Applegate Corporation sells $170,000, 9%, 20-year bonds for 96 on January 1. Interest is paid on January 1 and July 1. Straight-line amortization is used. The amount of interest expense recorded on July 1, six months after issuance is:
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Applegate Corporation sells $170,000, 9%, 20-year bonds for 96 on January 1. Interest is paid on January 1 and July 1. Straight-line amortization is used. The amount of interest expense recorded on July 1, six months after issuance is:
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- On January 1, a company issues bonds dated January 1 with a par value of $600,000. The bonds mature in 3 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The bonds are sold for $564,000. The journal entry to record the first interest payment using straight-line amortization is:On January 1 of the current year, a company paid $200,000 cash to purchase 10%, 10-year bonds, with a par value of $200,000; interest is paid semiannually each June 30 and December 31. The company intends to hold these bonds until they mature. Prepare the journal entry for the interest received on December 31 of the current year.3. Conor Corporation has $10,500,000 of 5 percent, 10-year bonds dated January 1, with interest payment dates of June 30 and December 31. The company’s fiscal year ends December 31. A. Assume the bonds are issued for $9,720,000 on January 1 to yield an effective interest rate of 6 percent. Prepare journal entries for January 1, June 30, and December 31, assuming that Conor Corporation uses the effective interest method to amortize bond premiums or discounts. B. Calculate the net book value of the bonds after the interest payments have been made on June 30 and December 31.
- The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: 20Y1 July 1 Issued $74,000,000 of 20-year, 11% callable bonds dated July 1, 20Y1, at a market (effective) rate of 13%, receiving cash of $63,532,267. Interest is payable semiannually on December 31 and June 30. Dec. 31 Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. 20Y2 June 30 Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. Dec. 31 Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. 20Y3 June 30 Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $9,420,961 after payment of interest and amortization of discount have been recorded. (Record the…On January 1, Jules Company purchased for cash, $50,000 bonds (10, $5,000 bonds) of Android Corporation at a market rate of 6%. The bonds pay 6.5% interest, payable on a semiannual basis each June 30 and December 31, and mature on December 31 in five years. The bonds are classified as available-for-sale securities. The annual reporting period of Jules Company ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Note: When answering the following questions, round answers to the nearest whole dollar. Amortization Schedule Journal Entries in Year 1 a. Prepare a bond amortization schedule for the year using the effective interest method. Date Stated Interest Jan. 1 June 30 $ Dec. 31 Check OS 0 Market Premium Bond Interest Amortization Amortized Cost 0 0 0 0$ 0 Financial Statement Presentation 0 0 $Zee Company sold an issue of $500,000, 9%, 10-year bonds for $468,845 on April 1. The interest is payable semiannually on October 1 and April 1. The market rate of interest at the time the bonds were issued was 10%. Oct. 1 Paid the first semiannual interest payment and amortized the bond discount, using the effective interest method. Dec. 31 Made the adjusting entry for bond interest accrued and amortization of the bond discount from October 1. (Hint: Use the effective interest rate for the three-month period from October 1–December 31.) Jan. 2 Reversed the adjusting entry for bond interest accrued and bond discount amortization as of December 31. Apr. 1 Paid the second semiannual interest payment and amortized the bond discount. Required: Prepare the general journal entry for above transactions (round all amounts to the nearest dollar).
- On January 1, a company issues bonds dated January 1 with a par value of $560,000. The bonds mature in 5 years. The contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The market rate is 9% and the bonds are sold for $537,828. The journal entry to record the second interest payment using the effective interest method of amortization is:On July 1 of the current year, West Company purchased for cash, 40, $10,000 bonds of North Corporation at a market rate of 6%. The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature in three years on July 1. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes. Note: When answering the following questions, round answers to the nearest whole dollar. Amortization Schedule Journal Entries in Year 1 Journal Entries in Year 2 a. Prepare a bond amortization schedule for the life of the bonds using the effective interest method. Date Stated Market Discount Bond Interest Interest Amortization Amortized Cost Jul. 1, Year 1 Jan. 1, Year 2 Jul. 1, Year 2 Jan. 1, Year 3 Jul. 1, Year 3 Jan. 1, Year 4…On January 1 of the current year, Barton Corporation issued 7%, 5-year bonds with a face value of $87,000. The bonds are sold for $82,650. The bonds pay interest semiannually on June 30 and December 31, and the maturity date is December 31, 5 years from now. Barton records straight-line amortization of the bond discount. The bond interest expense for the current year ended December 31 is Oa. $435 Ob. $6,960 Oc. $3,045 Od. $7,395
- Hambelton Ltd. issued $4,600,000 of 5% bonds payable on 1 September 20X9 to yield 4%. Interest on the bonds is paid semi-annually and is payable each 28 February and 31 August. The bonds were dated 1 March 20X8, and had an original term of five years. The accounting period ends on 31 December. The effective-interest method is used. (PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required:1. Determine the price at which the bonds were issued. (Round time value factor to 5 decimal places. Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.) 2. Prepare a bond amortization table for the life of the bond. (Round time value factor to 5 decimal places. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. Leave no cells blank - be certain to enter "0" wherever required.) 3.Prepare journal entries to record the issuance of the bonds, payment of…Krause Corporation issued $2,300,000, 10-year, 6% bonds for $2,231,000 on January 1, 2022. Interest is paid semiannually on January 1 and July 1. The corporation uses the straight-line method of amortization. Krause's fiscal year ends on December 31. The amount of discount amortization on July 1, 2022, would be OA. $138,000. OB. $69,000. OC. $6,900. OD. $3,450.On July 1 of Year 1, West Company purchased for cash, 8, $10,000 bonds of North Corporation to yield 10%. The bonds pay 9% interest, payable on a semiannual basis each July 1 and January 1, and mature in three years on July 1. The bonds are classified as AFS securities. West Company's annual reporting period ends December 31. Assume the effective interest method of amortization of any discount or premium. Note: When answering the following questions, round each amount to the nearest whole dollar. Amortization Schedule Journal Entries and Financial Statement Presentation for Year 1 a. Prepare a bond amortization schedule for Year 1 and Year 2 using the effective interest method. Discount Amortization Date Jul 1, Year 1 Jan. 1, Year 2 s Jul 1, Year 2 Stated Interest 8,100 $ 8,100x Market Interest 8,772 x 8.805 672 x 705 Bond Amortized Cost 175,433 X 176,104 x 176,810 x Journal Entries for Year 2
