On June 30, 2020, the market interest rate is 2.4%. Colwood Enterprises issues $500,000 of 3.4%, 16-year bondsat 110.625. The bonds pay interest on June 30 and December 31. Colwood amortizes bonds bythe effective-interest method.Requirements1. Prepare a bond amortization table for the first four semi-annual interest periods.2.Record issuance of the bonds on June 30, 2020, the payment of interest at December 31, 2020, andthe semi-annual interest payment on June 30, 2021.Requirement 1. Prepare a bond amortization table for the first four semi-annual interest periods. (Round youranswers to the nearest whole dollar.)ABColwood EnterprisesAmortization TableCDInterest ExpenseInterest Payment(1.2% of PrecedingPremiumSemi-Annual (1.7% of MaturityValue)Bond CarryingAmount)(A-B)Premium(D-C)Amortization Account Balance Amount ($500,000+EBond CarryingD)Interest DateJune 30, 2020Dec. 31, 2020June 30, 2021Dec. 31, 2021June 30, 2022

The initial bond carrying amount is the face value of the bond multiplied by the issue price…

Answered: On June 30, 2020, the market interest…

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 July 1, 2022, Free Compnay issued for $438,000, 500 of its 8%, $1000 bonds. The market rate when the bonds were issued was 10%. The bonds are dated July 1, 2022. The bonds mature in 10 years. Interest is payable semiannually on January 1 and July 1. Using the effective interest method, how much of the bond discount should be amortized on December 31, 2022?
On January 1, 2021, Daniel Corp. issued $500,000 of 10-year, 8% bonds for $385,298, yielding a market (discount, yield) rate of 12% per year. Interest is paid semi-annually on June 30 and December 31. Daniel uses the effective interest rate method to account for bonds. Required: a. Prepare JEs to record the issue on Jan. 1, 2021. Include the Discount on B/P b. What interest expense is reported on I/S for year ending December 31,2021? C. On December 31, 2029, after paying the December 31 interest (Coupon), Daniel Corp retires the bonds for $486,153. Determine the gain/loss on bonds retirement and prepare journal entries to record the retirement. Include the unamortized bond discount. d. Ignore (b) and suppose that on December 31, 2029, the yield decreases from 12% to 10% per year. What is the present value of the remaining cash flows of the bonds?
Ellis Company issues 6.5%, five-year bonds dated January 1, 2019, with a $250,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $255,333. The annual market rate is 6% 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.
On January 1, 2020, Cullumber Corporation issued $840,000, 7%, 10-year bonds at face value. Interest is payable annually on January 1. Cullumber Corporation has a calendar year end. Prepare all entries related to the bond issue for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) 2020 Account Titles and Explanation Debit Credit
National Orthopedics Co. issued 9% bonds, dated January 1, with a face amount of $500,000 on January 1, 2021. The bonds mature on December 31, 2024 (4 years). For bonds of similar risk and maturity the market yield was 10%. Interest is paid semiannually on June 30 and December 31.Required:1. Determine the price of the bonds at January 1, 2021.2. Prepare the journal entry to record their issuance by National on January 1, 2021.3. Prepare an amortization schedule that determines interest at the effective rate each period.4. Prepare the journal entry to record interest on June 30, 2021.5. Prepare the appropriate journal entries at maturity on December 31, 2024.
On April 1, 2020, Quicke Mart issued $1,000,000, 9% bonds at par plus accrued interest dated January 1, 2020. Interest is payable semi-annually on January 1 and July 1. The bonds mature on January 1, 2027. Required: Prepare journal entries to record the following transactions related to long-term bonds of Quicke Mart: 1. The issuance of the bonds. 2. The first interest payments.
Hillside issues $1,900,000 of 5%, 15-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,641,812. Required: 1. Prepare the January 1 journal entry to record the bonds’ issuance. 2(a) For each semiannual period, complete the table below to calculate the cash payment. 2(b) For each semiannual period, complete the table below to calculate the straight-line discount amortization. 2(c) For each semiannual period, complete the table below to calculate the bond interest expense. 3. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life. 4. Prepare the first two years of a straight-line amortization table. 5. Prepare the journal entries to record the first two interest payments.
Pretzelmania, Inc., issues 7%, 15-year bonds with a face amount of $67,000 for $73,507 on January 1, 2021. The market interest rate for bonds of similar risk and maturity is 6%. Interest is paid annually on December 31. Required: 1. & 2. Record the bond issue and first interest payment on December 31, 2021.
Sheffield Company issued $400,000, 12%, 10-year bonds on January 1, 2022, for $423,557. This price resulted in an effective-interest rate of 11% on the bonds. Interest is payable annually on January 1. Sheffield uses the effective-interest method to amortize bond premium or discount. (a) Your answer is correct. Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (b) Date Jan. 1, 2022 Account Titles and Explanation Cash Premium on Bonds Payable eTextbook and Media Date Bonds Payable List of Accounts Dec. 31, 2022 Your answer is partially correct. Account Titles and Explanation Interest Expense Premium on Bonds Payable Debit Prepare the journal entry to record the accrual of interest and the premium amortization on December 31, 2022. (Round answers to O decimal places, e.g. 15,250. Credit account titles are automatically indented when amount is entered. Do not indent manually.)…
On August 1, 2022, Bridgeport Corp. issued $483,600, 7%, 10-year bonds at face value. Interest is payable annually on August 1. Bridgeport’s year-end is December 31. A. Prepare the journal entry to record the issuance of the bonds B. Prepare the journal entry to record the accrual of interest on December 31, 2022. C. Prepare the journal entry to record the payment of interest on August 1, 2023.
On August 1, 2022, Skysong, Inc. issued $450,000, 10%, 10-year bonds at face value. Interest is payable annually on August 1. Skysong's year-end is December 31. (a) Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Aug. 1 Date Account Titles and Explanation (b) Prepare the journal entry to record the accrual of interest on December 31, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Dec. 31 Debit Date Account Titles and Explanation Aug. 1 Debit Credit Prepare the journal entry to record the payment of interest on August 1, 2023. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit Credit
Ellis Company issues 6.5%, five-year bonds dated January 1, 2021, with a $250,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $255,333. The annual market rate is 6% 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.

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