Amortize premlum by Interest mnethodInstructionsChart of AccountsJournalAdditional QuestionFinal QuestionInstructionsShunda Corporation wholesales parts to appliance manufacturers. On January 1, Year 1, Shunda Corporation issued $22,000,000 of five-year, 9% bonds at a marketeffective) interest rate of 7%, receiving cash of $23,829,684. Interest is payable semiannually. Shunda Corporation's fiscal year begins on January 1. The companyuses the interest method.Required:A. Journalize the entries to record the following transactions. Refer to the Chart of Accounts for exact wording of account titles.1. Sale of the bonds.2. First semiannual interest payment, including amortization of premium. Round to the nearest dollar.3. Second semiannual interest payment, including amortization of premium. Round to the nearest dollar.B. Determine the bond interest expense for the first year.C. Explain why the company was able to issue the bonds for $23,829,684 rather than for the face amount of $22,000,000.Check My Work 3 more Check My Work uses remaiingPreviousNextOV 11:

Answered: Amortize premlum by Interest mnethod…

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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On January 1, the first day of its fiscal year, Jacinto Company issued $6,500,000 of six-year, 7% 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 8%, resulting in Jacinto Company receiving cash of $6,194,985. Required: a. Journalize the entries to record the following (refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.): 1. Issuance of the bonds. 2. First semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) 3. Second semiannual interest payment. The bond discount amortization, using…
Show Me How Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method On the first day of its fiscal year, Chin Company issued $25,500,000 of five-year, 11% bonds to finance its operations of producing and selling home improvement products. Interest is payable semiannua at a market (effective) interest rate of 13%, resulting in Chin receiving cash of $23,666,949. eBook 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. 1 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 $23,666,949 rather than for the face…
Entries for Installment Note Transactions On January 1, Year 1, Luzak Company issued a $71,000, 4-year, 11% installment note to McGee Bank. The note requires annual payments of $22,885, beginning on December 31, Year 1. Journalize the entries to record the following. Issued the notes for cash at its face amount. Paid the annual payment on the note, which consisted of interest of $7,810 and principal of $15,075. For a compound transaction, if an amount box does not require an entry, leave it blank. Paid the annual payment on the note, including $2,268 of interest. The remainder of the payment reduced the principal balance on the note. For a compound transaction, if an amount box does not require an entry, leave it blank.
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Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method On the first day of its fiscal year, Chin Company issued $10,000,000 of five-year, 7% 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 8%, resulting in Chin receiving cash of $9,594,415. 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. 1. fill in the blank df302b011ff3040_2 fill in the blank df302b011ff3040_3 fill in the blank df302b011ff3040_5 fill in the blank df302b011ff3040_6…
Liability Transactions The following items were selected from among the transactions completed by Aston Martin Inc. during the current year: Apr. 15. Borrowed $225,000 from Audi Company, issuing a 30-day, 6% note for that amount. May 1. Purchased equipment by issuing a $320,000, 180-day note to Spyder Manufacturing Co., which discounted the note at the rate of 6%. 15. Paid Audi Company the interest due on the note of April 15 and renewed the loan by issuing a new 60-day, 8% note for $225,000. (Record both the debit and credit to the notes payable account.) July 14. Paid Audi Company the amount due on the note of May 15. Aug. 16. Purchased merchandise on account from Exige Co., $90,000, terms, n/30. Sept. 15. Issued a 45-day, 6% note for $90,000 to Exige Co., on account. Oct. 28. Paid Spyder Manufacturing Co. the amount due on the note of May 1. 30. Paid Exige Co. the amount owed on the note of September 15. Nov. 16. Purchased store…
Entries for Bonds Payable and Installment Note Transactions The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: Year 1 July 1. Issued $5,110,000 of five-year, 11% callable bonds dated July 1, Year 1, at a market (effective) rate of 13%, receiving cash of $4,742,651. Interest is payable semiannually on December 31 and June 30. Oct. 1. Borrowed $120,000 by issuing a 10-year, 7% installment note to Nicks Bank. The note requires annual payments of $17,085, with the first payment occurring on September 30, Year 2. Dec. 31. Accrued $2,100 of interest on the installment note. The interest is payable on the date of the next installment note payment. 31. Paid the semiannual interest on the bonds. The bond discount amortization of $36,735 is combined with the semiannual interest payment. Year 2 June 30. Paid the semiannual interest on the bonds. The bond discount amortization of $36,735 is combined with the semiannual interest…
On July 1, Year 1, Khatri Industries Inc. issued $18,000,000 of 10-year, 5% bonds at a market (effective) interest rate of 6%, receiving cash of $16,661,102. 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 discount, 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 discount, 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 less than the face amount of the bonds when the contract rate is less than the market rate of interest? 5. Compute…
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Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method On the first day of its fiscal year, Chin Company issued $17,800,000 of five-year, 12% 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 14%, resulting in Chin receiving cash of $16,549,813. 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. 1. Cash Discount on Bonds Payable Bonds Payable 2. Interest Expense Discount on Bonds Payable Cash 3. Interest Expense Discount on…
On January 1, Year 1, Platte Corporation issues a 5-year note payable for $5,000. The interest rate is 5% and the annual payment of $1,156, due each December 31, includes both interest and principal. Which of the following correctly shows the effect of the issuance of the note on Platte's financial statements? Assets = Liabilities + n/a n/a (5,000) 5,000 A. 5,000 B. 5,000 C. (5,000) D. 5,000 Multiple Choice O Option A O 0 0 Option B Option D Balance Sheet Option C Stockholders' Equity 5,000 5,000 n/a n/a Revenue 5,000 5,000 n/a n/a Income Statement - Expense n/a n/a n/a n/a = Net Income 5,000 5,000 n/a n/a Statement of Cash Flows. 5,000 FA 5,000 IA (5,000) IA 5,000 FA
Accounting Entries for Bonds Payable and Installment Note Transactions The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: Year 1 July 1. Issued $1,300,000 of five-year, 9% callable bonds dated July 1, Year 1, at a market (effective) rate of 11%, receiving cash of $1,202,010. Interest is payable semiannually on December 31 and June 30. Oct. 1. Borrowed $380,000 by issuing a 10-year, 8% installment note to Nicks Bank. The note requires annual payments of $57,631, with the first payment occurring on September 30, Year 2. Dec. 31. Accrued $7,600 of interest on the installment note. The interest is payable on the date of the next installment note payment. 31. Paid the semiannual interest on the bonds. The bond discount amortization of $9,799 is combined with the semiannual interest payment. Year 2 June 30. Paid the semiannual interest on the bonds. The bond discount amortization of $9,799 is combined with the semiannual interest payment.…

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