**Bond Payable Assumptions for Educational Purposes**### OverviewThis exercise involves the journalization of bond issuances and the first semiannual interest payment under three different assumptions. The company's approach includes the amortization of bond premiums and discounts using the effective-interest amortization method. All calculations should be rounded to the nearest whole dollar.### Assumptions1. **Initial Issuance**: - **Bond Details**: Ten-year bonds with a face value of $89,000 and a stated interest rate of 14%, paid semiannually. - **Market Rate**: At issuance, the market interest rate is also 14%. - **Present Value**: The present value of these bonds at issuance is $89,000.2. **Higher Market Rate**: - **Bond Details**: Same bond specifications as in assumption 1. - **Market Rate**: The market interest rate is 16% at the time of issuance. - **Present Value**: As a result of the higher market rate, the present value of the bonds at issuance drops to $80,301.3. **Lower Market Rate**: - **Bond Details**: Same bond specifications as in assumption 1. - **Market Rate**: The market interest rate is 12% at issuance. - **Present Value**: With a lower market rate, the present value of the bonds at issuance increases to $99,226.The task is to record debits before credits without including explanatory notes in journal entries.

A bond is a fixed pay instrument issued to represents to an advance made by a financial specialist…

Journalize issuance of the bond and the first semiannual interest payment under each of the three assumptions. The company amortizes bond premium and discount by the effective-interest amortization method. Explanations are not required. (Record debits first, then credits. Exclude explanations from any journal entries. Round your final answers te the nearest whole dollar.) O More Info - X semiannual 1. Ten-year bonds payable with face value of $89,000 and stated interest rate of 14%, paid semiannually. The market rate of interest is 14% at issuance. The present value of the bonds at issuance is $89,000. 2. Same bonds payable as in assumption 1, but the market interest rate is 16%. The present value of the bonds at issuance is $80,301. 3. Same bonds payable as in assumption 1, but the market interest rate is 12%. The present value of the bonds at issuance is $99,226.

Journalize issuance of the bond and the first semiannual interest payment under each of the three assumptions. The company amortizes bond premium and discount by the effective-interest amortization method. Explanations are not required. (Record debits first, then credits. Exclude explanations from any journal entries. Round your final answers te the nearest whole dollar.) O More Info - X semiannual 1. Ten-year bonds payable with face value of $89,000 and stated interest rate of 14%, paid semiannually. The market rate of interest is 14% at issuance. The present value of the bonds at issuance is $89,000. 2. Same bonds payable as in assumption 1, but the market interest rate is 16%. The present value of the bonds at issuance is $80,301. 3. Same bonds payable as in assumption 1, but the market interest rate is 12%. The present value of the bonds at issuance is $99,226.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Issuing Bonds at a Discount On the first day of the fiscal year, a company issues a $4,500,000, 10%, 9-year bond that pays semiannual interest of $225,000 ($4,500,000 × 10% × ½), receiving cash of $3,795,809. Journalize the bond issuance. If an amount box does not require an entry, leave it blank. - Select - - Select - - Select - - Select - - Select - - Select -
v2.cengagenow.com 403114 Discount Amortization On the first day of the fiscal year, a company issues a $1,100,000, 7%, 7-year bond that pays semiannual interest of $38,500 ($1,100,000 x 7% x 1/2), receiving cash of $1,041,903. 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.
Please do not give solution in image format ? And Fast Answering Please ? And Explain Proper Step by Step.
Redemption of Bonds Payable A $1,900,000 bond issue on which there is an unamortized premium of $101,264 is redeemed for $1,979,000. Journalize the redemption of the bonds. If an amount box does not require an entry, leave it blank.
Assume bonds payable are amortized using the straight-line amortization method unless stated otherwise. Determining bond amounts Savvy Drive-Ins borrowed money by issuing $3,500,000 of 9% bonds payable at 99.5. Interest is paid semiannually. Requirements How much cash did Savvy receive when it issued the bonds payable? How much must Savvy pay back at maturity? How much cash interest will Savvy pay each six months?
5 On January 1, Ruiz Company issued bonds as follows: Face Value: Number of Years: Stated Interest Rate: Interest payments per year 7 B 9 0 1 2 AWN IC $500,000 a) Required: 1) Calculate the bond selling price given the two market interest rates below. Use formulas that reference data from this worksheet and from the appropriate future or present value tables (found by clicking the tabs at the botto this worksheet). Note: Rounding is not required. 15 7% 2 Annual Market Rate Semiannual Interest Payment: PV of Face Value: +PV of Interest Payments: Bond Selling Price: Annual Market Rate Semiannual Interest Payment: PV of Face Value: +PV of Interest Payments: = Bond Selling Price: 9% $17,500 133,500.01 285,055.55 418,555.56 6.00% $17,500 205,993.38 5343,007.72 $549,001.10 +
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.
Redemption of Bonds Payable A $940,000 bond issue on which there is an unamortized premium of $68,000 is redeemed for $761,000. Journalize the redemption of the bonds. If an amount box does not require an entry, leave it blank.
Compute bond proceeds, amortizing premium by interest method, and interest expense Ware Co. produces and sells motorcycle parts. On the first day of its fiscal year, Ware issued $44,000,000 of 5-year, 13% bonds at a market (effective) interest rate of 10%, 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 premium to be amortized for the first semiannual interest payment period, using the interest method. Round your answer to the nearest dollar. c. The amount of premium to be amortized for the second semiannual interest payment period, using the interest method. Round your answer to the nearest dollar. d. The amount of the bond interest expense for the first year. Round your…
please help solve and explain equation
Premium Amortization On the first day of the fiscal year, a company issues a $5,300,000, 8%, five-year bond that pays semiannual interest of $212,000 ($5,300,000 x 8% x 2), receiving cash of $5,520,390. Journalize the first interest payment and the amortization of the related bond premium. If an amount box does not require an entry, leave it blank. 00
Exercise 14-15 Allocation of interest for bonds sold at a premium LO6 Tahoe Tent Ltd. issued bonds with a par value of $802,000 on January 1, 2020. The annual contract rate on the bonds was 13.00%, and the interest is paid semiannually. The bonds mature after three years. The annual market interest rate at the date of issuance was 11.00%, and the bonds were sold for $842,064. a. What is the amount of the original premium on these bonds? (Use financial calculator for calculating PV's. Round the final answer to the nearest whole dollar.) Premium b. How much total bond interest expense will be recognized over the life of these bonds? (Do not round intermediate calculations. Round the final answer to the nearest whole dollar.) Total interest expense