E-Tech Initiatives Limited plans to issue $550,000, 10-year, 3 percent bonds. Interest is payable annually on December 31. All of thebonds will be issued on January 1, 2019. Show how the bonds would be reported on the January 2, 2019, balance sheet if they areissued at 96. (Deductions should be indicated by a minus sign.)E-TECH INITIATIVES LIMITEDBalance Sheet (partial)As of January 2, 2019Carrying Value

Concept Introduction:Bonds: Bonds are debt instruments issued by the borrower company to its…

Answered: E-Tech Initiatives Limited plans to…

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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Roarie LLC issued 10,000, $1,000 bonds on January 1, 2020. The bonds have a 10-year term and pay interest semiannually. This is a partial bond amortization schedule for the bonds: Cash Payment Interest A. $4,261,329 B. $7,738,658 C. $4,000,000 D. $3,738,658 Effective Decrease in Interest Balance Disct Cash 1 200,000 313,067 113,067 2 200,000 318,720 118,720 3 200,000 324,657 124,657 4 200,000 330,889 130,889 What would be the total interest cost of the bonds over their full term? Outstanding Balance 10,000,000 (6,261,343) 3,738,658 4,000,000 7,738,658 6,261,343 6,374,410 6,493,130 6,617,787 6,748,676
At January 1, 2020, Konerko Corp. issued $40,000,000 of 6%, 12-year bonds that paid interest semiannually on June 30 and December 31. The bonds were issued at $36,788,326 to earn 7%. How much interest expense should Konerko report for these bonds on its income statement for the full year ended December 31, 2020? Please round your answer to the nearest dollar.
Madison Corporation is authorized to issue $570,000 of 5-year bonds dated June 30, 2019, with a stated rate of interest of 11%. Interest on the bonds is payable semiannually, and the bonds are sold on June 30, 2019. Required: Determine the proceeds that the company will receive if it sells the following: (Click here to access the tables to use with this exercise and round your answers to two decimal places, if necessary.) 1. The bonds to yield 12% $fill in the blank 1 2. The bonds to yield 10% $fill in the blank 2
Blue Corporation issued a 10 year bonds on January 1, 2019. Costs associated with the bond issuance were P1, 600,000. Blue Corporation uses the straight line method to amortize bond issue costs. Prepare the December 31, 2019 entry to record the 2019 bond issue cost amortization.
Sterium Company issues P1,000,000 face value, 6%, 5-year bonds payable on December 31, 2018. Interest is paid semiannually each June 30 and December 31. The bonds sell at a price of 97; It uses the straight-line method of amortizing bond discount or premium. Sterium 's entry at June 30, 2019, Journalize to record the first semiannual payment of interest and amortization of discount on the bonds.
On January 1, 2019, Company C issues $200,000 of its 6% bonds which mature in 10 years. Interest is paid annually on December 31. The market (effective) rate of interest is 4%. If the bond sells as 88.2, what the amount of interest expense reported on the Income Statement for 2019 (hint: prepare an amortization schedule)
The following section is taken from Bramble Corp.’s balance sheet at December 31, 2021. Current Liabilities Interest Payable $ 89,500 Long-term Liabilities Bonds payable, 5%, due January 1, 2024 1,790,000 Bond interest is payable annually on January 1. The bonds are callable on any interest date. a) Journalize the payment of the bond interest on January 1, 2022. b) Assume that on January 1, 2022, after paying interest, Bramble calls bonds having a face value of $602,000. The call price is 105. Record the redemption of the bonds. c) Prepare the entry to record the accrual of interest on December 31, 2022.
Temptation Vacations issues $58 million in bonds on January 1, 2021, that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: (1) (2) (3) (4) (5) Cash Paid for Interest Interest Expense Decrease in Carrying Value Carrying Value Date 1/1/2021 $65,279,805 6/30/2021 $1,740,000 1,631,995 $108,005 $65,279,805 12/31/2021 1,740,000 1,629,295 $110,705 65,171,800 6. What is the total cash paid for interest assuming the bonds mature in 20 years? (Enter your answer in dollars, not millions. (i.e., $5.5 million should be entered as 5,500,000)) Total cash interest
Discount-Mart issues $12 million in bonds on January 1, 2024. The bonds have a ten-year term and pay interest semiannually on June 30 and December 31 each year. Below is a partial bond amortization schedule for the bonds: Date 01/01/2024 06/30/2024 12/31/2024 06/30/2025 12/31/2025 Interest Expense $600,000 $637,417 HIT 639,662 642,041 644,564 Cash Paid 600,000 600,000 Increase in Carrying Value 600,000 $37,417 39,662 42,041 44,564 Carrying Value $10,623,609 10,661,026 10,700,688 10,742,729 10,787,293 What is the stated annual rate of interest on the bonds? (Hint: Be sure to provide the annual rate rather than the six-month rate.) (Do not round your intermediate calculations.)
Frozen Company issues $31,800 of ten year bonds on January 1, 2020 at 108. It uses the straight line method of amortization and prepares annual financial statements on December 31st. (Keep two decimal places in all your intermediate calculations). Required 1: What is the carrying value of the bonds on 2020 Financial Statements? Required 2: What is the carrying value of the bonds on 2021 Financial Statements? Required 3: What is the carrying value of the bonds on 2024 Financial Statements?
An accounting example: Otter Products inc issued bonds on January 1, 2019. Interest to be paid semi-annually. Term in years is 2; Face value of bonds issued is $200,000; Issue Price $206,000; Specified Interest Rate each payment period is 6% Question. Calculate a. the amount of interest paid in cash every payment period. b. The amount of amortization to be recorded at each interest payment date (use straight-line method) c. complete amoritzation table by calculating interest expense and beginning and ending bond carrying amounts at the each period over 2 years. The term is for 2 years however 3 years is showing on the workbook. How do I calcuate the 3rd year if the problem only says the term is 2 years?
Aggies Inc. issued bonds with a $450,000 face value, 8% interest rate, and a 4-year term on July 1, 2018, and received $510,000. Interest is payable semi-annually. The premium is amortized using the straight-line method. A. July 1, 2018: entry to record issuing the bonds B. Dec. 31, 2018: entry to record payment of interest to bondholders C. Dec. 31, 2018: entry to record amortization of premium Prepare journal entries for the above transactions. If an amount box does not require an entry, leave it blank. A. fill in the blank 2 fill in the blank 3 fill in the blank 5 fill in the blank 6 fill in the blank 8 fill in the blank 9 B. fill in the blank 11 fill in the blank 12 fill in the blank 14 fill in the blank 15 C.

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