1. Sun Corporation markets a 10-year bond issue dated January 1, 2020. The bonds pay interest semi-annually on January 1 and July 1. If these bonds are sold on August 1, 2020, how many months of accrued interest must be paid by the purchaser and over how many months would any discount on the bonds be amortized? * a. Months accrued: 7, Amortization period: 120 months b. Months accrued: 7, Amortization period: 113 months c. Month accrued: 1, Amortization period: 120 months d. Month accrued: 1, Amortization period: 113 months

1. Sun Corporation markets a 10-year bond issue dated January 1, 2020. The bonds pay interest semi-annually on January 1 and July 1. If these bonds are sold on August 1, 2020, how many months of accrued interest must be paid by the purchaser and over how many months would any discount on the bonds be amortized? * a. Months accrued: 7, Amortization period: 120 months b. Months accrued: 7, Amortization period: 113 months c. Month accrued: 1, Amortization period: 120 months d. Month accrued: 1, Amortization period: 113 months

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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On January 1, a company issues bonds: Par Value: $2,000,000 Bond Term, in years: 10 Interest Payments: 2x/year Stated Interest Rate: 8% Market Interest Rate: 6% How much will the bond sell for? What dollar amount will be booked to Bonds Payable on the date of sale? How much is Interest Expense on the FIRST interest payment? How much is the amortization of the Bond Premium on the FIRST interest payment? How much is the Interest Expense on the SECOND interest payment? How much is the Amortization of the Premium on the SECOND interest payment?
$60,000, 5-year bonds, with a 10% stated rate of interest are issued at $55,584 on January 1, 2021. Interest payments are made semi-annually on June 30 and December 31. How much interest expense would be recognized on the first interest payment date? Assume straight-line amortization is used. Round your answer to the nearest dollar.
E-Tech Initiatives Limited plans to issue $650,000, 10-year, 7.00 percent bonds. Interest is payable annually on December 31. All of the bonds will be issued on January 1, 2019. Show how the bonds would be reported on the January 2, 2019, balance sheet if they are issued at 105. How would I create a partial balance sheet with the carrying vaule for the problem above?
3. No adjustment has yet been made for accrued interest receivable on a bondreceivable for the year ended December 31 2023. Regular interest payments aremade on February 28, May 31, August 31 and November 30 with interest revenuebeing recorded at the time of the payment. The balance of the bond receivableis $240,000 and the annual interest rate is 10%. The balance of the interestreceivable account is $2,000 which is unchanged from the previous year.I. Discuss how the above should be treated in the financial statements for theyear ended December 31 2023. i.e. explanation, workings and journal entries,where applicable.
3. On July 1, 2018, Volunteer Inc. issued bonds with a $500,000 face value at 108.0 and the 5-year bonds have a 10% interest rate in a market with a rate of 8%. Interest is payable semi-annually and the effective-interest method is used for amortization. Prepare journal entries for the following transactions. Premium on Bonds Payable Interest Income Discount on Bonds Payable Interest Expense Cash Bonds Payable PLEASE NOTE: For each of the following journal entries there is one account's treatment (DR or CR), that depends on whether it is a bond issued at a premium or a discount. You are to identify if it is a DR or a CR. You must enter the account names exactly as written above and all dollar amounts will be rounded to whole dollars with "$" and commas as needed (i.e. $12,345). July 1, 2018: to record issuing the bonds DR DR/CR ? CR Dec. 31, 2018: to record the amortization & payment of interest to bondholders: DR…
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how to calculate this? thank you
On January 1, 2019, $40 million face amount of 5%, 20-year bonds were issued. The bonds pay interest on a semiannual basis on June 30 and December 31 each year. The market interest rates were slightly higher than 5% when the bonds were sold. Were these bonds issued at a premium or discount? Will the semiannual interest expense on these bonds be more than or less than the amount of interest paid on each payment date? Multiple Choice The bonds were issued at a discount, and the semiannual interest expense will be more than the amount of interest paid on each payment date. The bonds were issued at a discount, and the semiannual interest expense will be less than the amount of interest paid on each payment date. The bonds were issued at a premium, and the semiannual interest expense will be more than the amount of interest paid on each payment date. The bonds were issued at a premium, and the semiannual interest expense will be less than the amount of interest paid on each payment date.
Kingbird corporation issued $460,000 8% 20 year bond on January 1,2022 for $418,008.this price resulted in an effective interest rate of 9% on the bonds. Interest is payable annually on January 1. Kingbird uses the effective interest method to amortize bond premium or discount. Prepare the journal entry to record the payment of interest on January 1 2023
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26. Bonds Issued at a Premium (Effective Interest) Charger Battery issued $100,000 of 11%, seven-year bonds on December 31, 2022, for $104,868. Interest is paid annually on December 31. The market rate of interest is 10%. Required: Prepare the amortization table using the effective interest rate method. For those boxes in which no entry is required, leave the box blank. If the amount is zero, enter "0". If required, round your answers to the nearest whole dollar.