Problem 14-78 Computing Selling Price and Bond Interest Revenue- Effective Interest and Straight-Line L01 Were the bonds sold at par, discount, or premium? Compute the purchase price of bonds Compute interest revenue for Year 1 Compute interest revenue for Year 2 On January 1 of Year 1, Olympians Inc. purchased for cash, ten $10,000 king pay 4% interest, payable on an annual basis each December 31, and mature in 10 years on December 31. The bonds are classified as held-to-maturity securities. The annual reporting period of Olympians Inc. ends Decem- ber 31. The following table includes five separate scenarios pertaining to these bonds. (1) Bonds Yield 4% (2) Bonds Yield 5% (Use effective interest method) (3) Bonds Yield 5% (Use straight-line interest method) (4) Bonds Yield 3% (Use effective interest method) (5) Bonds Yield 3% (Use straight-line interest method)

Problem 14-78 Computing Selling Price and Bond Interest Revenue- Effective Interest and Straight-Line L01 Were the bonds sold at par, discount, or premium? Compute the purchase price of bonds Compute interest revenue for Year 1 Compute interest revenue for Year 2 On January 1 of Year 1, Olympians Inc. purchased for cash, ten $10,000 king pay 4% interest, payable on an annual basis each December 31, and mature in 10 years on December 31. The bonds are classified as held-to-maturity securities. The annual reporting period of Olympians Inc. ends Decem- ber 31. The following table includes five separate scenarios pertaining to these bonds. (1) Bonds Yield 4% (2) Bonds Yield 5% (Use effective interest method) (3) Bonds Yield 5% (Use straight-line interest method) (4) Bonds Yield 3% (Use effective interest method) (5) Bonds Yield 3% (Use straight-line interest method)

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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Bond Premium, Entries for Bonds Payable Transactions Instructions Present Value Tables Chart of Accounts Journal Final Questions Instructions O'Halloran Inc. produces and sells outdoor equipment. On July 1, Year 1, O'Halloran Inc. issued $32,000,000 of six-year, 8% bonds at a market (effective) interest rate of 7%, receiving cash of $33,546,022. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.* 2. Journalize the entries to record the following:* a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. b. 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. 3. Determine the total interest…
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RCISES i S Exercise 14-17A (Algo) Computing bond interest and price; recording bond issuance LO C2 Brin Company issues bonds with a par value of $700,000. The bonds mature in 6 years and pay 6% annual interest in semiannual payments. The annual market rate for the bonds is 8%. (Table B.1 Table B.2, Table B.3, and Table B.4) Note: Use appropriate factor(s) from the tables provided. 1. Compute the price of the bonds as of their issue date. 2. Prepare the journal entry to record the bonds' issuance. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the price of the bonds as of their issue date. Note: Round all table values to 4 decimal places, and use the rounded table values in calculations. Round intermediate calculations to the nearest dollar amount. Table Values are Based on: Cash Flow Par (maturity) value Interest (annuity) Price of bonds n = i= Table Value Amount Required 1 Present Value $ Saved Required 2 > 0
Subject: accounting
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Question 6 (i) On 1 April, year 1, Happy Corporation issues $50 million of 10%, 30-year bonds payable at par. Interest on the bonds is payable semiannually each 1 April and 1 October. The journal entry to record the first cash payment to bondholders on 1 October, year 1, will include: A: A credit to Cash of $5,000,000. B: A credit to Interest Payable of $2,500,000. C: A debit to Bonds Payable of $5,000,000. D: A debit to Interest Expense of $2,500,000. (ii) ABC Manufacturing Company sold a vehicle for cash of $70,000 with a loss of $10,000 recognized. The accumulated depreciation amounted to $140,000. The original cost of the asset must have been: A: $130,000. B: $150,000. C: $200,000. D: $220,000.
Exercise 10-3 (Algo) Recording bond issuance and interest LO P1 On January 1, Boston Enterprises Issues bonds that have a $1,600,000 par value, mature in 20 years, and pay 8% Interest semiannually on June 30 and December 31. The bonds are sold at par. 1. How much Interest will Boston pay (in cash) to the bondholders every six months? 2. Prepare Journal entries to record (a) the issuance of bonds on January 1, (b) the first interest payment on June 30, and (c) the second Interest payment on December 31. 3. Prepare the journal entry for Issuance assuming the bonds are issued at (a) 98 and (b) 102. Complete this question by entering your answers in the tabs below. Required 1 Required 2 How much interest will Boston pay (in cash) to the bondholders every six months? Semiannual Cash Interest Payment Par (maturity) Value Required 3 X Semiannual Rate Required 1 Required 2 >