On July 1, 2XX1, the company purchasedP 1,000,000 8% bonds due on July 1,2X11. The company plans to hold thebonds until maturity. The bonds, whichpay interest semiannually on January 1and July 1, were purchased for P 875,000to yield 10%. 2XX1 interest incomeshouldOP 50,000O P 43,750O P 35,000O P 40,000 On January 1, 2XX1, Car Companybought 9% P 400,000 bonds for P375,600 to yield 10%. The bonds payinterest annually on December 31.Effective interest method for amortizingdiscounts is used. Interest income thatshould be reported in 2XX1isO P 37,560O P 36,000O P 34,440O P 40,000

The interest income will be Purchase price= P875,000 Interest Rate=10% Time= 6 months= 6/12=0.5…

Answered: On July 1, 2XX1, the company purchased…

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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Earnest Corporation issued $200,000, 10-year mortgage bonds to Eather Corporation at Par value. The bonds bear a nominal interest rate of 11% and interest is paid semi-annually on January 1 and July 1. The market rate of interest is 10%. The original issue price of bonds for Net Corporation would be (Round your answer to the nearest dollar) a. $212,462 b. $200,000 c. $105,975 d. $188,050
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On January 1, 20x1, ABC Co. issued 1,000, ₱4,000, 12%, 3-year bonds. Principal is due on December 31, 20x3 but interests are due annually every year-end. The effective interest rate is 10%. The bonds payable will be presented in the Dec 31, 20X2 balance sheet as:PV of P1 at 12% for 3n = . 71178 PV of P1 at 10% for 3n = .75131PV ordinary annuity at 12% for 3n = 2.40183 PV ordinary annuity at 10% for 3n = 2.48685 Current liability of 4,072,703 Current liability of 4,000,000 Non current liability of 4,000,000 Non current liability of 3,928,569
On July 1, 2020, Kwek-kwek Company issued 600 of its 10%, P1,000 bonds at 99 plus accrued interest. The bonds are dated April 1, 2020 and mature on April 1, 2029. Interest is payable semi-annually on April 1 and October 1. What amount did Kwek-kwek Company receive from the bond issuance? A. 579,000 B. 594,000 C. 609,000 D. 600,000
2
Nest Corporation issued $100,000, 10-year mortgage bonds to Net Corporation at Par value. The bonds bear a nominal interest rate of 12% and interest is paid semi-annually on January 1 and July 1. The market rate of interest is 11%. The original issue price of bonds for Net Corporation would be (Round your answer to the nearest dollar) a. $100,000 b. $112,000 c. $105,975 d. $111,000
On January 1, Indigo Corporation issues $4350000, 5-year, 12% bonds at 96 with interest payable on January 1. What is the carrying value of the bonds at the end of the third interest period? $4280400 $4106400 $4245600 $4036800
2
Martin Company issues $2,000,000, 6%, 5-year bonds on lanuary 1, Year 4. The bonds pay interest semiannually on June 30 and December 31. The market yleld for bonds of similar risk and maturity is 5% What is the total amount of interest Martin will pay bondholders if the bondholders hold the bonds until maturity? Select one O a $120,000 Ob $300,000 Oc $600,000 Od $500,000 O e None of these choices. Of. $100,000
1. On January 1, 2017, Mintwood Company issued 5 year bonds with a face value of $500,000. The bonds carry a stated interest of 7% payable each January 1. 98 % = 490,o00 (a) Prepare the journal entry for the January1 issuance asşuming the bonds are issued at 98. Jon 1,20 Cosh 490, 000 Diseand Bondyble Bord> Payable (b) Prepare the journals entry at December 31 for these bonds. (c) Prepare the journal entry for the January 1 issuance assuming the bonds are issued at 103. (d) Prepare the journals entry at December 31 for these bonds. (e) Prepare the journal entry at January 1 issuance assuming the bonds are issued at 100. (f) Prepare the journal entry at December 31 for these bonds 2. On March 1, the Holden Company borrows $60,000 from New National Bank by signing a 6-month, 8%, interest-bearing note. (a) Prepare the entry on March 1 when the note was issued. (b) Prepare any adjusting entries necessary on June 30 in order to prepare the semiannual financial statements. Assume no other…
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