12A. On December 31, 2025, when the market interest rate is 14%, Arnold Corporation issues $150,000 of 12%, 4-yearbonds payable. The bonds pay interest semiannually. Determine the present value of the bonds at issuance.View the Present Value of $1 table.View the Present Value of Ordinary Annuity of $1 table.View the Future Value of $1 table.View the Future Value of Ordinary Annuity of $1 table.Start by calculating the present value of the principal. (Enter factor amounts to three decimal places, X.XXX.)PV of principalValue(XValueXNow calculate the present value of the stated interest. (Enter factor amounts to three decimal places, X.XXX.)Semiannual interestPV of statedinterestXFactor+rate%) x) xFinally, calculate the present value of bonds payable.PV of principal + PV of stated interest***=PFactorPV of bonds payable

The information given are as follows:Market Rate of interest per semi-annual period = 14%/2 = 7%No.…

Answered: 12A. On December 31, 2025, when the…

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, 2024, Christmas Anytime issues $850,000 of 6% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Assume that the market interest rate is 5% and the bonds issue at a premium. 3a. Calculate the issue price of a bond.3b. Complete the first three rows of an amortization schedule. (FV of $1, PV of $1, FVA of $1, and PVA of $1)
On January 1, 2021, Relay Company issued a 3-year, 12% bonds with face value of P3,000,000. Interest is payable annually every December 31 of each year starting December 31, 2021. The effective rate of interest on January 1, 2021 is 18%. PV of P1 @ 18% for 3 period................ 0.6086 PV of an ordinary annuity of P1@ 18% for 3 periods... 2.1743 At what amount shall the bonds be initially recognized of January 1, 2021? O P2,044,896 O P3,000,000 P2,483,088 O P2,608,548
On January 1, 2021, LMN Company issued 10-year bonds with a face amount of P3,000,000 at a stated interest rate of 8% payable annually on January 1. The bonds were priced to yield 10%. Present value factors are as follows: Present value of P1 for 10 periods Present value of an ordinary annuity of P1 for 10 periods At 8%. 0.46326.7101 At 10%0.38556.1446 The total issue price of the bonds was:
On January 1, 2024, Splash City issues $500,000 of 9% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. The market interest rate on the issue date is 10% and the bonds issued at $457,102. Required: 1. Using an amortization schedule, show that the bonds have a carrying value of $458,633 on December 31, 2025. (Round your final answers to nearest whole dollar.)
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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Your Company issued a $150,000 face value bond on January 1, 2020. The 20 year term bond was issued at 102 and had a 4% stated rate of interest that is payable on December 31st of each year. What is the carrying value of the bond after the third interest payment is made? Carrying value = bond face + bond premium
1. On January 1,2020, Kooky Corporation issued a 5-year, 10%, 1,000 of the P 5,000 face value bonds with a yield of 12%. The bonds is payable after five years and interests is payable annually starting December 31,2020. Assuming 1/4 of the bonds were retired at 102 on December 31,2022 after payment of periodic interest, how much is the gain or loss on retirement of the bonds? (For present value factors, do not round off) 2. The following are the balances of the liability accounts of IKARIS Company as of December 31,2021: Accounts payable - P 1,000,000(recognized for purchase of inventories, including a debit balance in the suppliers account of P 150,000) The following are not yet reflected in the balance of accounts payable above: - Upon receipt of the goods on January 1,2022 costing P 175,000, the accounting staff of IKARIS Company recorded the purchase in the accounts. It was determined that the goods were shipped Shipping point on December 31,2021. -Goods with invoice cost of…
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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.
On January 1, 2021, Jackie Company issued 10,000 P5,000 10% four-year bonds at an effective interest rate of 12%. The interest is payable every July 1 and December 31. On June 30, 2023, 6,000 of the bonds were retired at 98. How much is the interest expense for 2021?How much is the discount amortization during 2022?How much is the net effect of the bonds on the 2023 Statement of Comprehensive Income? [Indicate whether it is a gain or loss]How much is the interest expense for 2024?

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