Exercise 14-15 Allocation of interest for bonds sold at a premium LO6 Tahoe Tent Ltd. issued bonds with a par value of $802,000 on January 1, 2020. The annual contract rate on the bonds was 13.00%, and the interest is paid semiannually. The bonds mature after three years. The annual market interest rate at the date of issuance was 11.00%, and the bonds were sold for $842,064. a. What is the amount of the original premium on these bonds? (Use financial calculator for calculating PV's. Round the final answer to the nearest whole dollar.) Premium 6. How much total bond interest expense will be recognized over the life of these bonds? (Do not round intermediate calculations. Pound +he finel enswer to the neerest whele celler)

Exercise 14-15 Allocation of interest for bonds sold at a premium LO6 Tahoe Tent Ltd. issued bonds with a par value of $802,000 on January 1, 2020. The annual contract rate on the bonds was 13.00%, and the interest is paid semiannually. The bonds mature after three years. The annual market interest rate at the date of issuance was 11.00%, and the bonds were sold for $842,064. a. What is the amount of the original premium on these bonds? (Use financial calculator for calculating PV's. Round the final answer to the nearest whole dollar.) Premium 6. How much total bond interest expense will be recognized over the life of these bonds? (Do not round intermediate calculations. Pound +he finel enswer to the neerest whele celler)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Problem 14-78 Computing Selling Price and Bond Interest Revenue- Effective Interest and Straight-Line L01 Were the bonds sold at par, discount, or premium? Compute the purchase price of bonds Compute interest revenue for Year 1 Compute interest revenue for Year 2 On January 1 of Year 1, Olympians Inc. purchased for cash, ten $10,000 bonds of Ring Corporation. The bonds pay 4% interest, payable on an annual basis each December 31, and mature in 10 years on December 31. The bonds are classified as held-to-maturity securities. The annual reporting period of Olympians Inc. ends Decem- ber 31. The following table includes five separate scenarios pertaining to these bonds. (1) Bonds Yield 4% (2) Bonds Yield 5% (Use effective interest method) (3) Bonds Yield 5% (Use straight-line interest method) (4) Bonds Yield 3% (Use effective interest method) (5) Bonds Yield 3% (Use straight-line interest method) Required a. Prepare a bond amortization schedule for Year 1 and Year 2 for each of the five…
Problem Two On December 31, 2015, Olde West Corp issued $2,000,000, 10%, 5-year bonds. Interest is payable semiannually on June 30 and December 31. Using the present value tables, (1) determine the issue price of the bonds and (2) show the journal entry that would record the issuance, assuming the market interest rate at the date of issuance was: a) 8% b) 10% c) 12%
Problem 14-6
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 Prepare an amortization table using the straight-line method to amortize the discount for these bonds. (Round your intermediate calculations to the nearest dollar amount.) Carrying Value Semiannual Period- Unamortized End Discount 01/01/2017 06/30/2017 12/31/2017 06/30/2018…
None
Exercise 10-7 Straight-Line: Amortization of bond premium LO P3 Quatro Co. issues bonds dated January 1, 2017, with a par value of $800,000. The bonds' annual contract rate is 13%, 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 12%, and the bonds are sold for $819,700. 1. What is the amount of the premium 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 for these bonds; use the straight-line method to amortize the premium. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare an amortization table for these bonds; use the straight-line method to amortize the premium. (Round your intermediate calculations to the nearest dollar amount.) Unamortized Carrying Value Semiannual Interest Period-End Premium 01/01/2017 06/30/2017 12/31/2017…
Question 23
Exercise 9-12B Record bonds issued at a premium and related semiannual interest (LO9-5) [The following information applies to the questions displayed below.] On January 1, Year 1, a company issues $460,000 of 5% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 4%, the bonds will issue at $511,511. Exercise 9-12B Part 1 Required: 1. Complete the first three rows of an amortization schedule. (Round your final answers to the nearest whole dollar.) Date Cash Paid Interest Decrease in Expense Carrying Value Carrying Value 01/01/Year 1 24 460,000 06/30/Year 1 $ 19,950 $ 10,230 $ 9,720 12/31/Year 1 19,950 10,230 9,720
Exercise 14-17A (Algo) Computing bond interest and price; recording bond issuance LO C2 Brin Company issues bonds with a par value of $610,000. The bonds mature in 9 years and pay 9% annual interest in semiannual payments. The annual market rate for the bonds is 12%. (Table B.1. Table 8.2. Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided.) 1. Compute the price of the bonds as of their issue date. 2. Prepare the journal entry to record the bonds' issuance. Complete this question by entering your answers in the tabs below.. Requirei 1 Required 2 Compute the price of the bonds as of their issue date. (Round all table values to 4 decimal places, and use the rounded table values in calculations. Round intermediate calculations to the nearest dollar amount.) Table Values are Based on: Cash Flow Par (maturity) value Interest (annuity) Price of bonds nw 18 6.0% Answer is complete but not entirely correct. Table Value 0.3503✔ 10.8280 x Amount $610,000 $ 27,450…
EXERCISE 21-3 On January 1, Murphy, Inc., issues 7 percent, 20-year bonds with a face value of $650,000 at 96. Interest is payable on June 30 and December 31. Journalize the following entries: a. Issuance of the bonds b. Payment of semiannual interest on June 30 and December 31 C. Adjusting entry to amortize the discount on December 31, the company's year end
QS 10-8 (Algo) Journalizing premium bond issuance LO P3 Garcia Company issues 12.0%, 15-year bonds with a par value of $370,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10.0%, which implies a selling price of 117 1/4. Prepare the journal entry for the issuance of these bonds for cash on January 1. 51 X Answer is complete but not entirely correct. Date General Journal Debit Credit No January 01 Cash 433,825 1 Bonds payable 63.825 X Premium on bonds payable 370,000 8 9:21 A ere to search a 71°F 99+ 9/29/20 40 TH0 A 144 prt sc delete home end 96 & 8 um %3D backspace lock T Y U 7\ home F G H. L enter pause MI 1 shit HP Pavilion Me time. Now playin
A1