McCoy Corporation issued $460,000 of 7% 10-year bonds. The bonds are dated and sold on January 1, 20X1. Interest payment dates are January 1 and July 1.The bonds are issued for $428,559 to yield the market interest rate of 8%.Using the effective-interest method, what is the carrying amount of the bonds on the January 1, 20X2 balance sheet?A. $428,559B. $430,685OC. $429,601D. $450,000

The carrying amount, also known as the carrying value, is the asset's cost less accrued…

Answered: McCoy Corporation issued $460,000 of 7%…

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, Parson Freight Company issues 8.5%, 10-year bonds with a par value of $4,300,000. The bonds pay interest semiannually. The market rate of interest is 9.5% and the bond selling price was $4,007,812. The bond issuance should be recorded as: Multiple Choice Debit Cash $4,007,812; debit Interest Expense $292,188; credit Bonds Payable $4,300,000. Debit Cash $4,007,812; credit Bonds Payable $4,007,812. Debit Cash $4,300,000; credit Bonds Payable $4,007,812; credit Discount on Bonds Payable $292,188. Debit Cash $4,300,000; credit Bonds Payable $4,300,000. Debit Cash $4,007,812; debit Discount on Bonds Payable $292,188; credit Bonds Payable $4,300,000.
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 the first day of the fiscal year, a company issues a $1,100,000, 6%, 9-year bond that pays semiannual interest of $33,000 ($1,100,000 × 6% × ½), receiving cash of $1,178,944. Journalize the bond issuance. If an amount box does not require an entry, leave it blank. Interest Expense Premium on Bonds Payable Cash
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
A company issued 8%, 15-year bonds with a par value of $470,000 that pay Interest semiannually. The market rate on the date of issuance was 8%. The journal entry to record each semiannual interest payment is: Multiple Choice 58:17 Debit Bond Interest Expense S18,800; credit Cash $18,800. Debit Bond Interest Expense $37,600; credit Cash $37,600. Debit Bond Interest Payable $31,333; credit Cesh $31,333. Debit Bond Interest Expense $420,000; credit Cash $420,000. due. No entry needed, since no interest is paid until the bond
Subject :- Account
An $800,000 bond issue on which there is an unamortized premium of $57,000 is redeemed for $785,000. Journalize the redemption of the bonds. Refer to the Chart of Accounts for exact wording of account titles.
On January 1, $853,000, 5-year, 10% bonds were issued for $827,410. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize a discount on bonds payable, the semiannual amortization amount is a. $42,650 O Ob. $2,559 Oc. $25,590 Od. $5,118
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Accounting Randolph Company issued $1,000,000 of 6.5%, 8-year bonds dated June 1, 20X3, with semiannual interest payments on June 1 and December 1. The bonds were issued on June 1, 20X3, at 103 3/8. a. Were the bonds issued at a premium, a discount, or at face value? b. Was the market rate of interest higher, lower, or the same as the coupon rate of interest? c. How much cash was received by Randolph Company upon issuance of the bonds
Parrish Industries has bonds outstanding (originally sold for $5,400,000) in the amount of $6,000,000 with a current bond discount at 104 on the market at its year end. What should be the balance of the Fair Value Adjustment on Bonds Payable? Show your work. A. $840,000 debit balance B. $340,000 debit balance C. $840,000 credit balance D. $340,000 credit balance
On January 1, Year 1, Sheffield Company issued bonds with a face value of $480,000, a term of ten years, and a stated interest rate of 7%. The bonds were issued at 106, and interest Sheffield uses the straight-line method amortize bond discounts and premiums. What is the carrying value of the bonds at December 31, Year 4? Multiple Choice O O OO $497,280 $480,000 $491,520 $494,400 payable each December 31.

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