Amortize discount by Interest methodInstructionsChart of AccountsJournalAdditional QuestionFinal QuestionInstructionsOn January 1, the first day of its fiscal year, Ebert Company issued $76,500,000 of 10-year, 4% bonds to finance its operations. Interest is payable semiannually. Thebonds were issued at a market (effective) interest rate of 5%, resulting in Ebert Company receiving cash of $70,537,070. The company uses the interest method.Required:A. Journalize the entries to record the following transactions. Refer to the Chart of Accounts for exact wording of account tites.1. Sale of the bonds.2. First semiannual interest payment, including amortization of discount Round to the nearest dollar.3. Second semiannual interest payment including amortization of discount Round to the nearest dollar.B. Compute the amount of the bond interest expense for the first year.C. Explain why the company was able to issue the bonds for only $70,537,070 rather than for the face amount of $76,500,000.PreviousNextCheck My Work 3 more Check My Work uses remaining.

A. Prepare journal entry to record sale of bonds and first semiannual interest payment and second…

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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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Bond Premium, Entries for Bonds Payable Transactions Instructions Present Value Tables Chart of Accounts Journal Final Questions Instructions O'Halloran Inc. produces and sells outdoor equipment. On July 1, Year 1, O'Halloran Inc. issued $32,000,000 of six-year, 8% bonds at a market (effective) interest rate of 7%, receiving cash of $33,546,022. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.* 2. Journalize the entries to record the following:* a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. b. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. 3. Determine the total interest…
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Amortize Discount by Interest Method On the first day of its fiscal year, Ebert Company issued $25,000,000 of 5-year, 9% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 11%, resulting in Ebert receiving cash of $23,115,584. The company uses the interest method. a. Journalize the entries to record the following: 1. Sale of the bonds. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Cash Discount on Bonds Payable Bonds Payable 2. First semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Interest Expense Discount on Bonds Payable Cash 3. Second semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Interest Expense Discount on Bonds Payable Cash b. Compute the amount of…
Entries for issuing bonds and amortizing discount by straight-line method On the first day of its fiscal year, Chin Company issued $15,000,000 of 5-year, 6% bonds to finance its operations of producing and selling home improvement products. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 7%, resulting in Chin receiving cash of $14,376,255. a. Journalize the entries to record the following: 1. Issuance of the bonds. 2. First semiannual interest payment. The bond discount is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) 3. Second semiannual interest payment. The bond discount is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) If an amount box does not require an entry, leave it blank. 2. 3. b. Determine the amount of the bond interest expense for the first year. c. Why was the company able to issue the bonds for only $14,376,255 rather than for the face…
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