Claremont Inc. issued a $400,000 bond on January 1, 2020. The bond had a five-year life and an 8% stated rate of interest. The bond contract requires Claremont to pay semiannual dividends each June 30 and December 31. The market rate of interest on January 1, 2020 when Claremont issued the bond was 6%.   Required: 1. Expalin / Report the effects of the bond on the 2020 income statement, cash flows statement and the balance sheet on December 31, 2020

Q: On January 1, 2020, the Rangler Company issued $600,000 of eight-year bonds at 102. The stated…

A: Cash(600000*102/100) Dr $612000 Bond payable  Cr                      $600000 Premium on issue   Cr.…

Q: On March 1, 2020, Sandollar Inc. issued $90,000 of bonds at 105, paying 8% cash interest…

A: Journal: Recording of a business transactions in a chronological order.   As posted multiple sub…

Q: On January 1, 2021, for $18 million, BBCompany issued 10% bonds, dated January 1, 2021, with a face…

A: Effective interest method: The method of amortization that uses fixed interest rate (effective…

Q: Pretzelmania, Inc., issues 7%, 10-year bonds with a face amount of $70,000 for $70,000 on January 1,…

A: Interest payment on June 30, 2021 = Face value of bonds x rate of interest x 6/12 = $70,000 x 7% x…

Q: Sweetwood Company issues $5,000,000, 10-year, 9% bonds at 96, with interest payable annually on…

A: Bonds are instrument issued by company acknowledging the debt raised by company . It is a liability…

Q: Rombus corp issued P600,000, 9%, 20-year bonds on January 1, 2020, at P103. Interest is payable…

A: Each transactions needs to be recorded in the books of accounts. Journal entries are basic…

Q: On January 1, 2020, Everly Bottle Company sold $4,000,000 in long-term bonds. The bonds will mature…

A: Bonds payable refers to a type of long-term debt that a company or organization issues to borrow…

Q: A. On January 1, 2021, Bradley Company issued $100,000, 9%, 4-year bonds. Interest is paid…

A:

Q: Metlock, Inc. issued $282,000, 7%, 15-year bonds on December 31, 2021, for $253,800. Interest is…

A: Total discount on bonds = Face value of bonds - issue value of bonds = 282000-253800 = $28,200

Q: As a long-term investment, Camex Inc. paid $800,000 (par value) for Simple Bank bonds. The bonds pay…

A: A journal entry is the recording of financial transactions of business entity in the books of…

Q: On July 1, 2022, Mercurial Company issued at 98 plus accrued interest 2,500 of its 11%, P1,000 face…

A: Solution : Given Face value of bond         =P1000 Issue price                        =98%…

Q: PPetzelmaniá, Inc., issues 7%, 10-year bonds with a face amount of $70,000 for $70,000 on January 1,…

A: The bonds are issued at par when market rate is similar to coupon rate of bonds.

Q: Volunteer Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July…

A: Annual interest payment = Face value of bonds x rate of interest x 1 years = $500000 x 10% x 1 =…

Q: Mitchell Inc. issued 40, 6%, $1,000 bonds on January 1, 2020. The bonds pay cash interest…

A: The amount at which a bond is sold in the financial markets is called its selling price. generally,…

Q: Logan Inc issued a $1,600,000, 6% 10 year bond at 88 on January 1, 2018. 1. Journalize the issuance…

A: Bonds are the debts of an issuing company that is repayable after a specific period of time, it may…

Q: On January 1, 2025, Paxton Planning Services issued $56,000 of 2% bonds that mature in five years.…

A: Journal Entry :— It is an act of recording transactions in books of account when transaction…

Q: Kingbird Ltd. issued a $778,000, 10-year bond dated January 1, 2023. The bond was sold to yield 12%…

A: Issue price of bonds would be the present value of the interest annuity & maturity amount at…

Q: Randle Inc. issues $300,000, 10-year, 8% bonds at 98. Prepare the journal entry to record the sale…

A: Bonds are considered a financial instrument used to raise finance for the organization. It is also…

Q: Claremont Inc. issued a $400,000 bond on January 1, 2020. The bond had a five-year life and an 8%…

A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: Kingbird Ltd. issued a $778,000, 10-year bond dated January 1, 2023. The bond was sold to yield 12%…

A: An investment's real or actual interest rate, accounting for compounding over a certain time period,…

Q: Jazz Corporation issued a 8% $240,0000 bond on January 1, 2016. The bond became due on January 1,…

A: Bond: It is a long-term source of finance issued by the firm to raise money. It has a fixed maturity…

Q: Kingbird, Inc. issued $430,000 of 5-year, 7% bonds at 97 on January 1, 2020. The bonds pay interest…

A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in…

Q: On January 1, 2018, Lane Unlimited issues a 9%, 10- year bonds payable with a face value of…

A: Total premium on bonds = Issue value - Face value = $240,000 x 105/100 - $240,000 = $12,000

Q: Golden Inc. issues $4,000,000, 5-year, 10% bonds at 102, with interest payable annually on January…

A: Bonds are instrument issued by company acknowledging the debt raised by company . It is a liability…

Q: BlueLtd. issued a $1,164,000, 10-year bond dated January 1, 2020. The bond was sold to yield 12%…

A:

Q: Metlock Ltd. issued a $791,000, 10-year bond dated January 1, 2023. The bond was sold to yield 12%…

A: The proceeds from the bond issue are computed by adding the present value of interest and maturity…

Q: A. July 1, 2020: entry to record issuing the bonds. B. June 30, 2021: entry to record payment of…

A: A journal entry is a basic accounting record that is used to chronologically track financial…

Q: On January 1, 2021, Bradley Recreational Products issued $100,000, 9%, four year bonds. Interest…

A: Concept Given Date of issue January 1 2021 Face value 100000 Coupon rate 9%…

Q: On January 1, 2023, Kristopher Co. issued ten-year bonds with a face value of $7,000,000 and a…

A: A bond is a financial instrument or debt security that is used to symbolize a loan that an investor…

Q: On April 1, 2019, Ellison Co. issued 4-year, 7%, $100,000 face value bonds. The bonds were issued at…

A:

Q: On January 1, 2020, XYZ Co. issued 8-year bonds with a face value of $1,500,000 and a stated…

A: formula for price of bond: price of bond=coupon×1-11+rmm×nrm+par1+rmm×n where, r=rate per period m…

Q: Waterway Ltd. issued a $1,062,000, 10-year bond dated January 1, 2023. The bond was sold to yield…

A: Bonds can offer a reduced degree of risk compared to other investments and offer investors a fairly…

Q: Wildhorse Ltd. issued a $1,159,000, 10-year bond dated January 1, 2023. The bond was sold to yield…

A: Bonds: Compared to other investments, bonds can offer a lower level of risk and a somewhat steady…

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.