Amortize Discount by Interest MethodOn the first day of its fiscal year, Ebert Company issued $23,000,000 of 5-year, 10% bonds to finance its operations. Interest is payable semiannually. The bonds wereissued at a market (effective) interest rate of 12%, resulting in Ebert receiving cash of $21,307,304. 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.Cash21,307,304Discount on Bonds Payable1,692,696Bonds Payable v23,000,000FeedbackCheck My Work2. 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 vDiscount on Bonds Payable vCash vFeedbackCheck My Work 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 ExpenseDiscount on Bonds Payable vCash vFeedbackCheck My Workb. Compute the amount of the bond interest expense for the first year. Round to the nearest dollar.Annual interest paidDiscount amortizedInterest expense for first year$4FeedbackCheck My Workc. Explain why the company was able to issue the bonds for only $21,307,304 rather than for the face amount of $23,000,000.The bonds sell for less than their face amount because the market rate of interest is greater thanthe contract rate of interest. Investors are not v willing topay the full face amount for bonds that pay a lower contract rate of interest than the rate they could earn on similar bonds (market rate).Feedback

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Amortize Discount by Interest Method On the first day of its fiscal year, Ebert Company issued $23,000,000 of 5-year, 10% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 12%, resulting in Ebert receiving cash of $21,307,304. 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 v 21,307,304 Discount on Bonds Payable v 1,692,696 Bonds Payable 23,000,000 V Feedback Check My Work 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 v Discount on Bonds Payable v Cash v Feedback Check My Work

Amortize Discount by Interest Method On the first day of its fiscal year, Ebert Company issued $23,000,000 of 5-year, 10% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 12%, resulting in Ebert receiving cash of $21,307,304. 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 v 21,307,304 Discount on Bonds Payable v 1,692,696 Bonds Payable 23,000,000 V Feedback Check My Work 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 v Discount on Bonds Payable v Cash v Feedback Check My Work

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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On January 1, $877,000, five-year, 10% bonds, were issued for $850,690. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize the discount on bonds payable, the semiannual amortization amount is a.$43,850 b.$26,310 c.$2,631 d.$5,262
Amortize Discount by Interest Method On the first day of its fiscal year, Ebert Company issued $50,000,000 of 10-year, 7% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 9%, resulting in Ebert Company receiving cash of $43,495,895. The company uses the interest method. a. Journalize the entries to record the following: 1. Sale of the bonds. Round amounts to the nearest dollar. For a compound transaction, if an amount box does not require an entry, leave it blank.
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 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?
Doyle Company issued $362,000 of 10-year, 5 percent bonds on January 1, Year 1. The bonds were issued at face value. Interest is payable in cash on December 31 of each year. Doyle immediately invested the proceeds from the bond issue in land. The land was leased for an annual $52, 500 of cash revenue, which was collected on December 31 of each year, beginning December 31, Year 1. Journal entry worksheet Note: Enter debits before credits. 4 Date Dec 31 5 ü 6 Record the interest expense for bonds payable for Year 2. General Journal C 7 8 Debit Credit >
Un the first day of the current fiscal year, $2,000,000 of 10-year, 7% bonds, with interest payable annually, were sold for $2,125,000. Present the journal entries to record each of the following transactions for the current fiscal year: (a) Issuance of the bonds. Date Account DR CR (b) First annual interest payment on Dec. 31 (record as separate entry from premium amortization). Date Account DR CR (c) Amortization of bond premium for the year, using the straight-line method. Date Account DR CR
Lewis Corporation issued $520,000 of 7%, 10-year bonds payable at a price of 93. The market interest rate at the date of issuance was 8%, and the bonds pay interest semiannually. The journal entry to record the first semiannual interest payment using the effective-interest amortization method is OA OB. O C. Date Date Date Accounts and Explanation Interest Expense Discount on Bonds Payable Cash Accounts and Explanation Interest Expense Discount on Bonds Payable Cash Cach Accounts and Explanation Interest Expense Discount on Bonds Payable Debit 21,944 Debit 23,348 Debit 20,748 Credit 1,144 20,800 Credit 2,548 20,800 Credit 2,548 18 200 4 Next
On January 1, $834,000, 5-year, 10% bonds, were issued for $808,980. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable, what is the semiannual amortization amount? Select the correct answer. $5,004 $2,502 $41,700 O $25,020
Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method On the first day of its fiscal year, Chin Company issued $29,100,000 of five-year, 10% 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 11%, resulting in Chin receiving cash of $28,003,265. a. Journalize the entries to record the following: Issuance of the bonds. First semiannual interest payment. The bond discount is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) 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. b. Determine the amount of the bond interest expense for the first year.
Amortize Discount by Interest Method On the first day of its fiscal year, Ebert Company issued $27,000,000 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 $24,964,830. 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. 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. 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. b. Compute the amount of the bond interest expense for the first year. Round to the nearest dollar. Annual interest paid Discount amortized Interest expense for first…
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 expense for Year 1. 4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is…
On January 1, $954,000, 5-year, 10% bonds, were issued for $925,380. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable, what is the semiannual amortization amount? Select the correct answer. $47,700 $5,724 $28,620 $2,862

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