On January 1, 2025, Teal Company sold 11% bonds having a maturity value of $400,000.00 for $415,162.76, which provides thebondholders with a 10% yield. The bonds are dated January 1, 2025, and mature January 1, 2030, with interest payable December 31of each year. Teal Company allocates interest and unamortized discount or premium on the effective-interest basis.Click here to view factor tables.

The objective of the question is to understand how to account for the sale of bonds at a premium and…

Answered: On January 1, 2025, Teal Company sold…

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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On January 1, 2021, Solis Co. issued its 10% bonds in the face amount of P3,000,000, which mature on January 1, 2026. The bonds were issued for P3,405,000 to yield 8%, resulting in bond premium of P405,000. Solis uses the effective-interest method of amortizing bond premium. Interest is payable annually on December 31. At December 31, 2021, the carrying value of the bonds should be a.) P3,405,000 b.) P3,377,400 c.) P3,364,500 d.) P3,304,500
On January 1, 2022, Ehrlich Corporation issued 7%, 15-year bonds with a face amount of $4,800,000 . Instructions Prepare the following entries: record the issuance of the bonds on 1/1/22, assuming the bonds were issued at 102 record the issuance of the bonds on 1/1/22, assuming the bonds were issued at 100 prepare the entry for the redemption of the bonds at maturity calculate the total cost of borrowing for these bonds, assuming they are issued at 100
On January 1, 2020, Wildhorse Company purchased 8% bonds having a maturity value of $ 360,000, for $ 390,329.57. The bonds provide the bondholders with a 6% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Wildhorse Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020. (Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Ellis Company issues 8.0%, five-year bonds dated January 1, 2021, with a $530,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $540,871. The annual market rate is 7.5% on the issue date. Required: 1. Compute the total bond interest expense over the bonds' life. 2. Prepare an effective interest amortization table for the bonds' life. 3. Prepare the journal entries to record the first two interest payments. Please need answer for all with working please answer do not waste time or question by holding attempt if you can otherwise skip
On January 1, 2020, Riverbed Company purchased 12% bonds, having a maturity value of $ 284,000 for $ 305,531.40. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Riverbed Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2020 $ 303,400 2023 $ 293,200 2021 $ 292,200 2024 $ 284,000 2022 $ 291,200 (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2020. (c) Prepare the journal entry to record the recognition of fair value for 2021. (Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when…
Vikram bhai
On January 1, 2020, Wildhorse Company purchased 6% bonds, having a maturity value of $550,000 for $475,253. The bonds provide the bondholders with a 8% yield. They are dated January 1, 2020, and mature January 1, 2027, with interest paid on June 30 and December 31 of each year. Wildhorse Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2020 $476,000 2023 2021 $471,000 2024 $466,000 2022 (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2020. (c) Prepare the journal entry to record the recognition of fair value for 2021. (Round answers to 2 decimal places, eg. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for…
On January 1, 2020, Sandhill Company purchased 12% bonds, having a maturity value of $325,000 for $349,639.81. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Sandhill Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2020 $347,400 2023 $334,900 2021 $333,800 2024 $325,000 2022 $332,800 (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2020. (c) Prepare the journal entry to record the recognition of fair value for 2021. (Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is…
On January 1, 2020, Cheyenne Company purchased 5% bonds, having a maturity value of $570,000 for $488,989. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2020, and mature January 1, 2027, with interest paid on June 30 and December 31 of each year. Cheyenne Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2020 $490,000 2023 $510,000 2021 $485,000 2024 $530,000 2022 $480,000 (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2020. (c) Prepare the journal entry to record the recognition of fair value for 2021. (Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented…
On January 1, 2025, Flounder Company purchased 11% bonds having a maturity value of $312,000 for $336,270.95. The bonds provide the bondholders with a 9% yield. They are dated January 1, 2025, and mature January 1, 2030, with interest received on January 1 of each year. Flounder Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2025 $333,900 2028 $320,900 2029 2026 2027 $320,000 $321,800 $312,000 (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2025. (c) Prepare the journal entry to record the recognition of fair value for 2026. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No…
On January 1, 2025, Culver Company sold 12% bonds having a maturity value of $350,000.00 for $376,535.48, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2025, and mature January 1, 2030, with interest payable December 31 of each year. Culver Company allocates interest and unamortized discount or premium on the effective-interest basis. Click here to view factor tables. (a) Your answer is partially correct. Prepare the journal entry at the date of the bond issuance. (Round answer to 2 decimal places, e.g. 38,548.25. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Date January 1, 2025 Account Titles and Explanation Cash Premium on Bonds Payable Interest Expense Debit 350000 26535.48 Credit 376535.48
On January 1, 2020, Swifty Company sold 11% bonds having a maturity value of $700,000 for $726,535, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2020, and mature January 1, 2025, with interest payable December 31 of each year. Swifty Company allocates interest and unamortized discount or premium on the effective-interest basis. v (a) V Your answer is correct. Prepare the journal entry at the date of the bond issuance. (Round answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit January 1, 2020 726,535 Cash Bonds Payable 700,000 Premium on Bonds Pay: 26535

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