E10-9 (Algo) Indicating the Effects of a Premium Bond Issue and Interest Payment on the Financial Statements [LO 10-3] Grocery Corporation received $330,360 for 11.00 percent bonds issued on January 1, 2021, at a market interest rate of 8.00 percent. The bonds had a total face value of $275,000, stated that interest would be paid each December 31, and stated that they mature in 10 years. Required: Prepare the following table for each account by indicating (a) whether it is reported on the Balance Sheet (B/S) or Income Statement (VS): (b) the dollar amount by which the account increases, decreases, or does not change when Grocery Corporation issues the bonds; and (c) the direction of change in the account [increase, decrease, or no change) when Grocery Corporation records the interest payment on December 31.
E10-9 (Algo) Indicating the Effects of a Premium Bond Issue and Interest Payment on the Financial Statements [LO 10-3] Grocery Corporation received $330,360 for 11.00 percent bonds issued on January 1, 2021, at a market interest rate of 8.00 percent. The bonds had a total face value of $275,000, stated that interest would be paid each December 31, and stated that they mature in 10 years. Required: Prepare the following table for each account by indicating (a) whether it is reported on the Balance Sheet (B/S) or Income Statement (VS): (b) the dollar amount by which the account increases, decreases, or does not change when Grocery Corporation issues the bonds; and (c) the direction of change in the account [increase, decrease, or no change) when Grocery Corporation records the interest payment on December 31.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![E10-9 (Algo) Indicating the Effects of a Premium Bond Issue and Interest Payment on the Financial
Statements [LO 10-3]
Grocery Corporation received $330,360 for 11.00 percent bonds issued on January 1, 2021, at a market interest rate of 8.00 percent.
The bonds had a total face value of $275,000, stated that interest would be paid each December 31, and stated that they mature in 10
years.
Required:
Prepare the following table for each account by indicating (a) whether it is reported on the Balance Sheet (B/S) or Income Statement
(1/S): (b) the dollar amount by which the account increases, decreases, or does not change when Grocery Corporation issues the
bonds; and (c) the direction of change in the account [increase, decrease, or no change] when Grocery Corporation records the
interest payment on December 31.
Account
Bonds Payable
Discount on Bonds Payable
Interest Expense
Premium on Bonds Payable
(a) Financial
Statement
(b) Issuance (c) Interest Paid](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd419e784-6448-445d-a22f-d866e07671f1%2Fc8533831-ab4f-45dc-96b9-ba2e3b374d43%2Fmfl25kd_processed.jpeg&w=3840&q=75)
Transcribed Image Text:E10-9 (Algo) Indicating the Effects of a Premium Bond Issue and Interest Payment on the Financial
Statements [LO 10-3]
Grocery Corporation received $330,360 for 11.00 percent bonds issued on January 1, 2021, at a market interest rate of 8.00 percent.
The bonds had a total face value of $275,000, stated that interest would be paid each December 31, and stated that they mature in 10
years.
Required:
Prepare the following table for each account by indicating (a) whether it is reported on the Balance Sheet (B/S) or Income Statement
(1/S): (b) the dollar amount by which the account increases, decreases, or does not change when Grocery Corporation issues the
bonds; and (c) the direction of change in the account [increase, decrease, or no change] when Grocery Corporation records the
interest payment on December 31.
Account
Bonds Payable
Discount on Bonds Payable
Interest Expense
Premium on Bonds Payable
(a) Financial
Statement
(b) Issuance (c) Interest Paid
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