3. On January 1, a company issues bonds dated January 1 with a par value of $350,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 6% and the bonds are sold for $364,930. The journal entry to record the first interest payment using the effective interest method of amortization is: (Rounded to the nearest dollar.) A. Debit Interest Payable $12,250; credit Cash $12,250 B. Debit Bond Interest Expense $10,948; debit Discount on Bonds Payable $1,302; credit Cash $12,250 C. Debit Bond Interest Expense 13,743; credit Premium on Bonds Payable $1,493; credit Cash $12,250 D. Debit Bond Interest Expense $10,948; debit Premium on Bonds Payable $1,302; credit Cash $12,250 E. Debit Bond Interest Expense $10,757; debit Premium on Bonds Payable $1,493; credit Cash $12,250

3. On January 1, a company issues bonds dated January 1 with a par value of $350,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 6% and the bonds are sold for $364,930. The journal entry to record the first interest payment using the effective interest method of amortization is: (Rounded to the nearest dollar.) A. Debit Interest Payable $12,250; credit Cash $12,250 B. Debit Bond Interest Expense $10,948; debit Discount on Bonds Payable $1,302; credit Cash $12,250 C. Debit Bond Interest Expense 13,743; credit Premium on Bonds Payable $1,493; credit Cash $12,250 D. Debit Bond Interest Expense $10,948; debit Premium on Bonds Payable $1,302; credit Cash $12,250 E. Debit Bond Interest Expense $10,757; debit Premium on Bonds Payable $1,493; credit Cash $12,250

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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Similar questions

On January 1, a company issues bonds dated January 1 with a par value of $600,000. The bonds mature in 3 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The bonds are sold for $564,000. The journal entry to record the first interest payment using straight-line amortization is:
On January 1, Bramble Corp. issued 10 year, S6,000,000, 9% bonds for $6,842,830. The market rate of interest for these bonds is 79%. Interest is payable annually on December 31 (note that these bonds are ANNUAL bonds). Bramble uses the effective-interest method of amortizing bond premium. At the end of the second year, Bramble should report unamortized bond premium of Group of answer choices $722.000 $716,556 5691,933 $319,093
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Milan Company issued bonds with a face value of $463,000 on January 1, Year 1. The bonds had a 6 percent stated rate of interest and a six-year term. The bonds were issued at face value. Interest is payable on an annual basis. Required a. What total amount of interest will Milan Company pay in Year 1 if bond interest is paid annually each December 31? b. What total amount of interest will Milan Company pay in Year 1 if bond interest is paid semiannually each June 30 and December 31? (Do not round intermediate calculations.) a. Total amount of interest b. Total amount of interest
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F.
On January 1, Shanghai Fashions issued $325,000 of 6%, 3-year bonds when the market rate of interest was 10%. The bonds pay interest semiannually on June 30 and December 31. A. How much are the proceeds that Shanghai Fashions Company will receive on the issue date of the bonds? B. Prepare an amortization table for the bond issue. C. If the bonds are retired at the end of Year 2 at 104.5% of the maturity value, how much gain or loss on retirement will be reported?
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