Given the following information from an amortization table for December 31, prepare the journal entry to record the payment of interest. 6% Cash Interest $42,000 4% Effective Interest Premium Amortization $35,953 $6,047 Carrying Value $507,567 OA. Account December 31 Interest Expense Discount on Bonds Payable Cash Debit Credit 35,953 6,047 42.000 O B. Account Debit Credit December 31 Interest Expense 35,953 Premium on Bonds Payable 6,047 Cash 42,000 Account December 31 Interest Expense Discount on Bonds Payable Bonds Payable O D. Account December 31 Interest Payable Premium on Bonds Payable Interest Expense Debit Credit 35,953 6,047 42,000 Debit Credit 42,000 6,047 35,953

Given the following information from an amortization table for December 31, prepare the journal entry to record the payment of interest. 6% Cash Interest $42,000 4% Effective Interest Premium Amortization $35,953 $6,047 Carrying Value $507,567 OA. Account December 31 Interest Expense Discount on Bonds Payable Cash Debit Credit 35,953 6,047 42.000 O B. Account Debit Credit December 31 Interest Expense 35,953 Premium on Bonds Payable 6,047 Cash 42,000 Account December 31 Interest Expense Discount on Bonds Payable Bonds Payable O D. Account December 31 Interest Payable Premium on Bonds Payable Interest Expense Debit Credit 35,953 6,047 42,000 Debit Credit 42,000 6,047 35,953

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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30 and December 31. Portions of the bond amortization schedule appear below: Payment Cash Payment Interest Effective Increase in Balance Outstanding Balance 6,627,273 12345622 320,000 331,364 11,364 6,638,637 320,000 331,932 11,932 6,650,569 320,000 332,528 12,528 6,663,097 320,000 333,155 13,155 6,676,252 320,000 333,813 13,813 6,690,065 320,000 334,503 14,503 6,704,568 ~ ~ 38 320,000 389,107 69,107 7,851,247 39 40 320,000 392,562 72,562 320,000 396,191 76,191 7,923,809 8,000,000 Required: 1. What is the face amount of the bonds? 2. What is the initial selling price of the bonds? 3. What is the term to maturity in years? 4. Interest is determined by what approach? 5. What is the stated annual interest rate? 6. What is the effective annual interest rate? 7. What is the total cash interest paid over the term to maturity? 8. What is the total effective interest expense recorded over the term to maturity?
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.
Entries for TS: Effective Interest Method Note: When answering the following questions, round answers to the nearest whole dollar. Amortization Schedule Journal Entries in Year 1, Journal Entries in Year 2 d. Record the receipt of interest on January 1 of Year 2. e. Record the sale of all of the bonds on January 2 of Year 2 for $166, 100. f. Record the adjustment to the Fair Value Adjustment account on December 31 of Year 2, assuming no additional TS investments.
Majestic Corporation holds an investment in Cromwell bonds that pays interest eachOctober 31. Majestic’s balance sheet at December 31 should reporta. interest expense.b. interest revenue.c. interest payable.d. interest receivable.
Journalize the entries to record the following: If an amount box does not require an entry, leave it blank. a. The initial acquisition of the bonds on May 1. May 1 b. The semiannual interest received on November 1. Nov. 1 c. The sale of the bonds on November 1. Nov. 1 d. The accrual of $1,360 interest on December 31. Dec. 31
Compute bond proceeds, amortizing premium by interest method, and interest expense DATA Face amount of bonds Contract rate of interest Term of bonds, years Market rate of interest Interest payment REQUIRED: a. Compute the amount of cash proceeds from the sale of the bonds. $41,000,000 11% 3 9% Semiannual b. Compute the amount of premium to be amortized for the first semiannual interest payment period, using the interest method. c. Compute the amount of premium to be amortized for the second semiannual interest payment period, using the interest method. d. Compute the amount of the bond interest expense for the first year. Using formulas and cell references from the problem data, perform the required analysis. Formulas entered in the green cells show in the orange cells. Transfer amounts to CNOWv2 for grading. a. PV of cash proceeds b. Premium amortized for the 1st interest payment period c. Premium amortized for the 2nd interest payment period d. Interest expense for the 1st year…
On August 1, 2022, Martinez Corp. issued $489,600, 6%, 10-year bonds at face value. Interest is payable annually on August 1. Martinez’s year-end is December 31. Prepare the journal entry to record the issuance of the bonds. Prepare the journal entry to record the accrual of interest on December 31, 2022. Date Account Titles and Explanation Debit Credit Dec. 31 enter an account title to record the accrual of interest on December 31, 2017enter an account title to record the accrual of interest on December 31, 2017
Federal Semiconductors issued 8% bonds, dated January 1, with a face amount of $830 million on January 1, 2021. The bonds sold for $753,634,356 and mature on December 31, 2040 (20 years). For bonds of similar risk and maturity the market yield was 9%. Interest is paid semiannually on June 30 and December 31. Required: 1. to 3. Prepare the journal entries to record their issuance by Federal on January 1, 2021, interest on June 30, 2021 (at the effective rate) and interest on December 31, 2021 (at the effective rate). 4. At what amount will Federal report the bonds among its liabilities in the December 31, 2021, balance sheet? Complete this question by entering your answers in the tabs below. Req 1 to 3 Req 4 Prepare the journal entries to record their issuance by Federal on January 1, 2021, interest on June 30, 2021 (at the effective rate) and interest on December 31, 2021 (at the effective rate). (If no entry is required for a transaction/event, select "No journal entry required" in…
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Campbell, Inc. produces and sells outdoor equipment. On July 1, 20Y1, Campbell issued $40,000,000 of 10-year, 10% bonds at a market (effective) interest rate of 9%, receiving cash of $42,601,480. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds. 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the interest method. b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the interest method. 3. Determine the total interest expense for 20Y1.
Wildhorse Co. sold $3,310,000, 9%, 10-year bonds on January 1, 2025. The bonds were dated January 1, 2025, and pay interest on January 1. The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually. (a) Your Answer Correct Answer Your answer is correct. Prepare the journal entries to record the issuance of the bonds.assuming they sold at: (1) 104 and (2) 97. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) No. Date Account Titles and Explanation 1. 1/1/25 Cash Bonds Payable Premium on Bonds Payable Debit 3442400 Credit 3310000 132400