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Mahalo Boat Adventure Inc. has a July 31 year-end. It showed the following partial amortization schedules regarding two bond issues: "Pic" a. Were the bond B issued at a premium and/or discount?  - Discount b. Journalize the issuance of bond B on April 1, 2021. c. What is the contract interest rate for the issue bond B? - 8% d. Interest of how much is paid how often for bond B issued? - 10,800 Quarterly e. What is the term of bond B issue? f. Show how bond B would appear on the balance sheet under non-current liabilities at July 31, 2029. g. Calculate the bond B interest expense that would appear on the income statement for the year ended July 31, 2030. h. Independent of (a) through (g), assume that bond B issues was retired on December 1, 2030, at 97. Record the entries. - Record the interest paid on bonds. - Record the retired bonds.

Mahalo Boat Adventure Inc. has a July 31 year-end. It showed the following partial amortization schedules regarding two bond issues: "Pic" a. Were the bond B issued at a premium and/or discount?  - Discount b. Journalize the issuance of bond B on April 1, 2021. c. What is the contract interest rate for the issue bond B? - 8% d. Interest of how much is paid how often for bond B issued? - 10,800 Quarterly e. What is the term of bond B issue? f. Show how bond B would appear on the balance sheet under non-current liabilities at July 31, 2029. g. Calculate the bond B interest expense that would appear on the income statement for the year ended July 31, 2030. h. Independent of (a) through (g), assume that bond B issues was retired on December 1, 2030, at 97. Record the entries. - Record the interest paid on bonds. - Record the retired bonds.

FINANCIAL ACCOUNTING
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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Mahalo Boat Adventure Inc. has a July 31 year-end. It showed the following partial amortization schedules regarding two bond issues:

"Pic"

a. Were the bond B issued at a premium and/or discount? 

- Discount

b. Journalize the issuance of bond B on April 1, 2021.

c. What is the contract interest rate for the issue bond B?

- 8%

d. Interest of how much is paid how often for bond B issued?

- 10,800 Quarterly

e. What is the term of bond B issue?

f. Show how bond B would appear on the balance sheet under non-current liabilities at July 31, 2029.

g. Calculate the bond B interest expense that would appear on the income statement for the year ended July 31, 2030.

h. Independent of (a) through (g), assume that bond B issues was retired on December 1, 2030, at 97. Record the entries.

- Record the interest paid on bonds.

- Record the retired bonds.

Bond Issue B Period Ending Apr. 1/21 Jul. 1/21 ⠀ Apr. 1/29 Jul. 1/29 Oct. 1/29 Jan. 1/30 Apr. 1/30 Jul. 1/30 Oct. 1/30 Jan. 1/31 Apr. 1/31 Totals (A) Cash Interest Paid $540,000 x 8% x 3/12 *Adjusted for rounding $ 10,800 E 10,800 10,800 10,800 10,800 10,800 10,800 10,800 10,800 10,800 $ 432,000 (B) Period Interest Expense (E) x 8.5% * 3/12 $ 11,091 11,359 11,370 11,383 11,395 11,408 11,421 11,434 11,447 11,460* $ 450,067 (C) Amort. (A) (B) $ 291 559 570 583 595 608 621 634 647 660 $18,067 (D) Unamortized Balance $18,067 17,776 : 4,918 4,348 3,765 3,170 2,562 1,941 1,307 660 0 (E) Carrying Value $540,000 (D) $ 521,933 522,224 535,082 535,652 536, 235 536,830 537,438 538,059 538,693 539,340 540,000
Transcribed Image Text:Bond Issue B Period Ending Apr. 1/21 Jul. 1/21 ⠀ Apr. 1/29 Jul. 1/29 Oct. 1/29 Jan. 1/30 Apr. 1/30 Jul. 1/30 Oct. 1/30 Jan. 1/31 Apr. 1/31 Totals (A) Cash Interest Paid $540,000 x 8% x 3/12 *Adjusted for rounding $ 10,800 E 10,800 10,800 10,800 10,800 10,800 10,800 10,800 10,800 10,800 $ 432,000 (B) Period Interest Expense (E) x 8.5% * 3/12 $ 11,091 11,359 11,370 11,383 11,395 11,408 11,421 11,434 11,447 11,460* $ 450,067 (C) Amort. (A) (B) $ 291 559 570 583 595 608 621 634 647 660 $18,067 (D) Unamortized Balance $18,067 17,776 : 4,918 4,348 3,765 3,170 2,562 1,941 1,307 660 0 (E) Carrying Value $540,000 (D) $ 521,933 522,224 535,082 535,652 536, 235 536,830 537,438 538,059 538,693 539,340 540,000
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