On June 30, 2020, Oriole Company issued $4,880,000 face value of 13%, 20-year bonds at $5,247,120, a yield of 12%. Oriole uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. Prepare the journal entries to record the following transactions. (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 the amount is entered. Do not indent manually.) (1) The issuance of the bonds on June 30, 2020. (2) The payment of interest and the amortization of the premium on December 31, 2020. (3) The payment of interest and the amortization of the premium on June 30, 2021. (4) The payment of interest and the amortization of the premium on December 31, 2021. No. Date Account Titles and Explanation Debit Credit (1) June 30, 2020 (2) December 31, 2020 (3) June 30, 2021 (4) December 31, 2021 SHOW LIST OF ACCOUNTS LINK TO TEXT Show the proper balance sheet presentation for the liability for bonds payable on December 31, 2021, balance sheet. (Round answers to 0 decimal places, e.g. 38,548.) Oriole Company Balance Sheet December 31, 2021For the Year Ended December 31, 2021For the Quarter Ended December 31, 2021 Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity $ Notes ReceivableBook Value of Bonds PayableNotes PayableBad Debt ExpenseInterest PayableDiscount on Notes PayableCashPremium on Bonds PayableLoss on Redemption of BondsInterest Expense $ SHOW LIST OF ACCOUNTS LINK TO TEXT Provide the answers to the following questions. (1) What amount of interest expense is reported for 2021? (Round answer to 0 decimal places, e.g. 38,548.) Interest expense reported for 2021 $ (2) Will the bond interest expense reported in 2021 be the same as, greater than, or less than the amount that would be reported if the straight-line method of amortization were used? The bond interest expense reported in 2021 will be greater than less than same as the amount that would be reported if the straight-line method of amortization was used. (3) Determine the total cost of borrowing over the life of the bond. (Round answer to 0 decimal places, e.g. 38,548.) The total cost of borrowing over the life of the bond $ (4) Will the total bond interest expense for the life of the bond be greater than, the same as, or less than the total interest expense if the straight-line method of amortization were used? The total bond interest expense for the life of the bond will be greater than less than the same as the total interest expense if the straight-line method of amortization was used.

On June 30, 2020, Oriole Company issued $4,880,000 face value of 13%, 20-year bonds at $5,247,120, a yield of 12%. Oriole uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. Prepare the journal entries to record the following transactions. (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 the amount is entered. Do not indent manually.) (1) The issuance of the bonds on June 30, 2020. (2) The payment of interest and the amortization of the premium on December 31, 2020. (3) The payment of interest and the amortization of the premium on June 30, 2021. (4) The payment of interest and the amortization of the premium on December 31, 2021. No. Date Account Titles and Explanation Debit Credit (1) June 30, 2020 (2) December 31, 2020 (3) June 30, 2021 (4) December 31, 2021 SHOW LIST OF ACCOUNTS LINK TO TEXT Show the proper balance sheet presentation for the liability for bonds payable on December 31, 2021, balance sheet. (Round answers to 0 decimal places, e.g. 38,548.) Oriole Company Balance Sheet December 31, 2021For the Year Ended December 31, 2021For the Quarter Ended December 31, 2021 Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity $ Notes ReceivableBook Value of Bonds PayableNotes PayableBad Debt ExpenseInterest PayableDiscount on Notes PayableCashPremium on Bonds PayableLoss on Redemption of BondsInterest Expense $ SHOW LIST OF ACCOUNTS LINK TO TEXT Provide the answers to the following questions. (1) What amount of interest expense is reported for 2021? (Round answer to 0 decimal places, e.g. 38,548.) Interest expense reported for 2021 $ (2) Will the bond interest expense reported in 2021 be the same as, greater than, or less than the amount that would be reported if the straight-line method of amortization were used? The bond interest expense reported in 2021 will be greater than less than same as the amount that would be reported if the straight-line method of amortization was used. (3) Determine the total cost of borrowing over the life of the bond. (Round answer to 0 decimal places, e.g. 38,548.) The total cost of borrowing over the life of the bond $ (4) Will the total bond interest expense for the life of the bond be greater than, the same as, or less than the total interest expense if the straight-line method of amortization were used? The total bond interest expense for the life of the bond will be greater than less than the same as the total interest expense if the straight-line method of amortization was used.

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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Question

Prepare the journal entries to record the following transactions. (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 the amount is entered. Do not indent manually.)

(1)		The issuance of the bonds on June 30, 2020.
(2)		The payment of interest and the amortization of the premium on December 31, 2020.
(3)		The payment of interest and the amortization of the premium on June 30, 2021.
(4)		The payment of interest and the amortization of the premium on December 31, 2021.

No.	Date	Account Titles and Explanation	Debit	Credit
(1)	June 30, 2020


(2)	December 31, 2020


(3)	June 30, 2021


(4)	December 31, 2021

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LINK TO TEXT

Show the proper balance sheet presentation for the liability for bonds payable on December 31, 2021, balance sheet. (Round answers to 0 decimal places, e.g. 38,548.)

Oriole Company Balance Sheet December 31, 2021For the Year Ended December 31, 2021For the Quarter Ended December 31, 2021
Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity
			$

Notes ReceivableBook Value of Bonds PayableNotes PayableBad Debt ExpenseInterest PayableDiscount on Notes PayableCashPremium on Bonds PayableLoss on Redemption of BondsInterest Expense			$

SHOW LIST OF ACCOUNTS

LINK TO TEXT

Provide the answers to the following questions.

(1) What amount of interest expense is reported for 2021? (Round answer to 0 decimal places, e.g. 38,548.)

Interest expense reported for 2021

(2) Will the bond interest expense reported in 2021 be the same as, greater than, or less than the amount that would be reported if the straight-line method of amortization were used?

The bond interest expense reported in 2021 will be

greater than less than same as

the amount that would be reported if the straight-line method of amortization was used.

(3) Determine the total cost of borrowing over the life of the bond. (Round answer to 0 decimal places, e.g. 38,548.)

The total cost of borrowing over the life of the bond

(4) Will the total bond interest expense for the life of the bond be greater than, the same as, or less than the total interest expense if the straight-line method of amortization were used?

The total bond interest expense for the life of the bond will be

greater than less than the same as

the total interest expense if the straight-line method of amortization was used.

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