4. What is the carrying amount of the bonds payable onDecember 31, 2020?a. 1,064,600b. 1,077,200c. 1,000,000d. 1,064,9205. Prepare journal entries for 2020. On January 1, 2020, Trisha Company received P1,077,200for 12% bonds with face amount of P1,000,000. The bondswere sold to yield 10%. Interest is payable semiannuallyevery January 1 and July 1.The entity elected the fair value option for measuring financialliabilities.On December 31, 2020, the fair value of the bonds isP1,064,600. The change in fair value of the bonds isattributable to market factors.

In this option , initial recognition is made at the transaction price. for subsequent recognition ,…

Answered: On January 1, 2020, Trisha Company…

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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Wildhorse Co. received proceeds of $724000 on 10-year, 8% bonds issued on January 1, 2019. The bonds had a face value of $768000, pay interest annually on December 31, and have a call price of 102. Wildhorse uses the straight-line method of amortization. What is the amount of interest Wildhorse must pay the bondholders in 2019?
On January 1, 2021, Essence Communications issued $700,000 of its 10-year, 10% bonds for $619,711. The bonds were priced to yield 12%. Interest is payable semiannually on June 30 and December 31. Essence Communications records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2021, the market interest rate for bonds of similar risk and maturity was 11%. The bonds are not traded on an active exchange. The decrease in the market interest rate was due to a 1% decrease In general (risk-free) interest rates. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Using the information provided, estimate the fair value of the bonds at December 31, 2021. 2. to 4. Prepare the journal entries to record interest on June 30, 2021 (the first interest payment), on December 31, 2021 (the second Interest payment) and to adjust the bonds to their fair value…
On July 1, 2019, Rix Corporation had $10,000,000 of 9% bonds outstanding. The maturity date is June 30, 2024. Interest is paid semiannually every June 30 and December 31. All the bonds were redeemed on July 1, 2019, at 98. At the time of the bond redemption, there was unamortized bond premium of $60,000 and unamortized debt issuance costs of $100,000. What is the amount of the gain on the bond redemption?
On January 1, 2020, Sheridan Company sold 9% bonds with a face value of $2100000. The bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for $2274700 to yield 7%. Using the effective-interest method of amortization, interest expense for 2020 is $158709. $189000. $159179. $147000.
On January 1, 2021, Rapid Airlines issued $225 million of its 8% bonds for $207 million. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. Rapid Airlines records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2021, the fair value of the bonds was $213 million as determined by their market value in the over-the-counter market. Rapid determined that $1,000,000 of the increase in fair value was due to a decline in general interest rates. Required: 1. to 3. Prepare the journal entries to record interest on June 30, 2021 (the first interest payment), on December 31, 2021 (the second interest payment) and to adjust the bonds to their fair value for presentation in the December 31, 2021, balance sheet. (Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
On January 1, 2019, Legion Company sold OMR 50,000 of 10% ten-year bonds. Interest is payable semiannually on June 30 and December 31. The bonds were sold for OMR 43,000, priced to yield 12%. Legion records interest at the effective rate. Legion should report bond interest expense for the six months ended June 30, 2019, in the amount of: Select one: a. OMR 2,500 b. OMR 2,150 c. OMR 3,000 d. OMR 2,580
On January 1, 2020, Lizzo Construction sold $750,000 of 6% bonds to Swift Enterprise. The bonds mature on December 31, 2024 (4 years). For bonds of similar risk and maturity, the market yield was 8%. Interest is paid semiannually on June 30 and December 31. Swift Enterprise purchased the bonds as an investment and plans to hold the bonds for approximately 2 years. The fair value of the bonds at 12/31/20 was $850,000. Swift's fiscal year end is December 31 and 2020 was its first year of business. Required: 1. Prepare the fair value adjusting entry for Swift Enterprise as of 12/31/20. Show your work. | 2. Show or describe exactly and specifically what will appear on the Balance Sheet of Swift Enterprise as of 12/31/20, related to these bonds. 3. Show or describe exactly and specifically what will appear on the Income Statement of Swift Enterprise for the year ending 12/31/20.
On January 1, 2020, Huber Co. sold 12% bonds with a face value of $2,000,000. The bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for $2,154,500 to yield 10%. Using the effective-interest method of amortization, interest expense for 2020 is: show steps please
On January 1, 2018, NFB Visual Aids issued $800,000 of its 20-year, 8% bonds. The bonds were priced to yield10%. Interest is payable semiannually on June 30 and December 31. NFB Visual Aids records interest expense atthe effective rate and elected the option to report these bonds at their fair value. On December 31, 2018, the fairvalue of the bonds was $668,000 as determined by their market value in the over-the-counter market.Required:1. Determine the price of the bonds at January 1, 2018, and prepare the journal entry to record their issuance.2. Prepare the journal entry to record interest on June 30, 2018 (the first interest payment).3. Prepare the journal entry to record interest on December 31, 2018 (the second interest payment).4. Prepare the journal entry to adjust the bonds to their fair value for presentation in the December 31, 2018,balance sheet.
On January 1, 2021, Minorka Company issued a 5-year, P3,000,000, 17% bonds. The effective interest rate after considering the bond issue cost is 16%. The bond issue cost paid by the issuer is P70,000 The bond pays interest annually every December 31. The entity uses 2 decimal places for the PV factor. Under the effective interest method, how much is the issue price of the bonds payable on January 1, 2021?
On July 1, 2019, Pen Co. issued 4,000 of its 8%, P1,000 face value bonds payable for P3,504,000. The bonds were issued to yield 10%. The bonds are dated July 1, 2019 and mature July 1, 2029. Interest is payable semiannually on January 1 and July 1. Using effective interest method, what amount of the bond discount should be amortized for the six months ended December 31, 2019?
On January 1, 2019, P Sport Corporation issued 10% bonds with a face value of $200,000. The bonds are sold for $191,000. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, five years from now. X Sport records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31, 2019 is:

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