Exercise 10-2 Straight-Line: Amortization of bond discount LO P2Tano issues bonds with a par value of $99,000 on January 1, 2017. The bonds' annual contract rate is 6%, and interestis paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at thedate of issuance is 8%, and the bonds are sold for $93,809.1. What is the amount of the discount on these bonds at issuance?2. How much total bond interest expense will be recognized over the life of these bonds?3. Prepare an amortization table using the straight-line method to amortize the discount for these bonds.Complete this question by entering your answers in the tabs below.Required 1Required 2Required 3Prepare an amortization table using the straight-line method to amortize the discount for these bonds. (Round yourintermediate calculations to the nearest dollar amount.)CarryingValueSemiannual Period-UnamortizedEndDiscount01/01/201706/30/201712/31/201706/30/201812/31/201806/30/201912/31/2019

1. 2. Working note: Calculate semi annual interest payment: Calculate 6 payments of 2,970:

Answered: Exercise 10-2 Straight-Line:…

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Problem 1Q

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Exercise 7-19 (Algo) Bonds payable-various issues LO 7-8 Reynolds Company issued $71 million face amount of 4.25% bonds when market interest rates were 4.13% for bonds of similar risk and other characteristics. Required: a. How much interest will be paid annually on these bonds? Note: Enter your answer in dollars, not millions of dollars. b. Were the bonds issued at a premium or discount? c. Will the annual interest expense on these bonds be more than, equal to, or less than the amount of interest paid each year? a. Annual interest payment b. Bonds issued c. Annual interest expense will be
! Required information Problem 9-7B Calculate the issue price of a bond and prepare amortization schedules (LO9-5, 9-7) [The following information applies to the questions displayed below.] Christmas Anytime issues $830,000 of 6% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Calculate the issue price of a bond and complete the first three rows of an amortization schedule when: Problem 9-7B Part 2 2. The market interest rate is 7% and the bonds issue at a discount. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors. Round your answers to nearest whole dollar.) Issue price Date $ Cash Paid 830,000 Interest Change in Expense Carrying Value 01/01/2021 06/30/2021 $ 29,050 $ 29,050 12/31/2021 29,050 Carrying Value
Question 1 Bonds (23 marks) Terra Company issued a $300,000, 7.50%, 10-year bond on June 1, 2015. Additional information on the bond follows: Bond Date: January 1, 2015 December 31, 2024 Maturity Date: Yield (Market) Rate: Interest Payment Date: Terra's year end: Required: Round calculations to the nearest dollar a) Calculate the present value of the bond assuming that it had been issued on January 1, 2015. Show calculations/keystrokes. (1 mark) 8% Interest is paid annually on December 31 of each year September 30 b) Prepare a bond amortization table from January 1, 2015 until December 31, 2018. Show each annual interest payment. (3 marks) c) Calculate the total amount of cash received by Terra on June 1, 2015, reflecting the fact the bond was issued on June 1, 2015. Make the journal entry to record the bond issue on June 1, 2015. (4 marks) d) Prepare the adjusting entry required at Terra's year end, Sept 30, 2017. (2 marks) e) Prepare the journal entry on Terra's books to make the…
Exercise 10-2 Straight-Line: Amortization of bond discount LO P2 Tano issues bonds with a par value of $99,000 on January 1, 2017. The bonds' annual contract rate is 6%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 8%, and the bonds are sold for $93,809. 1. What is the amount of the discount on these bonds at issuance? 2. How much total bond interest expense will be recognized over the life of these bonds? 3. Prepare an amortization table using the straight-line method to amortize the discount for these bonds. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the amount of the discount on these bonds at issuance? Discount
9
Problem 2 Bond Amortization (Premium) On January 1, 2022, Skyfall Inc. received permission to issue a 5-year bond with a face value of P6,000,000. The nominal rate is 12% and is payable annually every December 31. The face value of the bond will be repaid in full after 5 years. On January 1, 2022, Skyfall Inc. sold the bonds for P6,454,894.41with an effective yield of 10%. Using the effective interest method, complete the amortization table. Date Interest Payments Interest Expense Amortization Carrying Value January 1, 2022 December 31, 2022 December 31, 2023 December 31, 2024 December 31, 2025 December 31, 2026
Exercise 10-3 (Algo) Recording bond issuance and interest LO P1 On January 1, Boston Enterprises Issues bonds that have a $1,600,000 par value, mature in 20 years, and pay 8% Interest semiannually on June 30 and December 31. The bonds are sold at par. 1. How much Interest will Boston pay (in cash) to the bondholders every six months? 2. Prepare Journal entries to record (a) the issuance of bonds on January 1, (b) the first interest payment on June 30, and (c) the second Interest payment on December 31. 3. Prepare the journal entry for Issuance assuming the bonds are issued at (a) 98 and (b) 102. Complete this question by entering your answers in the tabs below. Required 1 Required 2 How much interest will Boston pay (in cash) to the bondholders every six months? Semiannual Cash Interest Payment Par (maturity) Value Required 3 X Semiannual Rate Required 1 Required 2 >
Exercise 14-4 (Algo) Straight-Line: Amortization of bond discount LO P2 Tano Company issues bonds with a par value of $98,000 on January 1, 2021. The bonds' annual contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 10%, and the bonds are sold for $90,537. 1. What is the amount of the discount on these bonds at issuance? 2. How much total bond interest expense will be recognized over the life of these bonds? 3. Prepare a straight-line amortization table for these bonds.

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