Questions # 9-13 are based on the following:Jolly Old Co. issued 8% bonds with a face amount of $900,000 on January 1, 2021. The bonds mature onDecember 31, 2024 (4 years). For bonds of similar risk and maturity the market yield was 10%. Interest ispaid semiannually on June 30 and December 31.Date1/1/20216/30/202112/31/20216/30/202212/31/20226/30/202312/31/20236/30/202412/31/2024Payment36,00036,00036,00036,00036,00036,00036,00036,000EffectiveInterest42,09242,39642,71643,05243,40443,77544,16344,57012. What is the bond price of this issue?A. $847,924B. $841,832Increase inBalance6,0926,3966,7167,0527,4047,7758,1638,57010. What is the interest expense for the first year of the bonds?A. $72,000B. $12,488C. $84,488D. $42,39611. How much of the discount is amortized in the first year?A. $72,000B. $42,396C. $84,488D. $12,4889. What amount is debited to the Discount on Bonds Payable account on January 1, 2021?A. $58,168B. $36,000C. $841,832D. $900,000OutstandingBalanceC. $900,000D. Cannot be determined without additional information.841,832847,924854,320861,036868,088875,492883,267891,430900,000

Bonds are said to be issued at discount when the contract rate or stated interest rate is less than…

8% has mature December 31, 2024 (4 years). For bonds of similar risk and maturity the market yield was 10%. Interest is paid semiannually on June 30 and December 31. Date 1/1/2021 6/30/2021 36,000 12/31/2021 36,000 6/30/2022 36,000 12/31/2022 36,000 6/30/2023 36,000 36,000 36,000 36,000 12/31/2023 6/30/2024 12/31/2024 Payment Effective Interest 42,092 42,396 42,716 43,052 43,404 C. $84,488 D. $12,488 43,775 44,163 44,570 Increase in Outstanding Balance Balance 841,832 847,924 854,320 861,036 868,088 875,492 883,267 891,430 900,000 6,092 6,396 6,716 7,052 7,404 7,775 8,163 8,570 9. What amount is debited to the Discount on Bonds Payable account on January 1, 2021? A. $58,168 B. $36,000 C. $841,832 D. $900,000 10. What is the interest expense for the first year of the bonds? A. $72,000 B. $12,488 C. $84,488 D. $42,396 11. How much of the discount is amortized in the first year? A. $72,000 B. $42,396 12. What is the bond price of this issue? A. $847,924 B. $841,832 C. $900,000 D. Cannot be determined without additional information.

8% has mature December 31, 2024 (4 years). For bonds of similar risk and maturity the market yield was 10%. Interest is paid semiannually on June 30 and December 31. Date 1/1/2021 6/30/2021 36,000 12/31/2021 36,000 6/30/2022 36,000 12/31/2022 36,000 6/30/2023 36,000 36,000 36,000 36,000 12/31/2023 6/30/2024 12/31/2024 Payment Effective Interest 42,092 42,396 42,716 43,052 43,404 C. $84,488 D. $12,488 43,775 44,163 44,570 Increase in Outstanding Balance Balance 841,832 847,924 854,320 861,036 868,088 875,492 883,267 891,430 900,000 6,092 6,396 6,716 7,052 7,404 7,775 8,163 8,570 9. What amount is debited to the Discount on Bonds Payable account on January 1, 2021? A. $58,168 B. $36,000 C. $841,832 D. $900,000 10. What is the interest expense for the first year of the bonds? A. $72,000 B. $12,488 C. $84,488 D. $42,396 11. How much of the discount is amortized in the first year? A. $72,000 B. $42,396 12. What is the bond price of this issue? A. $847,924 B. $841,832 C. $900,000 D. Cannot be determined without additional information.

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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