On January 1, Elias Corporation issued 7% bonds with a face value of $81,000. The bonds are sold for $78,570. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 10 years from now, Elias records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 of the first year is

On January 1, Elias Corporation issued 7% bonds with a face value of $81,000. The bonds are sold for $78,570. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 10 years from now, Elias records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 of the first year is

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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Mitchell Inc. issued 600 of its 6%, $1,000 bonds on January 1 of Year 1. The bonds pay cash interest semiannually each June 30 and December 31 and were issued to yield 5%. The bonds mature in five years on December 31, and the company uses the effective interest method to amortize bond discounts or premiums. Required a. Determine the selling price of the bonds.
The Designer Company issued 10-year bonds on January 1. The 6% bonds have a face value of $792,000 and pay interest every January 1 and July 1. The bonds were sold for $658,239 based on the market interest rate of 7%. Designer uses the effective interest method to amortize bond discounts and premiums. On July 1 of the first year, Designer should record interest expense (round to the nearest dollar) of
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On January 1, Year 1, Twain Corporation sold $620,000 of its own 5 percent, 10-year bonds. Interest is payable annually on December 31. The bonds were sold to yield an effective interest rate of 6 percent. Twain uses the effective interest rate method. The bonds sold for $574,368. Requireda. Prepare the journal entry for the issuance of the bonds.b. Prepare the journal entry for the amortization of the bond discount and the payment of the interest at December 31, Year 1. (Assume effective interest amortization.)c. Prepare the journal entry for the amortization of the bond discount and the payment of interest on December 31, Year 1. (Assume straight-line amortization.)d. Calculate the amount of interest expense for Year 2. (Assume effective interest amortization.) e. Calculate the amount of interest expense for Year 2. (Assume straight-line amortization.)
On the first day of the current fiscal year, $1,500,000 of 10-year, 8% bonds, with interest payable semiannually, were sold for $1,225,000. Present entries to record the following transactions for the current fiscal year (for the issuer’s books): (a) Issuance of the bonds. (b) First semiannual interest payment. (c) Amortization of bond discount for the year, using the straight-line method of amortization. (for each Journal Entry, omit the step of providing a brief explanation) JOURNAL Date Post. DR CR (a) (b) (c)
On January 1 of the current year, Barton Corporation issued 11%, 5-year bonds with a face value of $112,000. The bonds are sold for $106,400. The bonds pay interest semiannually on June 30 and December 31, and the maturity date is December 31, 5 years from now. Barton records straight-line amortization of the bond discount. The bond interest expense for the current year ended December 31 is a.$560 b.$13,440 c.$14,000 d.$6,160
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XYZ Corporation issued $20,000,000 of 5 year, 9% bonds on April 1 of the current year at face value, with interest payable semi-annually on April 1 and October 1. The bonds were issued at a market interest rate of 8%, resulting in XYZ Corporation receiving cash of $20,811,020. Journalize the entries to record the following transactions: Issuance of the bonds on April 1 Paid the first semi-annual interest on the bonds on October 1 Is the semi annual interest done as: 20,000,000*9%*1/2 = 4,50,000 or interest Expense Debit 720,000 [(20,000,000 x 9%)/2] Premium on Bonds Payable Debit 27,050 (amortization of premium) Cash Credit 747,050
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