On January 1, 2024, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Payment Cash Payment Effective Interest Increase in Balance Outstanding Balance 6,286,574 1 370,000 377,194 7,194 6,293,768 2 370,000 377,626 7,626 6,301,394 3 370,000 378,084 8,084 6,309,478 4 370,000 378,569 8,569 6,318,047 5 370,000 379,083 9,083 6,327,130 6 370,000 379,628 9,628 6,336,758 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 38 370,000 432,132 62,132 7,264,327 39 370,000 435,860 65,860 7,330,187 40 370,000 439,813 69,813 7,400,000 Required: What is the face amount of the bonds? What is the initial selling price of the bonds? answer = $6,286,574 What is the term to maturity in years? answer = 20 years Interest is determined by what approach? answer = Effective interest rate What is the stated annual interest rate? What is the effective annual interest rate? answer = 12% What is the total cash interest paid over the term to maturity? What is the total effective interest expense recorded over the term to maturity? Questions 2, 3, 4, and 6 have been answered.
On January 1, 2024, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Payment Cash Payment Effective Interest Increase in Balance Outstanding Balance 6,286,574 1 370,000 377,194 7,194 6,293,768 2 370,000 377,626 7,626 6,301,394 3 370,000 378,084 8,084 6,309,478 4 370,000 378,569 8,569 6,318,047 5 370,000 379,083 9,083 6,327,130 6 370,000 379,628 9,628 6,336,758 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 38 370,000 432,132 62,132 7,264,327 39 370,000 435,860 65,860 7,330,187 40 370,000 439,813 69,813 7,400,000 Required: What is the face amount of the bonds? What is the initial selling price of the bonds? answer = $6,286,574 What is the term to maturity in years? answer = 20 years Interest is determined by what approach? answer = Effective interest rate What is the stated annual interest rate? What is the effective annual interest rate? answer = 12% What is the total cash interest paid over the term to maturity? What is the total effective interest expense recorded over the term to maturity? Questions 2, 3, 4, and 6 have been answered.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
100%
On January 1, 2024, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below:
| Payment | Cash Payment | Effective Interest | Increase in Balance | Outstanding Balance |
|---|---|---|---|---|
| 6,286,574 | ||||
| 1 | 370,000 | 377,194 | 7,194 | 6,293,768 |
| 2 | 370,000 | 377,626 | 7,626 | 6,301,394 |
| 3 | 370,000 | 378,084 | 8,084 | 6,309,478 |
| 4 | 370,000 | 378,569 | 8,569 | 6,318,047 |
| 5 | 370,000 | 379,083 | 9,083 | 6,327,130 |
| 6 | 370,000 | 379,628 | 9,628 | 6,336,758 |
| ~ | ~ | ~ | ~ | ~ |
| ~ | ~ | ~ | ~ | ~ |
| ~ | ~ | ~ | ~ | ~ |
| 38 | 370,000 | 432,132 | 62,132 | 7,264,327 |
| 39 | 370,000 | 435,860 | 65,860 | 7,330,187 |
| 40 | 370,000 | 439,813 | 69,813 | 7,400,000 |
Required:
- What is the face amount of the bonds?
- What is the initial selling price of the bonds? answer = $6,286,574
- What is the term to maturity in years? answer = 20 years
- Interest is determined by what approach? answer = Effective interest rate
- What is the stated annual interest rate?
- What is the effective annual interest rate? answer = 12%
- What is the total cash interest paid over the term to maturity?
- What is the total effective interest expense recorded over the term to maturity?
Questions 2, 3, 4, and 6 have been answered.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education