What is the net cash received over the life of the bond investment? Annapolis Company purchased a $3,000,6%, 6-year bond at 101 and held it tomaturity. The straight-line method ofamortization is used for both premiumsand discounts. What is the net cashreceived over the life of the bondinvestment?

Step 1: Define BondsA bond is a financial asset whereby funds are borrowed by financial institutions…

Answered: Annapolis Company purchased a $3,000,…

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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According to the theory, premium bonds, discount bonds, and face value bonds at the expiry date will have a value of $1,000. Why is the value is $1,000 at the expiring day? Explain.
Presented below is the partial bond discount amortization schedule for Pharoah Corp. Pharoah uses the effective-interest method of amortization. Interest Periods Issue date 1 2 Interest to Be Paid $117,000 117,000 Interest Expense to Be Recorded $124,981 125,380 Discount Amortization $7,981 8,380 Unamortized Discount Debit $100,383 92,402 84,022 Bond Carrying Value Credit $2,499,617 2,507,598 (a) Prepare the journal entry to record the payment of interest and the discount amortization at the end of period 1. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation 2,515,978
When bonds are issued at a premium and the effective interest method is used for amortization, at each subsequent interest payment date, the cash paid is: Select one: a. Less than the interest expense b. Equal to the interest expense c. Greater than the interest expense d. More than if the bonds had been sold at a discount e. Less than if the bonds had been sold at a discount
The following is the partial bond discount amortization schedule for Monty Corp. Monty uses the effective-interest method of amortization. Interest Periods Issue date (a) 1 2 Interest to Be Paid $42,750 42,750 Interest Expense to Be Recorded Account Titles and Explanation $45,666 45,812 Discount Amortization $2,916 3,062 Unamortized Discount Debit $36,678 33,762 30,700 Bond Carrying Value $913,322 Prepare the journal entry to record the payment of interest and the discount amortization at the end of period 1. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Credit 916,238 919,300
Bonds Payable has a balance of $802,000 and Discount on Bonds Payable has a balance of $9,624. If the issuing company redeems the bonds at 98, what is the amount of gain or loss on redemption?
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Enumerate the following; 32. Provides for recognition of an equal amount of premium or discount amortization each period. 33. Bonds that mature in one lump sum at a specified future date. 34. Bonds that provide for conversion into some other security at the option of the stockholder. 35. Bonds that mature in a series of installments at future dates. 36. The difference between the face value and the sales price when bonds are sold below their face value. 37. Bonds for which assets are pledged to guarantee repayment. 38. Obligations that are not expected to be paid in cash within one year or the normal operating cycle. 39. Bonds that do not bear interest but instead are sold at significant discounts providing the investor with a total interest payoff at maturity. 40. Costs incurred by the issuer for legal services, printing and engraving, taxes, and underwriting in connection with the sale of a…
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Given that a bond's carrying value is $185,000 and the fair value is $183,000, what is the journal entry to record the unrealized holding gain? Would it be a debit or credit to unrealized holding gain? Likewise, if this was a loss, would it be debit or credit to unrealized holding loss? Thanks!
If bonds of $1,000,000 with unamortized discount of $10,000 are redeemed at 98, the gain on redemption of bonds is $10,000. True False
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Requ a. Using the present value tables in Chapter 6, calculate the proceeds (issue price) of Learned, Inc.'s, bonds on January 1, 2013, assuming that the bonds were sold to provide a market rate of return to the investor. b. Assume instead that the proceeds were $93,000,000. Use the horizontal model (or write the journal entry) to record the payment of semiannual interest and the related premium amortization on June 30, 2013, assuming that the premium of $3,000,000 is amortized on a straight-line basis. o 0ompound interest method

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Annapolis Company purchased a $3,000, 6%, 6-year bond at 101 and held it to maturity. The straight-line method of amortization is used for both premiums and discounts. What is the net cash received over the life of the bond investment?