On 3/1/16, Lawrence Company sold 6% bonds having a maturity value of $300,000 at a price which provides the bondholders with an 8% yield. The bonds are dated 3/1/16 and mature 3/1/21 with interest payable semiannually on 3/1 and 9/1 of each year. The bonds are callable at 101 any time after 1/1/17. a. Prepare the amortization table and all journal entries required in 2016. b. On 6/1/18, Lawrence called the bonds and retired them Prepare all journal entries required in 2018.

On 3/1/16, Lawrence Company sold 6% bonds having a maturity value of $300,000 at a price which provides the bondholders with an 8% yield. The bonds are dated 3/1/16 and mature 3/1/21 with interest payable semiannually on 3/1 and 9/1 of each year. The bonds are callable at 101 any time after 1/1/17. a. Prepare the amortization table and all journal entries required in 2016. b. On 6/1/18, Lawrence called the bonds and retired them Prepare all journal entries required in 2018.

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, 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?
Ellis Company issues 7.5%, five-year bonds dated January 1, 2021, with a $440,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $449,140. The annual market rate is 7.0% on the issue date. Required: 1. Compute the total bond interest expense over the bonds' life. 2 Dr the de life
On the first day of the fiscal year, a company issues a $8,500,000, 6%, 5-year bond that pays semiannual interest of $255,000 ($8,500,000 \times 6% \times (1)/(2)), receiving cash of $7,491, 128. Using straight - line amortization, 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.
On January 1, 2024, Christmas Anytime issues $850,000 of 6% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Assume that the market interest rate is 7% and the bonds issue at a discount.2a. Calculate the issue price of a bond.2b. Complete the first three rows of an amortization schedule. (FV of $1, PV of $1, FVA of $1, and PVA of $1)
On January 1, a company issues bonds dated January 1 with a par value of $350,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $335,819. The journal entry to record the first interest payment using straight-line amortization is: Multiple Choice Debit Interest Expense $10,831.90; debit Discount on Bonds Payable $1,418.10; credit Cash $12,250,00 Debit Interest Expense $13,668.10, credit Discount on Bonds Payable $1,418.10, credit Cash $12,250.00 Debit Interest Expense $12,250.00, credit Cash $12.250.00 Debit interest Expense $13,668.10; credit Premium on Bonds Payable $1,418.10; credit Cash $12,250,00 Debit interest Payable $12.250.00; credit Cash $12.250.00
. 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.
On January 1, 2023, ABC Company issued $60,000,000 of 20-year, 9.5% bonds when the market rate of interest was 10.25%. Interest is paid semi-annually on June 30 and December 31. Required: Using Excel compute the price at which the bond was issued. Using Excel and the effective interest method of bond amortization prepare an amortization table for the entire life of the bond issue. You are expected to do all calculations in Excel (What are the excel Formulas) Prepare ALL journal entries for the following dates: January 1, 2023, June 30, 2023, December 31, 2023, and December 31, 2042
(b) Prepare an effective-interest amortization table for the first eight interest payments for these bonds. (c) The Bonds were redeemed on January 1, 2026 (after the interest had been paid and recorded) at 102. Prepare the journal entry for the redemption of the bonds.
On January 01, 2019, SUNOD NA ANG LEASES LTD. issued 3-year bonds with face value of P5,000,000 at 99. The nominal rate is 10% and the interest is payable annually on December 31. Additionally, it paid bond issue cost of P150,000. Suppose the bonds were issued in the amount of P5,407,550. What is the present value of the bonds? a. P5,000,000 at face amount since as a general rule, when the problem is silent, stated rate is equal to effective rate. b. P5,407,550 is the present value. Bond issue cost should be included in the computation of the present value since under the effective interest method; this cost should be lumped together with the discount, or netted against the premium, as the case may be. c. P5,257,550 is the present value. With the nominal rate at 10%, it is understood that the bonds were issued at a premium to be amortized using the rate contained in the bond certificate. d. None of the scenarios above is correct. They are just simply…
A company issues 8%, two-year bonds on December 31, 2018, with a par value of $10,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 96.0% or $9,600. (a) Prepare an amortization table for these bonds; use the straight-line method to amortize the discount. Then prepare journal entries to record; (b) The issuance of bonds on December 31, 2018; (c) The first interest payments on each June 30 and December 31; and (d) The maturity of the bond on December 31, 2020.
Aggies Inc. issued bonds with a $450,000 face value, 8% interest rate, and a 4-year term on July 1, 2018, and received $510,000. Interest is payable semi-annually. The premium is amortized using the straight-line method. A. July 1, 2018: entry to record issuing the bonds B. Dec. 31, 2018: entry to record payment of interest to bondholders C. Dec. 31, 2018: entry to record amortization of premium Prepare journal entries for the above transactions. If an amount box does not require an entry, leave it blank. A. fill in the blank 2 fill in the blank 3 fill in the blank 5 fill in the blank 6 fill in the blank 8 fill in the blank 9 B. fill in the blank 11 fill in the blank 12 fill in the blank 14 fill in the blank 15 C.
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.…