Yale Corporation issued $60,000, 8% (cash interest payable semiannually on June 30 and December 31) 10-year bonds dated and sold on January 1. Yale amortizes any bond discount or premium using the effectiveinterest amortization method and bond issuance costs are $1,500. If the bonds were sold to yield 9%, provide journal entries to be made at each of the following dates.a. January 1, for issuance of bonds.b. June 30, for the first interest payment.• Note: Round your answers to the nearest whole dollar.Datea. Jan. 1Account NameCashDiscount on Bonds PayableBonds PayableTo record bond issuance.b. June 30 Interest ExpenseCashDiscount on Bonds PayableTo record interest payment.<>Dr.54,5975,40302,45700Cr.0060,00002,40057

Financial liabilities should be recognized at a market rate of interest. If the market rate of…

Answered: ale Corporation issued $60,000, 8%…

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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Diaz Company issued bonds with a face value of $180,000 on January 1, Year 1. The bonds had a stated interest rate of 7 percent and a five-year term. Interest is paid in cash annually, beginning December 31, Year 1. The bonds were issued at 98. The straight- line method is used for amortization. Required a. Use a financial statements model to demonstrate how (1) the January 1, Year 1, bond issue and (2) the December 31, Year 1, recognition of interest expense, including the amortization of the discount and the cash payment, affect the company's financial statements. b. Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, Year 1. c. Determine the amount of interest expense reported on the Year 1 income statement. d. Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, Year 2 e. Determine the amount of interest expense reported on the Year 2 income statement. Complete…
On January 1, a company issued and sold a $400,000, 7%, 10-year bond payable, and received proceeds of $396,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The journal entry to record the first interest payment is: Multiple Choice Debit Bond Interest Expense $13,800; debit Discount on Bonds Payable $200; credit Cash $14,000. Debit Bond Interest Expense $28,000; credit Cash $28,000. Debit Bond Interest Expense $14,200; credit Cash $14,000; credit Discount on Bonds Payable $200. Debit Bond Interest Expense $14,000; credit Cash $14,000.
On January 1, Year 1, Sheffield Company issued bonds with a face value of $500,000, a term of ten years, and a stated interest rate of 5%. The bonds were issued at 104, and interest is payable each December 31. Sheffield uses the straight-line method to amortize bond discounts and premiums. What is the carrying value of the bonds at December 31, Year 4? Multiple Choice O O O O $508,000 $500,000 $512,000 $510,000
On January 1, Topeka Outfitters issued $175,000 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 Topeka Outfitters? 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?
On April 1, Year 1, Brandi Corporation issued $20,000,000 of 5-year, 9% bondsat a market interest rate of 8%, receiving cash of $20,811;010. Interest ispayable semiannually on April 1 and October 1. Journalize the entries to recordthe following:a. Issuance of the bonds on April 1, Year 1b. First interest payment on October 1, Year 1, and the amortization of bond premium for 2 months, using the straight-line method. how would I do part b since october 1 is 6 months away from april 1 but it says amortization of the bond premium for 2 months?
On May 1, Holiday Company issued $200,000, 9%, 10-year bonds for $213,591 when the market rate was 8%. Prepare the general journal entry for the first semiannual interest payment and bond premium amortization on November 1, using the effective interest method. Round all amounts to the nearest dollar.
On June 30, Jamison Company issued $2,500,000 of 10-year, 9% bonds, dated June 30, for $2,580,000. Present entries to record the following transactions. Issuance of bonds. (a) Payment of first semiannual interest on December 31 (record separate entry from premium (b) amortization). (C) Amortization by straight-line method of bond premium on December 31.
On January 1, Innovative Solutions, Inc., issued $200,000 in bonds at face value. The bonds havea stated interest rate of 6 percent. The bonds mature in 10 years and pay interest once per year onDecember 31.Required:1. Prepare the journal entry to record the bond issuance.2. Prepare the journal entry to record the first interest payment on December 31. Assume nointerest has been accrued earlier in the year.3. Assume the bonds were retired immediately after the first interest payment at a quoted priceof 101. Prepare the journal entry to record the early retirement of the bonds.
On January 1, Topeka Outfitters issued $175,000 of 6%, 3-year bonds when the market rate of interest was 10%. The bonds pay interest semiannually on June 30 and December 31. Prepare an amortization table for the bond issue.
Yale Corporation issued $36,000 , 8 % ( cash interest payable semiannually on June 30 and December 31) 10-year bonds dated and sold on January 1. Yale amortizes any bond discount or premium using the effective interest amortization method and bond issuance costs are $900. If the bonds were sold to yield 9%, provide journal entries to be made at each of the following dates. a. January 1, for issuance of bonds. b. June 30, for the first interest payment. • Note: Round your answers to the nearest whole dollar. Date a. Jan. 1 Account Name Cash Discount and Debt Issuance Costs Bonds Payable To record bond issuance. b. June 30 Interest Expense Discount on Bonds Payable Cash To record interest payment. V V V V ✓ V Dr. 32,758 3,242 0 1,474 0 0 Cr. 0✔ 0✓ 36,000 ✓ 0x 30 x 1,440
Paulson Company issues 6%, four-year bonds, on January 1 of this year, with a par value of $200,000 and semiannual interest payments. Use the following bond amortization table and prepare journal entries to record (a) the issuance of bonds on January 1, (b) the first interest payment on June 30, and (c) the second interest payment on December 31. Semiannual Period-End Unamortized Discount Carrying Value (0) January 1, issuance $13,466 $186,534 (1) June 30, first payment 11,782 188,218 (2) December 31, second payment . 10,098 189,902
Franklin corporation issues $86,000, 10%, 5 year bonds on January 1st for $89,900. Interest paid semi-annually on January 1st and July 1st. Is Franklin uses the straight line method of amortization of bond premium, the amount of bond interest expense to be recognized on July 1st is

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