Presented below is a partial amortization schedule for Discount Pizza. (2) (1) Period Cash Paid for (3) Interest Interest Expense (4) Increase in Carrying Value (5) Carrying Value Issue Date $55,736 1 2 $1,800 1,800 $1,951 1,956 $151 55,887 156 56,043 Required: 1. & 2. Record the bond issue and first interest payment assuming the face amount of bonds payable is $60,000. 3. Interest expense increases each period because the carrying value of the debt issued at a discount increases over time.
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- Presented below is a partial amortization schedule for Discount Pizza. (1) (2) Cash Paid for Interest (3) (4) Increase in (5) Interest Carrying Value Carrying Value $58,523 58,681 58,845 Period Issue date Expense 1 $1,890 1,890 $2,048 2,054 $158 164 2 Required: 1. & 2. Record the bond issue and first interest payment assuming the face amount of bonds payable is $63,000. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 1 2 Record the bond issue. Note: Enter debits before credits.Presented below is the partial bond discount amortization schedule for Pharoah Corp. Pharoah uses the effective-interest method of amortization. Interest Periods Issue date 1 2 Interest to Be Paid $117,000 117,000 Interest Expense to Be Recorded $124,981 125,380 Discount Amortization $7,981 8,380 Unamortized Discount Debit $100,383 92,402 84,022 Bond Carrying Value Credit $2,499,617 2,507,598 (a) Prepare the journal entry to record the payment of interest and the discount amortization at the end of period 1. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation 2,515,978The following is the partial bond discount amortization schedule for Monty Corp. Monty uses the effective-interest method of amortization. Interest Periods Issue date (a) 1 2 Interest to Be Paid $42,750 42,750 Interest Expense to Be Recorded Account Titles and Explanation $45,666 45,812 Discount Amortization $2,916 3,062 Unamortized Discount Debit $36,678 33,762 30,700 Bond Carrying Value $913,322 Prepare the journal entry to record the payment of interest and the discount amortization at the end of period 1. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Credit 916,238 919,300
- Exercise 14-15 Allocation of interest for bonds sold at a premium LO6 Tahoe Tent Ltd. issued bonds with a par value of $802,000 on January 1, 2020. The annual contract rate on the bonds was 13.00%, and the interest is paid semiannually. The bonds mature after three years. The annual market interest rate at the date of issuance was 11.00%, and the bonds were sold for $842,064. a. What is the amount of the original premium on these bonds? (Use financial calculator for calculating PV's. Round the final answer to the nearest whole dollar.) Premium b. How much total bond interest expense will be recognized over the life of these bonds? (Do not round intermediate calculations. Round the final answer to the nearest whole dollar.) Total interest expenseb. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Receivable 3. Determine the total interest expense for Year 1. Round to the nearest dollar. 4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest? 5. Compute the price of $23,854,460 received for the bonds by using Present value at compound interest, and Present value of an annuity. Round to the nearest dollar. Your total may vary slightly from the price given due to rounding differences. Present value of the face amount Present value of the semiannual interest payments Price received for the bondsExercise 14-8 Allocation of interest for bonds sold at a discount LO5 Huskey Mining Corporation issued bonds with a par value of $90,000 on January 1, 2020. The annual contract rate on the bonds is 8.00%, and the interest is paid semiannually. The bonds mature after three years. The annual market interest rate at the date of issuance was 10.00%, and the bonds were sold for $85,431. a. What is the amount of the original discount on these bonds? Discount b. How much total bond interest expense will be recognized over the life of these bonds? (Do not round intermediate calculations. Round the final answer to the nearest whole dollar.) Total interest expense
- Compute bond proceeds, amortizing premium by interest method, and interest expense DATA Face amount of bonds Contract rate of interest Term of bonds, years Market rate of interest Interest payment REQUIRED: a. Compute the amount of cash proceeds from the sale of the bonds. $41,000,000 11% 3 9% Semiannual b. Compute the amount of premium to be amortized for the first semiannual interest payment period, using the interest method. c. Compute the amount of premium to be amortized for the second semiannual interest payment period, using the interest method. d. Compute the amount of the bond interest expense for the first year. Using formulas and cell references from the problem data, perform the required analysis. Formulas entered in the green cells show in the orange cells. Transfer amounts to CNOWv2 for grading. a. PV of cash proceeds b. Premium amortized for the 1st interest payment period c. Premium amortized for the 2nd interest payment period d. Interest expense for the 1st year…Terms related to long-term debt. Place the letter of the best matching phrase before each word. 1. Indenture 6. Times Interest Earned Ratio Refunding Bonds Issued at Par 2. 7. Mortgage 3. 8. Premium on Bonds Carrying Value Nominal Rate 4. 9. Reacquisition Price 5. 10. Market Rate Requires that bond discount be reported in the balance sheet as a direct deduction from the face of the bond. b. a. Rate set by party issuing the bonds which appears on the bond instrument. The interest paid each period is the effective interest at date of issuance. d. C. Rate of interest actually earned by the bondholders. Results when bonds are sold below par. f. e. Results when bonds are sold above par. The replacement of an existing bond issuance with a new one. g. h. Price paid by issuing corporation for its own bonds. Book value of bonds at any given date. Ratio of current assets to current liabilities. i. k. The bond contract or agreement. 1. Indicates the company's ability to meet interest payments as…A comapny has issued a $162, 000, 3 year, zero interest bond dated January 1, 2023. The market interest rate for similar bonds was 11%. Assume the company used the effective interest method of amortization. Prepare a schedule of bond discount/premium amortization. (Round answers to 0 decimal places, e. g. 5, 275. Do not leave any answer field blank. Enter 0 for amounts.)
- A $2,600 credit balance in the Premium on Bonds Payable account represents which of the following? Select one: a. An overpayment for a bond purchase b. An underpayment for a bond purchase c. The current amount of amortization expense d. The unamortized amount of premium earned on a bond issue4. What is the carrying value of the bonds at the end of the second period (third number)? Premium 57,913.01 Carrying value (bonds) 432,913.01 Face Rate Market Rate Semiannual payments a. b. Cash Payment C. d. e. 14% 10% 0 or 1 2 or 3 4 or 5 6 or 7 8 or 9 Interest Expense Today Period #1 26,250.00 Period #2 26,250.00 Carrying value at end of second period (third number) ___________?__ 2. Disc. or Prem. Amort. 21,645.65 21,415.43 Disc. or Prem. 4,604.35 4,834.57 57,913.01 53,308.66 48,474.10 Face Value 375,000.00 375,000.00 375,000.00 Carrying Value 432,913.01 428,308.66 423,474.10Federal Semiconductors issued 8% bonds, dated January 1, with a face amount of $830 million on January 1, 2021. The bonds sold for $753,634,356 and mature on December 31, 2040 (20 years). For bonds of similar risk and maturity the market yield was 9%. Interest is paid semiannually on June 30 and December 31. Required: 1. to 3. Prepare the journal entries to record their issuance by Federal on January 1, 2021, interest on June 30, 2021 (at the effective rate) and interest on December 31, 2021 (at the effective rate). 4. At what amount will Federal report the bonds among its liabilities in the December 31, 2021, balance sheet? Complete this question by entering your answers in the tabs below. Req 1 to 3 Req 4 Prepare the journal entries to record their issuance by Federal on January 1, 2021, interest on June 30, 2021 (at the effective rate) and interest on December 31, 2021 (at the effective rate). (If no entry is required for a transaction/event, select "No journal entry required" in…