Following information is available for a bond issued on January 1, 2021: Period Beginning Balance Accrued Interest Amortization Payment Amortized cost 31/12/2021 996,843 41,238 248,762 290,000 748,081 31/12/2022 748,081 30,947 249,053 280,000 499,028 31/12/2023 499,028 20,644 249,356 270,000 249,672 31/12/2024 249,672 10,328 249,672 260,000 - It is also known that at time bond was issued, market rate was 5% per annum.1.- Determine commission (as a % of the market price) paid by investor.2.- Determine percentage decrease in investor's rate of return as a result of commission.3.- Perform accounting entries as of December 31, 2023.4.- Make corresponding accounting entries as of 12/1/2024 if issuer indicates that it will be able to pay ONLY 60% of remaining cash flows and there was also an estimated IMPAIRMENT of $12,115. 5.- Make accounting entries at December 31, 2024 if investor receives $156,000.
Following information is available for a bond issued on January 1, 2021: Period Beginning Balance Accrued Interest Amortization Payment Amortized cost 31/12/2021 996,843 41,238 248,762 290,000 748,081 31/12/2022 748,081 30,947 249,053 280,000 499,028 31/12/2023 499,028 20,644 249,356 270,000 249,672 31/12/2024 249,672 10,328 249,672 260,000 - It is also known that at time bond was issued, market rate was 5% per annum.1.- Determine commission (as a % of the market price) paid by investor.2.- Determine percentage decrease in investor's rate of return as a result of commission.3.- Perform accounting entries as of December 31, 2023.4.- Make corresponding accounting entries as of 12/1/2024 if issuer indicates that it will be able to pay ONLY 60% of remaining cash flows and there was also an estimated IMPAIRMENT of $12,115. 5.- Make accounting entries at December 31, 2024 if investor receives $156,000.
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter14: Long-term Liabilities: Bonds And Notes
Section: Chapter Questions
Problem 6PEA
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Question
Following information is available for a bond issued on January 1, 2021:
| Period | Beginning Balance | Accrued Interest | Amortization | Payment | Amortized cost |
| 31/12/2021 | 996,843 | 41,238 | 248,762 | 290,000 | 748,081 |
| 31/12/2022 | 748,081 | 30,947 | 249,053 | 280,000 | 499,028 |
| 31/12/2023 | 499,028 | 20,644 | 249,356 | 270,000 | 249,672 |
| 31/12/2024 | 249,672 | 10,328 | 249,672 | 260,000 | - |
It is also known that at time bond was issued, market rate was 5% per annum.
1.- Determine commission (as a % of the market price) paid by investor.
2.- Determine percentage decrease in investor's
3.- Perform accounting entries as of December 31, 2023.
4.- Make corresponding accounting entries as of 12/1/2024 if issuer indicates that it will be able to pay ONLY 60% of remaining
5.- Make accounting entries at December 31, 2024 if investor receives $156,000.
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