On January 1, 2021, Ivanhoe Ltd. issued bonds with a maturity value of $7,900,000 when the market rate of interest was 4%. The bonds have a coupon (contractual) interest rate of 5% and mature on January 1, 2031. Interest on the bonds is payable semi- annually on July 1 and January 1 of each year. The company's year end is December 31. Calculate the issue price of the bonds. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round final answer to O decimal places, e.g. 5,275.) Issue Price $ Prepare a bond amortization schedule from the date of issue up to and including January 1, 2023. (Round answers to O decimal places, e.g. 5,275.) IVANHOE LTD. Bond Premium Amortization Table Effective Interest Method-Semi-Annual Interest Payments 5% Bonds Issued at market rate of 4% Date Interest Payment Interest Expense Premium Amortization Bond Amortize Jan. 1, $ 2$ 2$ $ 2021 July 1, 2021 Jan. 1, 2022 July 1, 2022 Jan. 1, 2023 Prepare all of the required journal entries related to the bonds that Ivanhoe Ltd. will record during 2021, including any adjusting journal entries at December 31, 2021. (Round answers to 0 decimal places, e,.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 1 (To record issuance of bonds.) July 1 (To record interest payment.) Dec. 31 (To accrue interest expense.)
On January 1, 2021, Ivanhoe Ltd. issued bonds with a maturity value of $7,900,000 when the market rate of interest was 4%. The bonds have a coupon (contractual) interest rate of 5% and mature on January 1, 2031. Interest on the bonds is payable semi- annually on July 1 and January 1 of each year. The company's year end is December 31. Calculate the issue price of the bonds. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round final answer to O decimal places, e.g. 5,275.) Issue Price $ Prepare a bond amortization schedule from the date of issue up to and including January 1, 2023. (Round answers to O decimal places, e.g. 5,275.) IVANHOE LTD. Bond Premium Amortization Table Effective Interest Method-Semi-Annual Interest Payments 5% Bonds Issued at market rate of 4% Date Interest Payment Interest Expense Premium Amortization Bond Amortize Jan. 1, $ 2$ 2$ $ 2021 July 1, 2021 Jan. 1, 2022 July 1, 2022 Jan. 1, 2023 Prepare all of the required journal entries related to the bonds that Ivanhoe Ltd. will record during 2021, including any adjusting journal entries at December 31, 2021. (Round answers to 0 decimal places, e,.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 1 (To record issuance of bonds.) July 1 (To record interest payment.) Dec. 31 (To accrue interest expense.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2021, Ivanhoe Ltd. issued bonds with a maturity value of $7,900,000 when the market rate of interest was 4%. The
bonds have a coupon (contractual) interest rate of 5% and mature on January 1, 2031. Interest on the bonds is payable semi-
annually on July 1 and January 1 of each year. The company's year end is December 31.
Calculate the issue price of the bonds. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round
final answer to 0 decimal places, e.g. 5,275.)
Issue Price
$
Prepare a bond amortization schedule from the date of issue up to and including January 1, 2023. (Round answers to 0 decimal
places, e.g. 5,275.)
IVANHOE LTD.
Bond Premium Amortization Table
Effective Interest Method Semi-Annual Interest Payments
5% Bonds Issued at market rate of 4%
Date
Interest Payment
Interest Expense
Premium Amortization
Bond Amortize
Jan.
1,
2$
$
2$
2021
July
1,
2021
Jan.
1,
2022
July
1,
2022
Jan.
1,
2023
Prepare all of the required journal entries related to the bonds that Ivanhoe Ltd. will record during 2021, including any
adjusting journal entries at December 31, 2021. (Round answers to O decimal places, e.g. 5,275. Credit account titles are
automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account
titles and enter O for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
Jan. 1
(To record issuance of bonds.)
July 1
(To record interest payment.)
Dec. 31
(To accrue interest expense.)
What amounts would be reported as current and non-current in the liabilities section of Ivanhoe Ltd's December 31, 2021,
balance sheet? (Round answers to O decimal places, e.g. 5,275.)
IVANHOE LTD.
Balance Sheet (Partial)
Record the payment of interest on January 1, 2022. (Credit account titles are automatically indented when the amount is entered. Do
not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)
Date Account Titles and Explanation
Debit
Credit
Jan. 1
(To record interest payment.)
The bonds were redeemed on January 1, 2023 (after the interest had been paid and recorded) at 102. Prepare the journal entry
for the redemption of the bonds. (Round answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented
when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the
amounts.)
Date Account Titles and Explanation
Debit
Credit
Jan. 1
(To record redemption of bonds.)
Assume instead that the bonds were not redeemed on January 1, 2023. Record the entry for the repayment of the bonds on
January 1, 2031. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is
required, select "No Entry" for the account titles and enter O for the amounts.)
Date Account Titles and Explanation
Debit
Credit
Jan. 1
(To record maturity of bond.)
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