Garcia Company issues 10%, 15-year bonds with a par value of $310,000 and semiannual interest payments. On the issue date, theannual market rate for these bonds is 8%, which implies a selling price of 117 %. The effective interest method is used to allocateinterest expense.1. What are the issuer's cash proceeds from issuance of these bonds?2. What total amount of bond interest expense will be recognized over the life of these bonds?3. What amount of bond interest expense is recorded on the first interest payment date?Complete this question by entering your answers in the tabs below.Required 1 Required 2 Required 3What amount of bond interest expense is recorded on the first interest payment date?Bond interest expense Garcia Company issues 10%, 15-year bonds with a par value of $310,000 and semiannual interest payments. On the issue date, theannual market rate for these bonds is 8%, which implies a selling price of 117 %. The effective interest method is used to allocateinterest expense.1. What are the issuer's cash proceeds from issuance of these bonds?2. What total amount of bond interest expense will be recognized over the life of these bonds?3. What amount of bond interest expense is recorded on the first interest payment date?Complete this question by entering your answers in the tabs below.Required 1 Required 2Required 3What total amount of bond interest expense will be recognized over the life of these bonds?Total Bond Interest Expense Over Life of Bonds:Amount repaid:20 payments ofPar value at maturityTotal repaymentsLess amount borrowed (from part 1)Total bond interest expenseRequired 100Required 3>

Bond :— It is one of type of securities that pays fixed periodic interest and face value at the end…

Answered: Garcia Company issues 10%, 15-year…

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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1.On January 1, Year 1, Wayne Company issued bonds with a face value of $600,000, a 6% stated rate of interest, and a 10-year term. Interest is payable in cash on December 31 of each year. Wayne uses the straight-line method to amortize bond discounts and premiums. Assuming Wayne issued the bonds for 102.5, what is the amount of interest expense that will be reported on the income statement for the year ending December 31, Year 1? 2. On January 1, Year 1, Wayne Company issued bonds with a face value of $600,000, a 6% stated rate of interest, and a 10-year term. Interest is payable in cash on December 31 of each year. Wayne uses the straight-line method to amortize bond discounts and premiums. 2.Assuming Wayne issued the bonds for 102.5, what is the amount of interest expense that will be reported on the income statement for the year ending December 31, Year 1? 3.Perry Corporation was established on January 1, Year 1 when it issued 20,000 shares of $50 par, 5 percent, cumulative…
Enviro Company issues 8%, 10-year bonds with a par value of $200,000 and semiannual interest payments. On the Issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87 12. The straight-line method is used to allocate interest expense. 1. What are the issuer's cash proceeds from Issuance of these bonds? 2. What total amount of bond Interest expense will be recognized over the life of these bonds? 3. What is the amount of bond Interest expense recorded on the first interest payment date? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Answer is complete but not entirely correct. Required 3 What total amount of bond interest expense will be recognized over the life of these bonds? Note: Round final answers to the nearest whole dollar amount. payments of Par value at maturity Total Bond Interest Expense Over Life of Bonds: Amount repaid: 20 $ 168,000 $ 3,360,000 200,000 3,560,000 Total repayments Less amount…
Ellis Company issues 6.5%, five-year bonds dated January 1, 2021, with a $250,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $255,333. The annual market rate is 6% on the issue date. Required: 1. Compute the total bond interest expense over the bonds' life. 2. Prepare an effective interest amortization table for the bonds' life. 3. Prepare the journal entries to record the first two interest payments.
Hw.26.
On June 1, 2024, Ivanhoe Bottle Company sold $3,240,000 in long-term bonds for $2,841,822. The bonds will mature in 10 years and have a stated interest rate of 8% and a yield rate of 10 %. The bonds pay interest annually on May 31 of each year. The bonds are to be accounted for under the effective - interest method. (a) Construct a bond amortization table for this problem to indicate the amount of interest expense and discount amortization at each May 31. Include only 531 the first four years. (Round answers to 0 decimal places, e.g. 25,000.) \table[[Date, Credit Cash, Debit Interest Expense,Credit Bond Discount Carrying Amount of Bonds], [6/1/24,,,], [₁₁/25,,,], [¸₁/27,,,], [28 ,,,]] 5 31 5 31
Garcia Company issues 11.50%, 15-year bonds with a par value of $450,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 15.50%, which implies a selling price of 80 1/2. The effective interest method is used to allocate interest expense. What are the issuer's cash proceeds from issuance of these bonds? What total amount of bond interest expense will be recognized over the life of these bonds? What amount of bond interest expense is recorded on the first interest payment date?
Aaron's chairs is in the process of preparing a production costbudget for August. Actual costs in July for 120 chairs were:Materials cost $4,730Labor cost 2,940Rent 1,500Depreciation 2,500Other fixed costs 3,200Materials and labor are the only variable costs. If productionand sales are budgeted to change to 120 chairs in August,how much is the expected total variable cost on the Augustbudget?
3. On July 1, 2018, Volunteer Inc. issued bonds with a $500,000 face value at 108.0 and the 5-year bonds have a 10% interest rate in a market with a rate of 8%. Interest is payable semi-annually and the effective-interest method is used for amortization. Prepare journal entries for the following transactions. Premium on Bonds Payable Interest Income Discount on Bonds Payable Interest Expense Cash Bonds Payable PLEASE NOTE: For each of the following journal entries there is one account's treatment (DR or CR), that depends on whether it is a bond issued at a premium or a discount. You are to identify if it is a DR or a CR. You must enter the account names exactly as written above and all dollar amounts will be rounded to whole dollars with "$" and commas as needed (i.e. $12,345). July 1, 2018: to record issuing the bonds DR DR/CR ? CR Dec. 31, 2018: to record the amortization & payment of interest to bondholders: DR…
Enviro Company issues 11.00%, 10-year bonds with a par value of $310,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 8.00%, which implies a selling price of 124.875. The straight-line method is used to allocate interest expense. 1. What are the issuer’s cash proceeds from issuance of these bonds?2. What total amount of bond interest expense will be recognized over the life of these bonds?3. What is the amount of bond interest expense recorded on the first interest payment date?
Enviro Company issues 8%, 10-year bonds with a par value of $290,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87 1⁄2. The straight-line method is used to allocate interest expense. 1. What are the issuer's cash proceeds from issuance of these bonds?2. What total amount of bond interest expense will be recognized over the life of these bonds?3. What is the amount of bond interest expense recorded on the first interest payment date?
Basil Corporation issues for cash $1,000,000 of 8%, 10-year bonds, interest payable annually, at a time when the market rate of interest is 7%. The straight-line method is adopted for the amortization of bond discount or premium. Which of the following statements is true? The carrying amount decreases from its amount at issuance date to $1,000,000 at maturity. The carrying amount increases from its amount at issuance date to $1,000,000 at maturity. The amount of annual interest paid to bondholders increases over the 10-year life of the bonds. The amount of annual interest expense decreases as the bonds approach maturity.
Diana Inc. issued $100,000 of its 9%, 5-year bonds for $96,149 when the market rate was 10%. The bonds pay interest semi-annually. Prepare an amortization table for the first three payments. PLEASE NOTE: All whole dollar amounts will be with "$" and commas as needed (i.e. $12,345). Semiannual Interest Period Semiannual Interest Expense Semiannual Interest Payment Amortization of Discount Ending Carrying Value 1 2 3

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