Inc. Tive-year yielding effective interest rate of 12%. Semi annual interest is payable on June 30 and December 31 each year. The firm uses effective interest method to amortize the discount. a) Prepare Amortization schedule showing the necessary information for the first two interest periods. Round amounts to the nearest dollar. b) Prepare the journal entry for the bond issuance on December 31, 2018. c) Prepare the journal entry to record bond interest expense and discount amortization at June 30 2019. d) Prepare the journal entry to record the bond interest expense and discount amortization at December 31, 2019

Inc. Tive-year yielding effective interest rate of 12%. Semi annual interest is payable on June 30 and December 31 each year. The firm uses effective interest method to amortize the discount. a) Prepare Amortization schedule showing the necessary information for the first two interest periods. Round amounts to the nearest dollar. b) Prepare the journal entry for the bond issuance on December 31, 2018. c) Prepare the journal entry to record bond interest expense and discount amortization at June 30 2019. d) Prepare the journal entry to record the bond interest expense and discount amortization at December 31, 2019

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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5 0 V File C13 123456 7 89 Home 18 19 20 Insert Arial X ✓ fx Face amount of bonds Contract rate of interest Draw Term of bonds, years Market rate of interest Interest payment Page Layout く 10 Formulas DATA B ✓ ✓ V Data A B C Compute bond proceeds, amortizing discount by interest method, and interest expense Av $80,000,000 9% 5 11% Semiannual Review Amount ... View Ev ab ≡く D Using formulas and cell references, perform the required analysis, and input your answers into the Amount column. Transfer the numeric results for the green entry cells (C13:C16) into the appropriate fields in CNOWv2 10 for gradina. 11 12 13 a. PV of cash proceeds 14 b. Discount amortized for the 1st interest payment period 15 c. Discount amortized for the 2nd interest payment period 16 d. Interest expense for the 1st year 17 Help Formulas Editing ✓ Currency E $ 500 ✓ C →>>
On the first day of the fiscal year, a company issues a $8,500,000, 6%, 5-year bond that pays semiannual interest of $255,000 ($8,500,000 \times 6% \times (1)/(2)), receiving cash of $7,491, 128. Using straight - line amortization, journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.
On January 1, Innovative Solutions, Inc., issued $200,000 in bonds at face value. The bonds havea stated interest rate of 6 percent. The bonds mature in 10 years and pay interest once per year onDecember 31.Required:1. Prepare the journal entry to record the bond issuance.2. Prepare the journal entry to record the first interest payment on December 31. Assume nointerest has been accrued earlier in the year.3. Assume the bonds were retired immediately after the first interest payment at a quoted priceof 101. Prepare the journal entry to record the early retirement of the bonds.
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ABC company issued a 5 year $200,000 bond. The bond has a stated rate of 6% and the market rate of 8%. The company issued the bond at .91889 or $183,778 on January 1", 2019. AMORTIZATION OF BOND DISCOUNT st H J K Interest on Cash Interest Amortization Carrying Value (K + J) Carrying Year Payment. of Discount. Date Description Debit Credit Value. (A * D) (I - H) (K * E) Jan 1 2019 Jan 1, 2019 June 30, 2019 December 31, 2019 June 30, 2020 December 31, 2020 June 30, 2021 December 31, 2021 June 30, 2022 December 31, 2022 June 30, 2023 December 31, 2023 June 30, 2019 Dec 31, 2019 June 30, 2020 A Bond Par Value Discount on Bond Payable B Coupon Rate Jan 1, 2019 June 30, 2,019 Market Rate Dec 31, 2019 Dec 31, 2020 6month coupon rate (B/2) 6 month market rate (C/2) D June 30, 2020 E Dec 31, 2020 Money Received Discount (A-F) F Dec 31,2023
On January 1, when the market interest rate was 9 percent, Seton Corporation completed a$200,000, 8 percent bond issue for $187,163. The bonds pay interest each December 31 andmature in 10 years. Seton amortizes the bond discount using the straight-line method.Required:1. Prepare the journal entry to record the bond issuance.2. Prepare the journal entry to record the first interest payment on December 31.3. Prepare a bond discount amortization schedule for these bonds. Round calculations to thenearest dollar.
An accounting example: Otter Products inc issued bonds on January 1, 2019. Interest to be paid semi-annually. Term in years is 2; Face value of bonds issued is $200,000; Issue Price $206,000; Specified Interest Rate each payment period is 6% Question. Calculate a. the amount of interest paid in cash every payment period. b. The amount of amortization to be recorded at each interest payment date (use straight-line method) c. complete amoritzation table by calculating interest expense and beginning and ending bond carrying amounts at the each period over 2 years. The term is for 2 years however 3 years is showing on the workbook. How do I calcuate the 3rd year if the problem only says the term is 2 years?
Compute bond proceeds, amortizing discount by interest method, and interest expense Boyd Co. produces and sells aviation equipment. On the first day of its fiscal year, Boyd issued $80,000,000 of five-year, 9% bonds at a market (effective) interest rate of 11%, with interest payable semiannually. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. X Open spreadsheet Compute the following: a. The amount of cash proceeds from the sale of the bonds. Round your answer to the nearest dollar. $ b. The amount of discount to be amortized for the first semiannual interest payment period, using the interest method. Round your answer to the nearest dollar. $ 73,969,806 X $ c. The amount of discount to be amortized for the second semiannual interest payment period, using the interest method. Round your answer to the nearest dollar. 468,339 X $ 442,581 X d. The amount of the bond…
Aggies Inc. issued bonds with a $450,000 face value, 8% interest rate, and a 4-year term on July 1, 2018, and received $510,000. Interest is payable semi-annually. The premium is amortized using the straight-line method. A. July 1, 2018: entry to record issuing the bonds B. Dec. 31, 2018: entry to record payment of interest to bondholders C. Dec. 31, 2018: entry to record amortization of premium Prepare journal entries for the above transactions. If an amount box does not require an entry, leave it blank. A. fill in the blank 2 fill in the blank 3 fill in the blank 5 fill in the blank 6 fill in the blank 8 fill in the blank 9 B. fill in the blank 11 fill in the blank 12 fill in the blank 14 fill in the blank 15 C.
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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 January 1, Nic Inc. issued $100,000 of ten-year, 10% bonds that pay interest semiannually on June 30 and 31st. The bonds are sold to yield 8%. A. Using the information provided in this problem, as well as your time value of money tables to calculate the issue price of the bond. B. Was the bond issued at a premium or a discount, explain your answer.