Hambelton Ltd. issued $5,000,000 of 5% bonds payable on 1 September 20X9 to yield 4%. Interest on the bonds is paid semi-annuallyand is payable each 28 February and 31 August. The bonds were dated 1 March 20X8, and had an original term of five years. Theaccounting period ends on 31 December. The effective-interest method is used. (PV of $1, PVA of $1, and PVAD of $1.) (Useappropriate factor(s) from the tables provided.)2. Prepare a bond amortization table for the life of the bond. (Round time value factor to 5 decimal places. Do not roundintermediate calculations. Round your final answers to the nearest whole dollar amount. Leave no cells blank - be certain to enter"O" wherever required.)PremiumAmortizationInterestInterestUnamortizedNet BondDatePaymentExpensePremiumLiabilityOpening1247 3.Prepare journal entries to record the issuance of the bonds, payment of interest, and all necessary adjustments through to the end of20X10. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round youranswers to the nearest whole dollar amount.)View transaction listJournal entry worksheet13 4>Record the issuance of bonds at a premium.Note: Enter debits before credits.DateGeneral JournalDebitCredit1 September 20X9Record entryClear entryView general journal3.Prepare journal entries to record the issuance of the bonds, payment of interest, and all necessary adjustments through to the end of20X10. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round youranswers to the nearest whole dollar amount.)View transaction listRecord the issuance of bonds at a premium.>12Record the accrual of interest expense.3Record the payment of interest on bonds.4Record the payment of interest on bonds.5 Record the accrual of interest expense.CreditNote := journal entry has been enteredRecord entryClear entryView general journal4. Calculate the interest expense that would be recorded in each of 20X9 and 20X10. (Do not round intermediate calculations.Round your final answers to the nearest whole dollar amount.)20X920X10Interest expense5. Show how the bond would be presented on the statement of financial position as of 31 December 20X9 and 20X10. (Do not roundintermediate calculations. Round your final answers to the nearest whole dollar amount.)HAMBELTON LIMITEDStatement of Financial Position (Partial)As of 31 December20X920X10Bonds payablePremium on bond payable$0 $

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Hambelton Ltd. issued $5,000,000 of 5% bonds payable on 1 September 20X9 to yield 4%. Interest on the bonds is paid semi-annually and is payable each 28 February and 31 August. The bonds were dated 1 March 20X8, and had an original term of five years. The accounting period ends on 31 December. The effective-interest method is used. (PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) 2. Prepare a bond amortization table for the life of the bond. (Round time value factor to 5 decimal places. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. Leave no cells blank - be certain to enter "O" wherever required.) Interest Interest Premium Unamortized Net Bond Date Dumium

Hambelton Ltd. issued $5,000,000 of 5% bonds payable on 1 September 20X9 to yield 4%. Interest on the bonds is paid semi-annually and is payable each 28 February and 31 August. The bonds were dated 1 March 20X8, and had an original term of five years. The accounting period ends on 31 December. The effective-interest method is used. (PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) 2. Prepare a bond amortization table for the life of the bond. (Round time value factor to 5 decimal places. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. Leave no cells blank - be certain to enter "O" wherever required.) Interest Interest Premium Unamortized Net Bond Date Dumium

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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Diaz Company issued bonds with a face value of $127,000 on January 1, Year 1. The bonds had a stated interest rate of 8 percent and a 10-year term. Interest is paid in cash annually, beginning December 31, Year 1. The bonds were issued at 98. The straight-line method is used for amortization. Required a. Use a financial statements model to demonstrate how (1) the January 1, Year 1, bond issue and (2) the December 31, Year 1, recognition of interest expense, including the amortization of the discount and the cash payment, affect the company's financial statements. b. Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, Year 1. c. Determine the amount of interest expense reported on the Year 1 income statement. d. Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, Year 2. e. Determine the amount of interest expense reported on the Year 2 income statement.
On January 1, 20X1, Nicks Corporation issued $250 million of floating-rate debt. The debt carries a contractual interest rate of “LIBOR plus 5.5%,” which is reset annually on January 1 of each year. The LIBOR rates on January 1, 20X1, 20X2, and 20X3, were 6.5%, 7.0%, and 5.5%, respectively. Required: Prepare a journal entry to record the issuance of the bonds on January 1, 20X1, at par. What was the effective (or market) interest rate when the bonds were issued? Prepare a journal entry to record interest expense for 20X1, 20X2, and 20X3. Assume that interest is paid annually on December 31. What is the market value of the debt at December 31, 20X3, assuming Nicks Corporation’s credit risk has not changed.
On January 1 of the current year, Barton Corporation issued 12% bonds with a face value of $87,000. The bonds are sold for $82,650. The bonds pay interest semiannually on June 30 and December 31, and the maturity date is December 31, five years from now. Barton records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 is )a. $435 b. $5,220 )c. $11,310 d. $11,745
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On January 1, Year 1, Twain Corporation sold $620,000 of its own 5 percent, 10-year bonds. Interest is payable annually on December 31. The bonds were sold to yield an effective interest rate of 6 percent. Twain uses the effective interest rate method. The bonds sold for $574,368. Requireda. Prepare the journal entry for the issuance of the bonds.b. Prepare the journal entry for the amortization of the bond discount and the payment of the interest at December 31, Year 1. (Assume effective interest amortization.)c. Prepare the journal entry for the amortization of the bond discount and the payment of interest on December 31, Year 1. (Assume straight-line amortization.)d. Calculate the amount of interest expense for Year 2. (Assume effective interest amortization.) e. Calculate the amount of interest expense for Year 2. (Assume straight-line amortization.)
On January 1 of the current year, Barton Corporation issued 11%, 5-year bonds with a face value of $112,000. The bonds are sold for $106,400. The bonds pay interest semiannually on June 30 and December 31, and the maturity date is December 31, 5 years from now. Barton records straight-line amortization of the bond discount. The bond interest expense for the current year ended December 31 is a.$560 b.$13,440 c.$14,000 d.$6,160
Franklin corporation issues $84,000, 8%, 5-year bonds on January 1, for $87,780. Interest is paid semiannually on January 1 and July 1. If Franklin uses the straight-line method of amortization of bond premium, the amount of bond interest expense to b recognized on July 1 is O a. $3,738 O b. $6,720 Oc. $3.360 d. $2,982
On 31 December 20X7, a company has the following bond on the statement of financial position: Bond payable, 7%, interest due semi-annually on 31 Dec. and 30 June; maturity date, 30 June 20X11 Premium on bonds payable $5,600,000 47,040 $5,647,040
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.
On January 1, 20x6, SAM COMPANY. issued 3-year bonds with a face value of P3,000,000 for P2,850,756. The bonds carry an interest of 8% per year payable annually on December 31. On the date of issuance, the company incurred and paid commission to underwriters of P15,000. The bonds are to be properly classified as financial liabilities at fair value through profit or loss. On December 31, 20x6, the bonds are quoted at 103%. Assume that there are no changes due to credit risk. On January 1, 20x7, the bonds are retired at 104%. How much is the interest expense for 20x6?
The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: 20Y1 July 1 Issued $74,000,000 of 20-year, 11% callable bonds dated July 1, 20Y1, at a market (effective) rate of 13%, receiving cash of $63,532,267. Interest is payable semiannually on December 31 and June 30. Dec. 31 Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. 20Y2 June 30 Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. Dec. 31 Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. 20Y3 June 30 Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $9,420,961 after payment of interest and amortization of discount have been recorded. (Record the…
Wayne Company issued bonds with a face value of $1,020,000, a 10% stated rate of interest, and a 10-year term. The bonds were issued on January 1, Year 1, and Wayne uses the straight-line method of amortization. Interest is paid annually on December 31. Assuming Wayne issued the bonds for 106, what is the carrying value of the bonds on the December 31, Year 1 balance sheet?