3. Identify and analyze the effect of the payment of interest and the amortization of premium on December 31, 2019 (the third year) Activity Accounts Statement(s) How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Balance Sheet Income Statement Stockholders' Net Assets Liabilities Equity Revenues Expenses Income Determine the balance sheet presentation of the bonds on December 31, 2019. Stacy Company Balance Sheet (Partial) December 31, 2019 Bonds payable Discount on bonds payable
3. Identify and analyze the effect of the payment of interest and the amortization of premium on December 31, 2019 (the third year) Activity Accounts Statement(s) How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Balance Sheet Income Statement Stockholders' Net Assets Liabilities Equity Revenues Expenses Income Determine the balance sheet presentation of the bonds on December 31, 2019. Stacy Company Balance Sheet (Partial) December 31, 2019 Bonds payable Discount on bonds payable
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
Transcribed Image Text:3. Identify and analyze the effect of the payment of interest and the amortization of premium on December 31, 2019 (the third year)
Activity
Accounts
Statement(s)
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.
Balance Sheet
Income Statement
Stockholders'
Net
Assets
Liabilities
Equity
Revenues
Expenses
Income
Determine the balance sheet presentation of the bonds on December 31, 2019.
Stacy Company
Balance Sheet (Partial)
December 31, 2019
Bonds payable
Discount on bonds payable
Transcribed Image Text:Amortization of Premium
Stacy Company issued five-year, 10% bonds with a face value of $10,000 on January 1, 2017. Interest is paid annually on December 31. The market rate of interest of January 1, 2017, is 8% and the proceeds from the bond issuance equal $10,799.
Required:
1. Prepare a five-year table to amortize the premium using the effective interest method. Enter all amounts as positive numbers. If required, round all calculations and final answers to the nearest dollar.
*Note: Due to rounding you will have to adjust the interest expense for 12/31/21 so the carrying value equals $10,000.
Stacy Company
Premium Amortization
Effective Interest Method of Amortization
Date
Cash Interest 10%
Interest Expense 8%
Premium Amortized
Carrying Value
1/01/17
12/31/17
12/31/18
12/31/19
12/31/20
12/31/21
Totals
2. What is the total interest expense over the life of the bonds? cash interest payment? premium amortization?
Interest expense
Cash interest payment
Premium amortized
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