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- On January 1, Year 1 Narito Company purchased P100,000 face
value 5-year bond of Wolverine Corp for P108,660, a price that yields 5% on a stated interest rate of 7%. Interest is payable annually at Dec 31.
- The bond investment is measured at amortized cost.
- On Dec 31, Year 3 after paying the periodic interest, Narito negotiated for a modification of interest from 7% to 4.5% for the remaining term of the bonds due to continuous decline in the market rate of interest. On this date, Narito Company had an allowance for expected credit losses relating to this investment in the amount of P1,500 after previously applying Stages 1 and 2 of the ECL model.
Required:
Give all entries in the books of Naruto for Years 1 to 4 as a result of the foregoing.
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- On 3/1/21, Lansing Company sold 6.5% bonds having a maturity value of $800,000 at a price which provides the bondholders with a 5% yield. The bonds are dated 3/1/21 and mature 3/1/26 with interest payable semiannually on 3/1 and 9/1 of each year. Legal and other costs of $12,000 were incurred in connection with the issue. Questions: a. Prepare the amortization table and all journal entries required in 2021. b. The bonds are callable at 101, and on 6/1/23 Lansing called the bonds and retired them. Prepare all journal entries required in 2023.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 skipMercer Corporation acquired $400,000 of Park Company’s bonds on June 30, 2018, for $409,991.12. The bonds carry a 12% stated interest rate and pay interest semiannually on June 30 and December 31. The appropriate market interest rate is 11%, and the bonds are due June 30, 2021. Required: 1. Prepare an investment interest income and premium amortization schedule, using the: a. straight-line method b. effective interest method 2. Prepare journal entries to record the December 31, 2018, and December 31, 2020, interest receipts using both methods.
- The Wilfred Company sold 8% bonds, dated January 1, with a face amount of $90 million on January 1, year 1 to Rexton-Base Corporation. The bonds mature on December 31, year 10 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. Prepare the journal entry to record interest revenue on June 30, year 1 (at the effective rate).On July 1 of Year 1, West Company purchased for cash, 8, $10,000 bonds of North Corporation to yield 10%. The bonds pay 9% interest, payable on a semiannual basis each July 1 and January 1, and mature in three years on July 1. The bonds are classified as AFS securities. West Company's annual reporting period ends December 31. Assume the effective interest method of amortization of any discount or premium. Note: When answering the following questions, round each amount to the nearest whole dollar. Amortization Schedule Journal Entries and Financial Statement Presentation for Year 1 a. Prepare a bond amortization schedule for Year 1 and Year 2 using the effective interest method. Discount Amortization Date Jul 1, Year 1 Jan. 1, Year 2 s Jul 1, Year 2 Stated Interest 8,100 $ 8,100x Market Interest 8,772 x 8.805 672 x 705 Bond Amortized Cost 175,433 X 176,104 x 176,810 x Journal Entries for Year 2On January 1, 2020, Ehrlich Corporation issued 7%, 10-year bonds with a face amount of $800,000 at 97. Interest is payable annually on January 1. Instructions Prepare the following entries: record the issuance of the bonds on 1/1/20 first annual interest accrual on 12/31/20 amortization, assuming that the company uses straight-line amortization on 12/31/20 payment of interest on 1/1/21 What is the unamortized balance of the discount account at 1/1/21? What is the carrying value of the bond at 1/1/21?.
- Garcia Company issues 10%, 15-year bonds with a par value of $310,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 8%, which implies a selling price of 117 %. The effective interest method is used to allocate interest expense. 1. What are the issuer's cash proceeds from issuance of these bonds? 2. What total amount of bond interest expense will be recognized over the life of these bonds? 3. What amount of bond interest expense is recorded on the first interest payment date? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What amount of bond interest expense is recorded on the first interest payment date? Bond interest expenseOn July 1 of the current year, West Company purchased for cash, 16, $10,000 bonds of North Corporation at a market rate of 6%. The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature in three years on July 1. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes. Note: When answering the following questions, round answers to the nearest whole dollar. Amortization Schedule Journal Entries in Year 1 Journal Entries in Year 2 b. Record the entry for the purchase of the bonds by West Company on July 1. Date Account Name Debit Credit Jul. 1, Year 1On January 1, a company issues bonds dated January 1 with a par value of $350,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $335,819. The journal entry to record the first interest payment using straight-line amortization is: Multiple Choice Debit Interest Expense $10,831.90; debit Discount on Bonds Payable $1,418.10; credit Cash $12,250,00 Debit Interest Expense $13,668.10, credit Discount on Bonds Payable $1,418.10, credit Cash $12,250.00 Debit Interest Expense $12,250.00, credit Cash $12.250.00 Debit interest Expense $13,668.10; credit Premium on Bonds Payable $1,418.10; credit Cash $12,250,00 Debit interest Payable $12.250.00; credit Cash $12.250.00
- DEF Company was authorized to issue a 12%, 10-year bond with a face amount of P20,000,000 on January 1, 2XX1. Interest on the bonds is payable semiannually on June 30 and December 31 of each year. The entity amortizes discounts or premiums only at the end of the calendar year using the straight-line method. If the company sold the bonds at 80, complete the table below. Jan 1, 2XX1 FINANCIAL POSITION Bond payable Less: Discount on bond payable Net COMPREHENSIVE INCOME Total interest expense 20,000,000 Dec 31, 2XX1 Dec 31, 2XX2 Dec 31, 2XX3 20,000,000 20,000,000 20,000,000On January 1, 2019, Rodgers Company purchased $200,000 face value, 10%, 3-year bonds for $190,165.35, a price that yields a 12% effective annual interest rate. The bonds pay interest semiannually on June 30 and December 31. Required: 1. Record the purchase of the bonds. 2. Prepare an investment interest income and discount amortization schedule using the effective interest method. 3. Record the receipts of interest on June 30, 2019, and June 30, 2021.On April 1, 2021, Marigold Corporation issued $352.000, 5-year bonds. On this date, Shoreline Corporation puurchased the bonds from Marigold to earn interest. Interest is received semi-annually on April 1 and October 1 and Shoreline's year end is March 31 Below is a partial amortization schedule for the first three interest periods of the bond issue Semi-Annual Interest Received Interest Interest Period Revenue Amortization Bond Amortized Cost April 1. 2021 $368.231 October 1, 2021 $7.040 $5.523 $1.517 366.714 April 1.2022 7.040 5.501 1.539 365,175 October 1, 2022 7.040 5,478 1,562 363,613 Were the bonds purchased at a discount or at a premium? Bonds purchased at a What is the face value of the bonds? Face value of the bonds s eTextbook and Media What will the bonds' amortized cost be at the maturity date? Bonds' amortized cost at the maturity date eTextbook and Media /1 E What is the bonds' contractual interest rate? The market interest rate? (Round answers to 2 decimal places, eg…
