? JOURNAL Page 25 DATE DESCRIPTION P.REF. DEBIT CREDIT (1) ? (2) ? (1) Interest Expense debit $11,000, and (2) Cash credit $11,000 (1) Interest Expense debit $10,000 and (2) Cash credit $10,000 (1) Cash debit $20,000 and (2) Interest Expense credit $20,000 (1) Cash debit $22,000, and (2) Interest Expense credit $22,000
An 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?
A borrower has two alternatives for a loan: (1) issue a $360,000, 60-day, 5% note or (2) issue a $360,000, 60-day note that the creditor discounts at 5%. a. Compute the amount of the interest expense for each option. b. Determine the proceeds received by the borrower in each situation. c. Which alternative is more favorable to the borrower? Explain.
Amortize Discount by Interest Method On the first day of its fiscal year, Ebert Company issued $12,000,000 of 5-year, 11% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 12%, resulting in Ebert Company receiving cash of $11,558,459. The company uses the interest method. a. Journalize the entries to record the following: 1. Sale of the bonds. Round amounts to the nearest dollar. If an amount box does not require an entry, leave it blank. 2. First semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. 3. Second semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry. leave it blank.
An important application of compound interest involves amortized loans. Some common types of amortized loans are automobile loans, home mortgage loans, and business loans. Each loan payment consists of interest and repayment of principal. This breakdown is often developed in an amortization schedule. Interest is largest in the first period and declines over the life of the loan, while the principal repayment is smallest in the first period and it increases thereafter. Quantitative Problem: You need $11,000 to purchase a used car. Your wealthy uncle is willing to lend you the money as an amortized loan. He would like you to make annual payments for 5 years, with the first payment to be made one year from today. He requires a 5% annual return. a. What will be your annual loan payments? Do not round intermediate calculations. Round your answer to the nearest cent. $ b. How much of your first payment will be applied to interest and to principal repayment? Do not round intermediate…