On January 1, 2021, your company sold $400,000 of 5%, 10 year bonds when the market rate was 6%. These bonds pay interest annually on December 31 each year. Your company uses the interest method of amortization. А. Calculate the selling price of the bonds. Show the time value of money factors you entered into your calculator. Prepare journal entries from January 1, 2021 through December 31, 2022 (TWO full years but no adjusting and reversing entries will be needed since you are making payments on the last day of the year), assuming your company's year ends on December 31. Put the appropriate date beside each journal entry. С. What is the carrying value of these bonds on; 1. December 31, 2021? 2. December 31 2022? B.
On January 1, 2021, your company sold $400,000 of 5%, 10 year bonds when the market rate was 6%. These bonds pay interest annually on December 31 each year. Your company uses the interest method of amortization. А. Calculate the selling price of the bonds. Show the time value of money factors you entered into your calculator. Prepare journal entries from January 1, 2021 through December 31, 2022 (TWO full years but no adjusting and reversing entries will be needed since you are making payments on the last day of the year), assuming your company's year ends on December 31. Put the appropriate date beside each journal entry. С. What is the carrying value of these bonds on; 1. December 31, 2021? 2. December 31 2022? B.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:On January 1, 2021, your company sold $400,000 of 5%, 10 year bonds when the market rate
was 6%. These bonds pay interest annually on December 31 each year. Your company uses the
interest method of amortization.
A.
Calculate the selling price of the bonds. Show the time value of money factors you
entered into your calculator.
Prepare journal entries from January 1, 2021 through December 31, 2022 (TW0 full years
but no adjusting and reversing entries will be needed since you are making payments on the
last day of the year), assuming your company's year ends on December 31. Put the
appropriate date beside each journal entry.
С.
What is the carrying value of these bonds on;
1. December 31, 2021?
2. December 31 2022?
D.
Assuming your company used STRAIGHT-LINE amortization. What would be the
carrying value of the bonds on:
1. December 31, 2021?
2. December 31, 2022?
Е.
If these bonds had been sold on August 1, 2021 (instead of January 1, 2021) and paid
interest annually on July 31, prepare the entries on August 1, 2021 through July 31, 2022,
(ONE full year) including adjusting and reversing entries, assuming your company was
using the interest method of amortization and your year ends on December 31.
B.
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