PROBLEM 3 On June 30, 2018, Upton Inc. sold $3,000,000 (face value) of bonds. The bonds are dated June 30, 2018, pay interest annually on June 30, and will mature on June 30, 2021. The following schedule was prepared by the accountant for 2018. Annual Interest Period 1 Interest to be Paid $240,000 Interest Expense $263,250 Amortization $23,250 Unamortized Amount $75,000 51,750 1. What is the stated interest rate for this bond issue? 2. What is the market interest rate for this bond issue? Bond Carrying Value $2,925,000 2,948,250 Instructions On the basis of the above information, answer the following questions. (Round your answer to the nearest dollar or percent.)

PROBLEM 3 On June 30, 2018, Upton Inc. sold $3,000,000 (face value) of bonds. The bonds are dated June 30, 2018, pay interest annually on June 30, and will mature on June 30, 2021. The following schedule was prepared by the accountant for 2018. Annual Interest Period 1 Interest to be Paid $240,000 Interest Expense $263,250 Amortization $23,250 Unamortized Amount $75,000 51,750 1. What is the stated interest rate for this bond issue? 2. What is the market interest rate for this bond issue? Bond Carrying Value $2,925,000 2,948,250 Instructions On the basis of the above information, answer the following questions. (Round your answer to the nearest dollar or percent.)

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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View Policies Current Attempt in Progress Hoffman Corporation retires its bonds at 106 on January 1, following the payment of annual interest. The face value of the bonds is $400,000. The carrying value of the bonds at the redemption date is $419,800. The entry to record the redemption will include a O debit of $19,800 to Premium on Bonds Payable. O credit of $4,200 to Gain on Bond Redemption. O debit of $24,000 to Premium on Bonds Payable. O credit of $19,800 to Loss on Bond Redemption. eTextbook and Media Save for Later Attempts: 0 of 2 used Submit Answer
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An accounting example: Otter Products inc issued bonds on January 1, 2019. Interest to be paid semi-annually. Term in years is 2; Face value of bonds issued is $200,000; Issue Price $206,000; Specified Interest Rate each payment period is 6% Question. Calculate a. the amount of interest paid in cash every payment period. b. The amount of amortization to be recorded at each interest payment date (use straight-line method) c. complete amoritzation table by calculating interest expense and beginning and ending bond carrying amounts at the each period over 2 years. The term is for 2 years however 3 years is showing on the workbook. How do I calcuate the 3rd year if the problem only says the term is 2 years?
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PROBLEM 1 On December 31, 2018, Edmand Inc. issued $750,000of 11% five-year bonds for $722,400, yielding an effective interest rate of 12%. Semi annual interest is payable on June 30 and December 31 each year. The firm uses effective interest method to amortize the discount. a) Prepare Amortization schedule showing the necessary information for the first two interest periods. Round amounts to the nearest dollar. b) Prepare the journal entry for the bond issuance on December 31, 2018. c) Prepare the journal entry to record bond interest expense and discount amortization at June 30 2019. d) Prepare the journal entry to record the bond interest expense and discount amortization at December 31, 2019