Brian Lee Company sells 8% bonds having a maturity value of $2,240,000 for $1,917,020. The bonds are dated January 1, 2025, andmature January 1, 2030. Interest is payable annually on January 1.Click here to view factor tables.Set up a schedule of interest expense and discount amortization under the straight-line method. (Round answers to 2 decimal places, e.g.38,548.25.)

The bonds are the long-term debt instruments. The coupon rate is fixed at the time of the issue of bonds and the interest payment are made based on the coupon rate over the term of the bond. Discount on bond=Par value-price of bondDiscount of bond=2240000-1917020=$322980Discount per year=Cash coupon=2240000 x 0.08/2=$112000Interest expenses=Discount +cash coupon=112000+64596=$176596DateCash couponDiscountinterest expensesCarrying value1 Jan 202519170201 Jan 20261120006459617659619816161 Jan 202711200064596176596 20462121 Jan 20281120006459617659621108081 Jan 20291120006459617659621754041 Jan 2030112000645961765962240000DateCash couponDiscountinterest expensesCarrying value1 Jan 202519170201 Jan 20261120006459617659619816161 Jan 202711200064596176596 20462121 Jan 20281120006459617659621108081 Jan 20291120006459617659621754041 Jan 2030112000645961765962240000

Answered: Brian Lee Company sells 8% bonds having…

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 September 30, 2023, when the market interest rate is 9 percent, Score Ltd. issues $8,000,000 of 11-percent, 20-year bonds for $9,472,126. The bonds pay 30. Score Ltd, amortizes bond premium by the effective-interest method. Required 1. Prepare an amortization table for the first four semi-annual interest periods. Score amortizes a bond premium by the effective-interest method. 2. Record the issuance of the bonds on September 30, 2023, the accrual of interest on December 31, 2023, and the semi-annual interest payment on March 3 Requirement 1. Prepare an amortization table for the first four semi-annual interest periods. (Round your answers to the nearest whole dollar.) B: Interest Expense (4.5% of Preceding Bond Carrying Amount) A: Interest Payment Semi-annual Interest (5.5% of Maturity Period Values) Issue date. March 31, 2024 September 30, 2024 March 31, 2025 September 30, 2025 440,000 440,000 440,000 440,000 426,245 C: Premium Amortization (A-B) 13,755 D: Unamortized Premium…
Edward Lewis Company sells 8% bonds having a maturity value of $2,840,000 for $2,624,680.00. The bonds are dated January 1, 2025, and mature January 1, 2030. Interest is payable annually on January 1. Click here to view factor tables. (a) Determine the effective-interest rate. (Round present value factor to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 18%) The effective-interest rate
3. On July 1, 2018, Volunteer Inc. issued bonds with a $500,000 face value at 108.0 and the 5-year bonds have a 10% interest rate in a market with a rate of 8%. Interest is payable semi-annually and the effective-interest method is used for amortization. Prepare journal entries for the following transactions. Premium on Bonds Payable Interest Income Discount on Bonds Payable Interest Expense Cash Bonds Payable PLEASE NOTE: For each of the following journal entries there is one account's treatment (DR or CR), that depends on whether it is a bond issued at a premium or a discount. You are to identify if it is a DR or a CR. You must enter the account names exactly as written above and all dollar amounts will be rounded to whole dollars with "$" and commas as needed (i.e. $12,345). July 1, 2018: to record issuing the bonds DR DR/CR ? CR Dec. 31, 2018: to record the amortization & payment of interest to bondholders: DR…
Cullumber Company sold $2,000,000, 4%, 10-year bonds on January 1, 2022. The bonds were dated January 1 and pay interest annually on January 1. Cullumber Company uses the straight-line method to amortize bond premium or discount. The bonds were sold at 101. (c) Prepare the journal entries for interest and the amortization of the premium in 2022 and 2023. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2022 enter an account title for the journal entry on december 31, 2022 enter a debit amount enter a credit amount enter an account title for the journal entry on december 31, 2022 enter a debit amount enter a credit amount enter an account title for the journal entry on december 31, 2022 enter a debit amount enter a credit amount…
On January 1, 2020, Joe Construction issued $350,000, 3-year bonds for $320,000. The stated rateof interest was 7% and interest is paid annually on December 31.1. Calculate the amount of discount that will be amortized each period. Discount/period:2. Calculate the amount of interest expense for each period.Interest/period:3. Complete the amortization table below for Joe Constructions bonds. Joe ConstructionAmortization for BondsPeriod Cash Payment (credit)Interest Expense(debit)Discount onBondsPayable(Credit)Discount onBondsPayableBalance Book ValueAt issue $ - $ - $ - $ 320,00012/31/202012/31/202112/31/2022
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Carla Corporation issued $510,000 of 7% bonds on November 1, 2025, for $542,033. The bonds were dated November 1, 2025, and mature in 8 years, with interest payable each May 1 and November 1. Carla uses the effective-interest method with an effective rate of 6% Click here to view factor tables. Prepare Carla's December 31, 2025, adjusting entry. (Round intermediate calculations to 5 decimal places, eg. 1.25124 and final answers to O decimal places, eg. 38,548. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries) Date December 31. 2025 Account Titles and Explanation Debit Credit
Coronado Inc. issued $920,000 of 10%, 10-year bonds on June 30, 2025, for $814,472. This price provided a yield of 12% on the bonds. Interest is payable semiannually on December 31 and June 30. If Coronado uses the effective-interest method, determine the amount of interest expense to record if financial statements are issued on October 31, 2025. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548.) Interest expense to be recorded
The balance sheet for Ivanhoe Consulting reports the following information on July 1, 2022. Long-term liabilities Bonds payable $4,500,000 Less: Discount on bonds payable 315,000 $4,185,000 Ivanhoe decides to redeem these bonds at 101 after paying annual interest.Prepare the journal entry to record the redemption on July 1, 2022.
The Melon Company issues $519,000 of 8%, 10-year bonds at 103 on March 31, Year 1. The bonds pay interest on March 31 and September 30. Assume that the company uses the straight- line method for amortization. Calculate the net balance that will be reported for the bonds on the September 30, Year 1 balance sheet. (Round your intermediate answers to the nearest dollar.) Group of answer choices $533, 791 $535, 349 $519,000 $534, 570
Lisa Anderson Company issued $516,000 of 10%, 20-year bonds on January 1, 2025, at 102. Interest is payable semiannually on July 1 and January 1. Lisa Anderson Company uses the effective-interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705% Click here to view factor tables. Prepare the journal entries to record the following. (Round intermediate calculations to 6 decimal places, eg. 1.251247 and final answer to O decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) a. The issuance of the bonds. b. The payment of interest and related amortization on July 1, 2025. с The accrual of interest and the related amortization on December 31, 2025. Date Account Titles and Explanation Debit Credit
Paul White Company sells 10% bonds having a maturity value of $1,900,000 for $1,763,025. The bonds are dated January 1, 2025, and mature January 1, 2030. Interest is payable annually on January 1. Click here to view factor tables. Set up a schedule of interest expense and discount amortization under the straight-line method. (Round answers to 2 decimal places, e.g. 38,548.25.)

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