M10-11 (Algo) Recording the Issuance and Interest Payments of a Bond Issued at a Discount (Straight- Line Amortization with a Discount Account) LO10-4 Wefald Company sold bonds with a face value of $608,000 for $562,000. The bonds have a coupon rate of 6 percent, mature in 5 years, and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Using a discount account, record the sale of the bonds on January 1 and the payment of interest on June 30 of this year. Wefald uses the straight-line amortization method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to nearest whole dollar amounts.) View transaction list Journal entry worksheet < 1 2 Record the payment of interest on June 30 using straight-line amortization. Note: Enter debits before credits. Date June 30 Record entry General Journal Clear entry Debit Credit View general journal

M10-11 (Algo) Recording the Issuance and Interest Payments of a Bond Issued at a Discount (Straight- Line Amortization with a Discount Account) LO10-4 Wefald Company sold bonds with a face value of $608,000 for $562,000. The bonds have a coupon rate of 6 percent, mature in 5 years, and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Using a discount account, record the sale of the bonds on January 1 and the payment of interest on June 30 of this year. Wefald uses the straight-line amortization method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to nearest whole dollar amounts.) View transaction list Journal entry worksheet < 1 2 Record the payment of interest on June 30 using straight-line amortization. Note: Enter debits before credits. Date June 30 Record entry General Journal Clear entry Debit Credit View general journal

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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On January 1, Shanghai Fashions issued $325,000 of 6%, 3-year bonds when the market rate of interest was 10%. The bonds pay interest semiannually on June 30 and December 31. A. How much are the proceeds that Shanghai Fashions Company will receive on the issue date of the bonds? B. Prepare an amortization table for the bond issue. C. If the bonds are retired at the end of Year 2 at 104.5% of the maturity value, how much gain or loss on retirement will be reported?
Bonds sold at Premium: Use the following information for Problems #4 - #6: Summatra Corporation issued $1,200,000 of five year 8% term bonds on January 1, 2012 with interest payable twice annually (each July 1 and January 1). The market rate of interest for such bonds is 6%. Record the journal entry on Summatra's for issuance of the bonds:
M10-11 (Algo) Recording the Issuance and Interest Payments of a Bond Issued at a Discount (Straight- Line Amortization with a Discount Account) LO10-4 Wefald Company sold bonds with a face value of $608,000 for $562,000. The bonds have a coupon rate of 6 percent, mature in 5 years, and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Using a discount account, record the sale of the bonds on January 1 and the payment of interest on June 30 of this year. Wefald uses the straight-line amortization method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to nearest whole dollar amounts.) View transaction list Journal entry worksheet 1 2 Record the sale of the bonds on January 1. Note: Enter debits before credits. Date January 01 Record entry General Journal Clear entry Debit Credit View general journal >
Use the following to answer questions 8-10 (Round answers to the nearest dollar) The company issues 9%, 10-year bonds with a total face amount of $100,000. The market interest rate for bonds of similar risk and maturity is 9%. Interest is paid semiannually. What is the issue price of the bond? When the company records the 2nd interest payment, how much will the company record for 8. $ 9. $ interest expense? 10. $ . What is the bond liability (carrying amount) after the 2nd interest payment?
1. On January 1, a company issues bonds dated January 1 with a par value of $300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $312,177. The journal entry to record the issuance of the bond is: Debit Cash $312,177; credit Discount on Bonds Payable $12,177; credit Bonds Payable $300,000. Debit Cash $300,000; debit Premium on Bonds Payable $12,177; credit Bonds Payable $312,177. Debit Bonds Payable $300,000; debit Interest Expense $12,177; credit Cash $312,177. Debit Cash $312,177; credit Premium on Bonds Payable $12,177; credit Bonds Payable $300,000. Debit Cash $312,177; credit Bonds Payable $312,177.
. On 1/1/21, Ehrlich Co. issued 4 year bonds with a face value of $700,000. The stated (bond) rate is 8%, payable semiannually on 1/1 and 7/1. The market rate at the time of issuance was 10%. a. Calculate the issue price of the bonds. b. Prepare the journal entry for the issuance of the bonds. c. Complete the amortization table below. Date cash paid interest expense amortization carrying value 1/1/21 7/1/21 1/1/22 7/1/22 d. Prepare the journal entries for the 7/1/21 interest payment and amortization, 12/31/21 interest accrual and amortization, and 1/1/22 interest payment. e. Prepare the journal entry for retirement of the bonds at maturity f. Assume instead that the bonds were redeemed on 7/1/22 at 102. Prepare the journal entry.
Atom Endeavour Co. issued $48 million face amount of 12.0% bonds when market interest rates were 13.38% for bonds of similar risk and other characteristics. Required: a. How much interest will be paid annually on these bonds? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.) Annual interest payment b. Were the bonds issued at a premium or discount? O Premium O Discount c. Will the annual interest expense on these bonds be more than, equal to, or less than the amount of interest paid each year? O Interest expense will be less than the interest paid. O Interest expense will be more than the interest paid. O Interest expense will be equal to the interest paid.
A business is planning to issue 10%, 6-year bonds with a par value of $525,000 on January 1 of the current year. The bonds pay semiannual interest on June 30 and December 31. Assuming the market rate for the bonds on the issue date is 8%, compute the total cash proceeds from the bond issue. Note: Use factor(s) from tables provided. Round "Table value" to 4 decimals and final answer to the nearest whole dollar. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Table Values are Based on: Cash Flow Present (maturity) value Interest (annuity) Total cash proceeds n = Table Value Amount Present Value
NoleCo issues bonds on January 1, 20X2. The bonds mature ten years from this date and pay interest semi-annually on June 30 and December 31 each year. The face value of the bonds is $500,000 and the coupon/stated rate is 8%. The market rate on the issue date is 7%. The bonds were issued for $535,531. Required: Complete the three parts below. Part A: The interest expense that NoleCo should recognize on June 30, 20X2 is: $20,000 $17,500 $18,744 $18,826 $21,421 Part B: The interest expense that NoleCo should recognize on December 31, 20X2 is: $18,686 $20,000 $18,788 $18,700 $17,500 Part C: The carrying value of these bonds on December 31, 20X2 (after the interest payment on that date) is: $533,248 $502,556 $500,000 $538,087 $532,975
Diaz Company issued bonds with a $149,000 face value on January 1, Year 1. The bonds had a 6 percent stated rate of interest and a 10-year term. Interest is paid in cash annually, beginning December 31, Year 1. The bonds were issued at 97. The straight-line method is used for amortization. Required a. Use a financial statements model like the one shown next 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. Note: Use + for increase or for decrease. In the Statement of Cash Flows column, use the initials OA to designate operating activity, IA for investing activity, and FA for financing activity. Not all cells require input. Effect of Transactions on Financial Statements Event Number Assets Balance Sheet Liabilities Income Statement Stockholders' Equity Revenue Expense Net Income Statement of Cash Flows 1. 2.…
P10-6 (Algo) Recording and Reporting Bonds Issued at a Discount LO10-4 [The following information applies to the questions displayed below.] PowerTap Utilities is planning to issue bonds with a face value of $2,300,000 and a coupon rate of 7 percent. The bonds mature in 10 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. PowerTap uses the effective-interest amortization method. Assume an annual market rate of interest of 8 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1) Note: Use appropriate factor(s) from the tables provided. P10-6 Part 2 2. What amount of interest expense should be recorded on June 30 and December 31 of this year? Note: Round your final answers to nearest whole dollar amount. Interest expense > Answer is complete but not entirely correct. $ June 30 41,988 × $ December 31 43,528
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.