A company issued 10%, 5-year bonds with a par value of $2,190,000, on January 1. Interest is to be paid semiannually each June 30and December 31. The bonds were sold at $2,333,290 based on an annual market rate of 8%. The company uses the effective interestmethod of amortization.1. Prepare an amortization table for the first two semiannual payment periods using the format shown below.2. Prepare the journal entry to record the first semiannual interest payment.Enter answers in each of the following tabs.Required 1Required 2Prepare an amortization table for the first two semiannual payment periods using the following format.Note: Round your answers to 2 decimal places.SemiannualPeriod-EndCash Interest PaidBond InterestExpensePremiumAmortizationUnamortizedPremiumCarrying Value06/3012/31

Step 1: Determine the Interest Payment and the Initial Carrying Value of the BondsPar Value:…

Answered: A company issued 10%, 5-year bonds with…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 15MCQ

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Diana Inc. issued $100,000 of its 9%, 5-year bonds for $96,149 when the market rate was 10%. The bonds pay interest semi-annually. Prepare an amortization table for the first three payments.
Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018, and received $540,000. Interest is payable semi-annually. The premium is amortized using the straight-line method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. Dec. 31, 2018: entry to record payment of interest to bondholders C. Dec. 31, 2018: entry to record amortization of premium
Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the market of interest was 9%. The company uses the effective-interest method of amortization. At the end of the year, the company will record ________. A. a credit to cash for $28,733 B. a debit to interest expense for $31,267 C. a debit to Discount on Bonds Payable for $1,267 D. a debit to Premium on Bonds Payable for $1.267
On July 1, a company sells 8-year $250,000 bonds with a stated interest rate of 6%. If interest payments are paid annually, each interest payment will be ________. A. $120,000 B. $60,000 C. $7,500 D. $15,000
Haiku Inc. issued $600,000 of 10-year bonds with a stated rate of 11% when the market rate was 12%. The bonds pay interest semi-annually. Prepare the first three years of an amortization schedule. Assume that the bonds were issued for $565,710.
A company issued 10%, 10-year bonds with a par value of $1,150,000 on January 1, at a selling price of $1,020,300 when the annual market interest rate is 12%. The company uses the effective interest amortization method. Interest is paid semiannually each June 30 and December 31. 1. Prepare an amortization table for the first two payment periods using the following format. 2. Prepare the journal entry to record the first semiannual interest payment. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare an amortization table for the first two payment periods using the following format. Note: Do not round intermediate calculation and round your answers to the 2 decimal places. Semiannual Interest Cash Interest Bond Interest Period Paid Expense 06/30 12/31 Discount Amortization Unamortized Discount Carrying Value $ 102,030.00
On January 1, a company issues bonds dated January 1 with a par value of $400,000. 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 8% and the bonds are sold for $383,793. The journal entry to record the first interest payment using straight-line amortization is:
On January 1, a company issues bonds dated January 1 with a par value of $560,000. The bonds mature in 5 years. The contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The market rate is 9% and the bonds are sold for $537,828. The journal entry to record the second interest payment using the effective interest method of amortization is:
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, 2024, Reyes Recreational Products issued $150,000, 9%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $145,153 to yield an annual return of 10%. Required: 1. Prepare an amortization schedule that determines interest at the effective interest rate 2. Prepare an amortization schedule by the straight-line method. 3. Prepare the journal entries to record interest expense on June 30, 2026, by each of the two approaches. 5. Assuming the market rate is still 10%, what price would a second investor pay the first investor on June 30, 2026, for $15,000 of the bonds? Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 5 Prepare an amortization schedule that determines interest at the effective interest rate. Note: Enter your answers in whole dollars.…
On December 31, Caper, Inc., issued $500,000 of 8% , 9-year bonds for $440,000, yielding an effective interest rate of 10%. Semiannual interest is payable on June 30 and December 31 each year. The firm uses the effective interest method to amortize the discount. Required a. Prepare an amortization schedule showing the necessary information for the first two interest periods. Round amounts to the nearest dollar. b. Prepare the journal entry for the bond issuance on December 31. c. Prepare the journal entry to record the bond interest payment and discount amortization at June 30 of the following year. d. Prepare the journal entry to record the bond interest payment and discount amortization at December 31 of the following year. a. Year at issue 1 Date b. Dec.31 Cash C. Jun.30 Interest Interest Period Paid d. 1 2 $ 0 $ 0 0 Interest Expense To record issuance of bonds. Balance Periodic of Unamortized Amortization Discount 0 $ 0 0 General Journal Description 0$ 0 0 + 수 수 + Book Value of…
On January 1, 2024, Reyes Recreational Products issued $150,000, 9%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $136,028 to yield an annual return of 12%. Required: 1. Prepare an amortization schedule that determines interest at the effective interest rate. 2. Prepare an amortization schedule by the straight-line method. 3. Prepare the journal entries to record interest expense on June 30, 2026, by each of the two approaches. 5. Assuming the market rate is still 12%, what price would a second investor pay the first investor on June 30, 2026, for $18,000 of the bonds?

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