Discount amortization On the first day of the fiscal year, a company issues a $2,500,000, 8%, 5-year bond that pays semiannual interest of $100,000 ($2,500,000 x 8% × 2), receiving cash of $2,300,000 Using straight-line amortization, journalize the first interest payment and the amortization of the related bond discount. If an amount box does not require an entry, leave it blank. Interest Expense

Discount amortization On the first day of the fiscal year, a company issues a $2,500,000, 8%, 5-year bond that pays semiannual interest of $100,000 ($2,500,000 x 8% × 2), receiving cash of $2,300,000 Using straight-line amortization, journalize the first interest payment and the amortization of the related bond discount. If an amount box does not require an entry, leave it blank. Interest Expense

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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26. Bonds Issued at a Premium (Effective Interest) Charger Battery issued $100,000 of 11%, seven-year bonds on December 31, 2022, for $104,868. Interest is paid annually on December 31. The market rate of interest is 10%. Required: Prepare the amortization table using the effective interest rate method. For those boxes in which no entry is required, leave the box blank. If the amount is zero, enter "0". If required, round your answers to the nearest whole dollar.
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On the first day of the fiscal year, a company issues a $8,500,000, 6%, 5-year bond that pays semiannual interest of $255,000 ($8,500,000 \times 6% \times (1)/(2)), receiving cash of $7,491, 128. Using straight - line amortization, journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.
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Amortize Discount by Interest Method On the first day of its fiscal year, Ebert Company issued $27,000,000 of 5-year, 9% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 11%, resulting in Ebert receiving cash of $24,964,830. The company uses the interest method. a. Journalize the entries to record the following: 1. Sale of the bonds. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. 2. First semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. 3. Second semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. b. Compute the amount of the bond interest expense for the first year. Round to the nearest dollar. Annual interest paid Discount amortized Interest expense for first…
Premium amortization On the first day of the fiscal year, a company issues a $3,600,000, 11%, 10-year bond that pays semiannual interest of $198,000 ($3,600,000 x 11% x 1/2), receiving cash of $4,068,286. Using straight-line amortization, journalize the first interest payment and the amortization of the related bond premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Interest Expense Premium on Bonds Payable Cash Feedback ▼ Check My Work ✓ 198,000 Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. The straight-line method of amortization provides equal amounts of amortization over the life of the bond.
Present entries to record the selected transactions described below: a. Issued $2,750,000 of 10-year, 8% bonds at 97. If an amount box does not require an entry, leave it blank. b. Amortized bond discount for a full year, using the straight-line method. If an amount box does not require an entry, leave it blank. c. Called bonds at 98. Assume the bonds were carried at $2,692,250 at the time of the redemption. If an amount box does not require an entry, leave it blank.
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