Amortize Premium by Interest Method Shunda Corporation wholesales parts to appliance manufacturers. On January 1, Shunda issued $30,000,000 of five-year, 10% bonds at a market (effective) interest rate of 8%, receiving cash of $32,433,150. Interest is payable semlannually. Shunda's fiscal year begins on January 1. 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 armount box does not require an entry, leave it blank. 2. First semiannual interest payment, including amortization of premium. 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 premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. b. Determine the bond interest expense for the first year. Round to the nearest dollar. Annual interest paid Less premium amortized Previous

Amortize Premium by Interest Method Shunda Corporation wholesales parts to appliance manufacturers. On January 1, Shunda issued $30,000,000 of five-year, 10% bonds at a market (effective) interest rate of 8%, receiving cash of $32,433,150. Interest is payable semlannually. Shunda's fiscal year begins on January 1. 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 armount box does not require an entry, leave it blank. 2. First semiannual interest payment, including amortization of premium. 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 premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. b. Determine the bond interest expense for the first year. Round to the nearest dollar. Annual interest paid Less premium amortized Previous

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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Amortize discount by Interest method Instructions Chart of Accounts Journal Additional Question Final Question Instructions On 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. The bonds 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…
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