Problem 5-16 (AICPA Adapted)During the current year, Cain Company incurred thefollowing costs in connection with the issuance of bonds:200,000150,000800,000Promotion costPrinting and engravingLegal feesFees paid to independent accountantsfor registration informationCommissions paid to underwriter100,000900,000What total amount should be recorded as bond issue cost?a. 1,950,000b. 2,150,000c. 1,800,000d. 2,000,000

Bonds is a financial instrument that is issued for the purpose of raising funds for the fixed amount…

Answered: Problem 5-16 (AICPA Adapted) During the…

Problem 5-16 (AICPA Adapted) During the current year, Cain Company incurred the pllowing costs in connection with the issuance of bonds: "romotion cost rinting and engraving 200,000 150,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Glen Company had the following long-term debt: Sinking fund bonds, maturing in installments…

Q: interest semiannually on January 1 and July 1. The interest per annum. The bonds, which mature on…

A: The carrying value of the bond investment is calculated by adding the interest income to the…

Q: . On January 1, 20x1, ABC sold a used vehicle with a historical cost of P2,000,0000 and accumulated…

A: Carrying Amount is the book value of an Assest which is recorded in financial Statement . When the…

Q: Required information [The following information applies to the questions displayed below.] Doyle…

A: 1. Accounting Equation -Accounting Equation is calculated using following equation -Assets =…

Q: a. 193,560 gain b. 193,560 loss c. 179,920 gain d. 179,920 loss What is the carrying amount of the…

A: Bond In exchange for regular interest payments, a bondholder loans money to a business or the…

Q: The Square Foot Grill, Incorporated issued $210,000 of 10-year, 7 percent bonds on July 1, Year 1,…

A: The bonds payable are the bonds which have been issued and which have not been repaid by the company…

Q: On July 1, 2024, a company acquired equipment. The company paid $210,000 in cash on July 1, 2024,…

A: The note can be issued in exchange of cash while purchasing the asset. The zero interest bearing…

Q: P2) On January 1, Sawmill Corporation sold $50,000, 10-year, 10 percent bonds at 94. Interest is…

A: Since you have posted a question with multiple sub parts, we will provide the solution only to the…

Q: EA6. LO 13.2 Oak Branch Inc. issued $700,000 of 5%, 10-year bonds when the market rate was 4%. They…

A: Bonds are the financial instruments which are issued by organizations to raise funds. Bonds can be…

Q: On July 1, 20x7, Axe Co. received P103,288 for P100,000 face amount, 12% bonds, a price that yields…

A: The bonds are issued at premium when market rate is lower than the coupon rate of bonds.

Q: On January 1, 2024, Evanston Corporation borrowed $22 million from a local bank to construct a new…

A: A liability is what a business owes to its outsiders. A liability can be classified as either…

Q: Required information Exercise 10-7 (Algo) Straight-Line: Amortization table and bond interest…

A: Bonds are the securities which are issued by the entities in order to raise capital for the…

Q: Required information [The following information applies to the questions displayed below] Doyle…

A: Statement of Cash Flow -Statement of Cash Flow is a financial statement that includes inflow and…

Q: Required: a. Prepare the worksheet consolidation entry or entries needed to remove the effects of…

A: Corporate Bonds - It is a type of debt security that businesses utilize to establish financial…

Q: Required information [The following information applies to the questions displayed below] Doyle…

A: An income statement is a financial report that indicates the revenue and expenses of a business. It…

Q: 2 How much is the unrealized gain (loss) in 2015 to be recognized in the profit or loss? Nil c.…

A: “Since you have asked multiple sub-parts, we will solve the first three sub-parts for you. If you…

Q: 2. On January 1, 20x1, Faith Co. issued 1,000, P2,000, 12% bonds for P2,206,168. Principal is due on…

A: As per the IFRS 9, the transaction cost incurred on the issue of bond will be reduced from proceeds…

Q: On July 1 of Year 1, West Company purchased for cash, 8, $10,000 bonds of North Corporation to yield…

A: When a bond is purchased at a discount then, the interest income is more than the stated interest as…

Q: Required information [The following information applies to the questions displayed below.] Doyle…

A: Accounting equation: Accounting equation is an accounting tool expressed in the form of equation, by…

Q: The Square Foot Grill, Incorporated issued $210,000 of 10-year, 7 percent bonds on July 1, Year 1,…

A: Bonds refer to the financial debt instruments issued by the borrower to raise money. The borrower…

Q: Prepare all necessary entries in general journal form for Garfield Corp. E6.13 (LO 4) (Note…

A: Note receivable: It is the amount that is owed by a business and is recorded on the balance sheet of…

Q: Trog Industries pays and records the semiannual interest on its $860,000, 10-year, 6% bonds…

A: A bond is a type of instrument that is identified as a loan given by a party known as a lender to…

Q: On January 1, 2020, Wolf Company issued 10% bonds in the face amount of P5,000,000, which mature on…

A: The bonds are issued at premium when market rate is lower than the coupon rate of bonds.

Q: un.3

A: The objective of this question is to prepare the journal entries for the issuance of bonds and the…

Q: [The following information applies to the questions displayed below.] Doyle Company issued…

A: Financial information refers to the set of statements that the companies are required to be prepared…

Q: On September 1, Bridgeport Ltd. purchased $76,200 of five-year, 8% bonds for $67,584, resulting in…

A: Although, only part d is asked but here part a,b and c is also answered to give a complete answer…

Q: 24, Cicero Corporation borrowed $ loan will be paid back in three equa e interest at a rate of 7%

A: Borrowed amount = $3,000,000 Rate of interest = 7% Time = 3 years Annual installment = $1,143,155

Q: Jaffe Blackout Power Company constructed a new power plant to supply energy to the Castle Electrical…

A: One of the source of raising the funds is obtaining the loans from the financial institutions. The…

Q: Problem 5-21 (AICPA Adapted) On January 1, 2020, Nilo Company reported bonds payable of P8,000,000…

A: Here in this question, we are required to calculate loss on early extinguishment of debt. When any…

Q: Which of the following would be the best choice for CFC to do to raise the money it needs?

A: As per our protocol we provide solution to only one question if in case of multiple questions and…

Q: - appropriated retained

A: Appropriated retained earnings is a part of retained earnings set aside for particular purposes.

Q: 1. Bank CO approved a loan application of Client ME on January 1, 20A for P3,500,000. Client ME is…

A: Operating income (EBIT) is another word for income from operations (IFO). The profit created by a…

Q: On January 1, 20x1, ABC sold a used vehicle with a historical cost of P2,000,0000 and accumulated…

A: Carrying value of Vehicle sold: Historical cost = p2,000,000 Accumulated depreciation = p700,000…

Q: On January 1, year 15, Hart, Inc. redeemed its 15-year bonds of $500,000 par value for 102. They…

A: Bonds payable refers to a type of long-term debt that a company or organization issues to borrow…

Q: On January 1, $858,000, 5-year, 10% bonds, were issued for $832,260. Interest is paid semiannually…

A: When the issue price is less than the face value of bonds the bonds are said to be issued on…

Q: None

A: It looks like you're describing a situation involving financial figures and dates, possibly related…

Q: On January 1, 20x9, Fairness Company sold a tract of land that was acquired years ago for P…

Q: An entity records on December 31, 20x1 show the following account balances: Trade accounts…

A: Liabilities are the obligations or dues which needs to be settled down or being paid by the…

Q: tment issued by Falcons Corporation. The amortized cost of the investment is $140,500 on December…

A: A journal entry is a record of financial transactions in accountting, It is the first step in the…

Q: Amortize discount by interest method On the first day of its fiscal year, Ebert Company issued…

A: Bond is financial instrument which are is used to raise funds for financial obligations. Bond have…

Q: Doyle Company issued $360,000 of 10-year, 7 percent bonds on January 1, Year 2. The bonds were…

A: Organize the given transaction data in accounts under the accounting equation for Year 2 an d Year…

Q: Conor Corporation has $10,500,000 of 5 percent, 10-year bonds dated January 1, with interest payment…

A: The bonds are issued to raise money from the investors or market for financial requirements of…

Q: 1, Y5, Homer repurchased the bonds issu = method is used for premium amortizatic er on the…

A: $3,00,000 premium in Y1 ($2.3 million - $2 million) as, = $300,000 / 10 = $30,000

Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

Problem 5-16 (AICPA Adapted)
During the current year, Cain Company incurred the
following costs in connection with the issuance of bonds:
200,000
150,000
800,000
Promotion cost
Printing and engraving
Legal fees
Fees paid to independent accountants
for registration information
Commissions paid to underwriter
100,000
900,000
What total amount should be recorded as bond issue cost?
a. 1,950,000
b. 2,150,000
c. 1,800,000
d. 2,000,000

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Problem 5-12 (AICPA Adapted) Zola Company had the following long-term debt: Bonds maturing in installments, secured by machinery Bonds maturing on a single date, secured by realty Collateral trust bonds 1,000,000 1,800,000 2,000,000 1. What is the total amount of debenture bonds? a. 2,000,000 b. 1,000,000 с. 1,800,000 d. 0. 2. What is total amount of secured bonds? a. 4,800,000 b. 2,800,000 c. 3,800,000 d. 3,000,000 190
Kk. 255.
Problem 5-15 (AICPA Adapted) On July 1, 2020, Carol Company issued at 104, five thousand 10% bonds with face amount of P1,000 per bond. The bonds were issued through an underwriter to whom the entity paid bond issue cost of P125,000. On July 1, 2020, what is the carrying amount of the bonds payable? a. 4,875,000 b. 5,075,000 c. 5,200,000 d. 5,325,000
42. On January 1, 2018, UE Realty Company sold property carried in inventory at a cost of P1,312,710 for P2,100,000. A 20% down payment was made and the balance payable in 4 equal installments of P420,000, payable semi-annually every June 30 and December 31. Expenses related with sale, P100,000. (Market rate of interest-12%). How much is the net income related with the installment sales for the year ended December 31, 2018? a. P462,600 c. P612,675 b. P549,918 d. P617,265
Problem 5-14 (AICPA Adapted) On April 1, 2020, Greg Company issued, at 99 plus accrued interest, 4,000 8% bonds with face amount of P1,000 per bond. The bonds are dated January 1, 2020, mature on January 1, 2030, and pay interest on January 1 and July 1. The entity paid bond issue cost of P140,000. How much cash was received from the bond issuance? a. 4,040,000 b. 3,960,000 c. 3,900,000 d. 3,820,000
Required information [The following information applies to the questions displayed below.] Doyle Company issued $310,000 of 10-year, 8 percent bonds on January 1, Year 2. The bonds were issued at face value. Interest is payable in cash on December 31 of each year. Doyle immediately invested the proceeds from the bond issue in land. The land was leased for an annual $59,000 of cash revenue, which was collected on December 31 of each year, beginning December 31, Year 2. Required a. Organize the transaction data in accounts under the accounting equation for Year 2 and Year 3. Note: Enter any decreases to account balances with a minus sign. Not all cells in the "Account Titles for Retained Earnings" column may require an input - leave cells blank if there is no corresponding input needed. Event Year 2 1/1 1/1 12/31 12/31 Balance Year 3 Beginning balance 12/31 12/31 Ending balance Cash Assets + + 0 + + + 0 + 0 + + + + DOYLE COMPANY Effect of Events on the Accounting Equation Year 2 and Year…
Amortize Discount by Interest Method On the first day of its fiscal year, Ebert Company issued $25,000,000 of 5-year, 9% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 11%, resulting in Ebert receiving cash of $23,115,584. The company uses the interest method. a. Journalize the entries to record the following: 1. Sale of the bonds. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Cash Discount on Bonds Payable Bonds Payable 2. First semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Interest Expense Discount on Bonds Payable Cash 3. Second semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Interest Expense Discount on Bonds Payable Cash b. Compute the amount of…
Subject: Engineering economics A Corporation sold an issue of 20-year bonds, having a total face value of 20,000,000 for 8, 500,000 The bonds bear interest at 16%, payable semiannually. The company wishes to establish a sinking fund for retiring the bond issue and will make semiannual deposit that will earn 12%, compounded semiannually. Compute the annual cost for interest and redemption of these bonds.
Hw.144.
Subject: accounting
E6-5. Prepare Balance Sheet. Blackburn Building Products Company provided the following information for the current year ended December 31. Account Debit Credit Cash $ 645,235 Notes payable, due in 5 years $ 190,900 Retained earnings 857,735 Obligations under capital leases (noncurrent) 575,000 Obligations under pension plans 301,250 Deferred tax liability (noncurrent) 35,500 Accumulated other comprehensive loss 356,700 Current portion of long-term debt 356,800 Property, plant, and equipment-net 2,745,600 Investments in affiliate companies 567,500 (noncurrent) Accounts receivable 450,000 Bonds payable, due in 10 years 1,890,750 Investments at fair value (trading) 235,000 Accounts payable 500,000 Additional paid-in capital 710,300 Dividends payable 55,000 Equipment under capital lease 1,511,750 Intangible assets-net 205,700 Merchandise inventory 665,750 Income taxes payable 40,000 Common stock, $1 par value 1,870,000 Totals $7,383,235 $7,383,235 Required » a. Prepare the current-year…
15. On January 1, 20x1, ABC sold a used vehicle with a historical cost of P2,000,0000 and accumulated depreciation of P700,000 in exchange for cash of P100,000 and a noninterest bearing note receivable of P1,000,000 due in 4 equal annual installments starting on December 31, 20x1 and every December 31, thereafter. The prevailing rate of interest for this type of note is 12%. On December 31, 20x3, the current portion of the note receivable is approximately (use 6-decimal present value factor)