3. Terry Company is authorized to issue P5,000,000 of 6%, 10- year bonds dated July 1, 2011 with interest payments on June 30 and December 31. When bonds are issued on November 1, 2011, Terry Company received cash of P5,150,000 (excluding interest). a. What is the discount or premium from the issuance of the bonds payable? Indicate whether discount/premium. b. How much is the total interest expense for the whole life of the bond?

3. Terry Company is authorized to issue P5,000,000 of 6%, 10- year bonds dated July 1, 2011 with interest payments on June 30 and December 31. When bonds are issued on November 1, 2011, Terry Company received cash of P5,150,000 (excluding interest). a. What is the discount or premium from the issuance of the bonds payable? Indicate whether discount/premium. b. How much is the total interest expense for the whole life of the bond?

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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2. On June 30, 2018 the market rate of interest is 9%. Ramsey Corporation issues$550,000 of 12%, 20 year bonds payable at $701,813. The bonds pay interest on June 30 and December 31. The company amortizes bond premium using the effective interest method. a. Prepare a bond amortization table for the first 6 years of the bond term b. Record the issuance of the bond payable on June 30, 2018, the payment of interest on Dec. 31, 2018 and June 30, 2019
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[The following information applies to the questions displayed below.]Alexi Co. issued $3.30 million face amount of 5%, 10-year bonds on June 1, 2019. The bonds pay interest on an annual basis on May 31 each year. b-1. Independent of your answer to part a, assume that the proceeds were $2,936,000. Use the horizontal model to show the effect of issuing the bonds. Indicate the financial statement effect. (Enter your answers in whole dollars, not in millions. Enter decreases with a minus sign to indicate a negative financial statement effect.)
Subject:
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