**Amortization Schedule for Oak Branch Inc. Bonds**Oak Branch Inc. issued $900,000 of 5%, 10-year bonds when the market rate was 4%. They received $973,595. Interest was paid semi-annually. The table below outlines the amortization schedule for the first three years of the bonds. All monetary values are rounded to the nearest whole dollar.| Date | Cash Interest Payment | Interest on Carrying Value | Amortization of Premium | Carrying Value ||---------------|-----------------------|----------------------------|------------------------|-----------------|| Jan. 1, Year 1| | | | $973,595 ✓ || June 30, Year 1| $22,500 ✓ | $19,472 ✓ | $3,028 ✓ | $970,567 ✓ || Dec. 31, Year 1| $22,500 ✓ | $19,411 ✓ | $3,089 ✓ | $967,478 ✓ || June 30, Year 2| $22,500 ✓ | $19,350 ✓ | $3,150 ✓ | $964,328 ✓ || Dec. 31, Year 2| $22,500 ✓ | $19,287 ✓ | $3,213 ✓ | $961,114 ✗ || June 30, Year 3| $22,500 ✓ | $19,222 ✓ | $3,278 ✓ | $957,837 ✓ || Dec. 31, Year 3| $22,500 ✓ | $19,157 ✓ | $3,343 ✓ | $954,493 ✗ |**Explanation:**- **Cash Interest Payment**: The fixed interest payment of $22,500 made semi-annually based on the bond's face value and stated interest rate (5% of $900,000, divided by 2 for semi-annual payments).- **Interest on Carrying Value**: The interest calculated on the carrying value of the bond, using the market rate of 4%. This decreases as the premium is amortized.- **Amortization of Premium**: The amount by which the premium is reduced each period, calculated as the difference between the cash interest payment and the interest on carrying value.- **Carrying

Bond is a debt security which is issued by borrower to investors. It is source of raising money from…

Answered: Oak Branch Inc. issued $900,000 of 5%,…

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

On January 1, a company issues bonds dated January 1 with a par value of $600,000. The bonds mature in 3 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The bonds are sold for $564,000. The journal entry to record the first interest payment using straight-line amortization is:
Alvarez Corporation issued $130,000 par value, 8%, 4-year bonds (i.e., there were 130 of $1,000 par value bonds in the issue). Interest is payable semiannually each January 1 and July 1 with the first interest payment due at the end of the period on July 1. Determine the issue price of the bonds if the market rate of interest is 6%. Future Value of $1 table Future Value of an Ordinary Annuity table Future Value of an Annuity Due table Present Value of $1 table Present Value of an Ordinary Annuity table Present Value of an Annuity Due table Determine the issue price of the bonds. (Use the present value and future value tables, the formula method, a financial calculator, or a spreadsheet for your calculations. If using present and future value tables or the formula method, use factor amounts rounded to five decimal places, X.XXXXX. Round your final answers to the nearest whole dollar.) The issue price of the bonds =
Fill in the Blank Question Î A company issues $100,000 of 5%, 10-year bonds dated January 1. The bonds pay interest semiannually on June 30 and December 31 each year. If the bonds are sold at par value, the issuer records the sale with a debit to in the amount of $
Diana Inc. issued $150,000 of its 9%, 5-year bonds for $144,218 when the market rate was 10%. The bonds pay interest semi-annually. Prepare an amortization table for the first three payments. Round intermediate and final answers to whole dollar amount. Cash InterestPayment Interest onCarrying Value Amortization ofDiscount Carrying Value
On January 1, a company issues bonds dated January 1 with a par value of $560,000. The bonds mature in 5 years. The contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The market rate is 9% and the bonds are sold for $537,828. The journal entry to record the second interest payment using the effective interest method of amortization is:
Diana Inc. issued $300,000 of its 5%, 5-year bonds for $287,215 when the market rate was 6%. The bonds pay interest semi-annually. Prepare an amortization table for the first three payments. Round intermediate and final answers to whole dollar amount. Cash InterestPayment Interest onCarrying Value Amortization ofDiscount Carrying Value Jan. 1, Year 1 $fill in the blank 1 June 30, Year 1 $fill in the blank 2 $fill in the blank 3 $fill in the blank 4 fill in the blank 5 Dec. 31, Year 1 fill in the blank 6 fill in the blank 7 fill in the blank 8 fill in the blank 9 June 30, Year 2 fill in the blank 10 fill in the blank 11 fill in the blank 12 fill in the blank 13
On May 1, Holiday Company issued $200,000, 9%, 10-year bonds for $213,591 when the market rate was 8%. Prepare the general journal entry for the first semiannual interest payment and bond premium amortization on November 1, using the effective interest method. Round all amounts to the nearest dollar.
F.
On January 1 year 1, a company issues 7%, 10 year $300,000 par value bonds that pay annual interest on December 31 of every year. The bonds were issued at 104. Required: Calculate the total borrowing cost (financing cost) for the company, over the life of the bonds.
A company issues $50,000 of 4% bonds, due in 5 years, with interest payable semiannually. Assuming a market rate of 3%, the bonds issue for $52,306. Calculate interest expense as of the first semiannual interest payment.a. $1,570.b. $1,000.c. $785.d. $375.
A company issues $75000 face value bonds with a state interest rate of 10% paying interest semi-annually and maturing in 5 years. the market rate on the date the bonds are issued is 8%. Complete the partial amortization schedule schedule provided, the journal entry at issuance, and the journal entry for the second interest payment.
On January 1, a company issued 3%, 20-year bonds with a face amount of $80 million for $69,057,776 to yield 4%. Interest is paid semiannually. What was the interest expense at the effective interest rate on the December 31 annual income statement? Note: Round intermediate calculations and your final answer to the nearest whole dollar.

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS