On January 1, 2003, $50,000 of 20-year, 6 percent debentures were issued for $56,275.20. Interest payment dates on the bonds are January 1 and July 1. The amount of premium to be amortized on July 1, 2003, when using the straight-line method is a. $313.76. b. $156.88. c. $776.50. d. $93.11.
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On January 1, 2003, $50,000 of 20-year, 6 percent debentures were issued for $56,275.20. Interest payment dates on the bonds are January 1 and July 1. The amount of premium to be amortized on July 1, 2003, when using the straight-line method is
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If a $6,000, 10 percent, 10-year bond was issued at 104 plus accrued interest two months after the authorization date, how much cash was received by the issuer?
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- Wilbury Corporation issued 1 million of 13.5% bonds for 985,071.68. The bonds are dated and issued October 1, 2019, are due September 30, 2020, and pay interest semiannually on March 31 and September 30. Assume an effective yield rate of 14%. Required: 1. Prepare a bond interest expense and discount amortization schedule using the straight-line method. 2. Prepare a bond interest expense and discount amortization schedule using the effective interest method. 3. Prepare adjusting entries for the end of the fiscal year December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. If income before interest and income taxes of 30% in 2020 is 500,000, compute net income under each alternative. 5. Assume the company retired the bonds on June 30, 2020, at 98 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight line method of amortization b. effective interest method of amortization 6. Compute the companys times interest earned (pretax operating income divided by interest expense) for 2020 under each alternative.Assume that on January 1 of the current year, $100,000 of 5-year, 12% bonds, with interest payable semiannually, were sold for $103,769 (11% market rate). Give the account to be debited (1) and the amount and the account to be credited (2) and the amount to journalize the amortization of the premium using the straight- line method of amortization when the first interest payment is made on June 30. Round to the nearest whole dollar. JOURNA L Page 25 DATE DESCRIPTION P.REF. DEBIT CREDIT June 30 (1) ? (2) ? debit (1) Premium on Bonds Payable $376.90 and credit (2) Cash $736.90 debit (1) Premium on Bonds Payable $376.90 and credit (2) Interest Expense $376.90 debit (1) Premium on Bonds Payable $3,769 and credit (2) Discount on Bonds Payable $3,769 debit (1) Bonds Payable $3,769 and (2) credit Interest Expense $3,769On January 1, $881,000, 5-year, 10% bonds were issued for $854,570. Interest is paid semiannually on January 1 and July 1. If the issuing company uses the straight-line method to amortize a discount on bonds payable, the semiannual amortization amount is a. $44,050 b. $26,430 c. $5,286 d. $2,643
- 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 2a. Journalize the entry to record the first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the straight-line method.Compute the price of $42,601,480 received for the bonds by using the present value tablesWhat is the correct answer? The semi-annual interest expense to be recorded using the straight line method of interest amortization on $46,000, ten-year, 6 percent bonds that are issued at 98 is a. $1,426 b. $1,380 c. $1,334 d. $2,852PA6. 13.3 Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018, and received $540,000. Interest is payable semi-annually. The premium is amortized using the straightline method. Prepare journal entries for the following transactions. 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
- On 1/1/20, $300,000 of 10 year, 8% bonds were issued for $262,616. The issue price was based on an effective interest rate of 10%. Interest payment dates are 6/30 and 12/31 of each year. On 1/1/21, the bonds were retired at 95. A: Journalize the issuance of the bonds on 1/1/20. B: Journalize the entries that should be made on 6/30/20 and 12/31/20 under the straight line amortization method. C: Journalize the entry that should be made on 6/30/20 under the effective interest method. (show calculations) D: Journalize the entry that should be made on 12/31/20 under the effective interest method. (show calculations) E: Journalize the retirement of the bonds on 1/1/21 (show calculations). Assume use of the effective interest method.On January 1, Year 1, Kennard Co. issued $2,000,000, 5%, 10-year bonds, with interest payable on June 30 and December 31 to yield 6%. The bonds were issued for $1,851,234. a. Prepare an amortization schedule for Year 1 and Year 2 using the effective interest rate method. Round answers to the nearest dollar. Enter all amounts as positive numbers. Amortization Table The Effective Interest Rate Method Interest Paid Interest Expense Amortization Bond Carrying Amount Date 1/1/Year 1 6/30/Year 1 12/31/Year 1 6/30/Year 2 12/31/Year 2 b. Show how this bond would be reported on the balance sheet at December 31, Year 2. Kennard Co. Partial Balance SheetPB6. LO 13.3Edward Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $480,000. Interest is payable semiannually. The discount is amortized using the straight-line method. Prepare journal entries for the following transactions. July 1, 2018: entry to record issuing the bonds Dec. 31, 2018: entry to record payment of interest to bondholders Dec. 31, 2018: entry to record amortization of discount
- 3. On 1/1/21, Your Company issued $250,000 of 6% bonds, dated 1/1/21. The bonds pay interest annually on December 31st. The yield is 8%. They mature in three years on 12/31/23. The bonds were issued for $237,115. Be sure to show the date of each journal entry. The 'right' journal entry on the 'wrong' date is wrong. а. Prepare an amortization table Prepare thejournal entry for 1/1/21 Prepare thejournal entry for 12/31/21 b. с. Amortization table: CV 8% Interest Payment Amortization Discount CV 12/31/20 12/31/21 12/31/22 Journal entries: Debits Credits 1/1/21 12/31/21PB6. 13.3 Edward Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $480,000. Interest is payable semiannually. The discount is amortized using the straightline method. Prepare journal entries for the following transactions. 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 discountOn January 2, Year 1, Kampai Sushi Bar sold $800,000 of bonds for $785,000. The bonds will mature in 10 years and pay interest annually on December 31. The company properly recorded the payment of interest and the amortization of the discount using the effective interest method. What will be the carrying value of the bonds at the end of Year 1? a.$800,000 b.less than $785,000 c.$785,000 d.greater than $785,000, but less than $800,000