Financial Accounting: Q. 14 Crystaline Porcelain Company issues $1,250,000 of its 12%, 8-year bonds at 98 on March 31, 2022. The bonds pay interest on March 31 and September 30. Assume that Crystaline uses the straight-line method for amortization. What net amount will be reported for the bonds on the September 30, 2022 balance sheet?

Financial Accounting: Q. 14 Crystaline Porcelain Company issues $1,250,000 of its 12%, 8-year bonds at 98 on March 31, 2022. The bonds pay interest on March 31 and September 30. Assume that Crystaline uses the straight-line method for amortization. What net amount will be reported for the bonds on the September 30, 2022 balance sheet?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 7P: Wilbury Corporation issued 1 million of 13.5% bonds for 985,071.68. The bonds are dated and issued...

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Wilbury Corporation issued 1 million of 13.5% bonds for 985,071.68. The bonds are dated and issued October 1, 2019, are due September 30, 2020, and pay interest semiannually on March 31 and September 30. Assume an effective yield rate of 14%. Required: 1. Prepare a bond interest expense and discount amortization schedule using the straight-line method. 2. Prepare a bond interest expense and discount amortization schedule using the effective interest method. 3. Prepare adjusting entries for the end of the fiscal year December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. If income before interest and income taxes of 30% in 2020 is 500,000, compute net income under each alternative. 5. Assume the company retired the bonds on June 30, 2020, at 98 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight line method of amortization b. effective interest method of amortization 6. Compute the companys times interest earned (pretax operating income divided by interest expense) for 2020 under each alternative.
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Subject :- Accountion
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