On 1 January 20X5, Franco Ltd. purchased $440,000 of Gentron Company 7.00% bonds. The bonds pay semi-annual interest each 30June and 31 December. The market interest rate was 8% on the date of purchase. The bonds mature on 31 December 20X10. Thecompany has a 31 December year-end.Required:1. Calculate the price paid by Franco Ltd. (Do not round Intermediate calculations. Round your final answer to the nearest dollaramount.)Price paidPeriod2. Assume that the bond is classified as an AC investment. Construct a table that shows interest revenue reported by Franco, and thecarrying value of the investment, for four interest periods. Use the effective-interest method. (Do not round Intermediate calculations.Round your final answers to the nearest dollar amount.)0$1234CashPayment361,607View transaction listInterestRevenueAmortizationBond CarryingValue3. Prepare the entries for the first four interest periods based on your calculations in requirement 2. (If no entry is required for atransaction/event, select "No Journal entry required" In the first account field. Do not round Intermediate calculations. Round yourFinal answers to the nearest dollar amount.)

Bond valuation is the process of determining the fair market value of a bond, considering factors…

Answered: Required: 1. Calculate the price paid…

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

ChapterMB: Model-building Problems

Section: Chapter Questions

Problem 13M

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Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the market of interest was 9%. The company uses the effective-interest method of amortization. At the end of the year, the company will record ________. A. a credit to cash for $28,733 B. a debit to interest expense for $31,267 C. a debit to Discount on Bonds Payable for $1,267 D. a debit to Premium on Bonds Payable for $1.267
On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
On July 1, a company sells 8-year $250,000 bonds with a stated interest rate of 6%. If interest payments are paid annually, each interest payment will be ________. A. $120,000 B. $60,000 C. $7,500 D. $15,000
Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market rate of 4%. The bonds paid interest semi-annually on June 30 and Dec. 31. How much money did the company receive when the bonds were issued? The bonds would be quoted at what rate?
Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018, and received $540,000. Interest is payable semi-annually. The premium is amortized using the straight-line method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. Dec. 31, 2018: entry to record payment of interest to bondholders C. Dec. 31, 2018: entry to record amortization of premium
5
On January 2, Year 1, Kampai Sushi Bar sold $800,000 of bonds for $785,000. The bonds will mature in 10 years and pay interest annually on December 31. The company properly recorded the payment of interest and the amortization of the discount using the effective interest method. What will be the carrying value of the bonds at the end of Year 1? a.$800,000 b.less than $785,000 c.$785,000 d.greater than $785,000, but less than $800,000
On 1 may 20x3, Amazon Limited purchased $5,000,000 of price Limited 6.3% bonds to be held to maturity. The bonds pay semiannual interest each 1 May and 1 November. The market interest rate was 8% on the date of purchase. The bonds mature on 1 November 20x7. Required Calculate the price paid by Amazon Limited Construct a table that shows interest revenue reported by Amazon, and the carrying value of the investment, for each interest period to maturity. Use the effective interest method. Give entries for 20x3 and 20x4 for Amazon Limited, including adjusting entries at the year end, which is December 31.
The Melon Company issues $519,000 of 8%, 10-year bonds at 103 on March 31, Year 1. The bonds pay interest on March 31 and September 30. Assume that the company uses the straight- line method for amortization. Calculate the net balance that will be reported for the bonds on the September 30, Year 1 balance sheet. (Round your intermediate answers to the nearest dollar.) Group of answer choices $533, 791 $535, 349 $519,000 $534, 570
On December 31, Caper, Inc., issued $500,000 of 8% , 9-year bonds for $440,000, yielding an effective interest rate of 10%. Semiannual interest is payable on June 30 and December 31 each year. The firm uses the effective interest method to amortize the discount. Required a. Prepare an 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. c. Prepare the journal entry to record the bond interest payment and discount amortization at June 30 of the following year. d. Prepare the journal entry to record the bond interest payment and discount amortization at December 31 of the following year. a. Year at issue 1 Date b. Dec.31 Cash C. Jun.30 Interest Interest Period Paid d. 1 2 $ 0 $ 0 0 Interest Expense To record issuance of bonds. Balance Periodic of Unamortized Amortization Discount 0 $ 0 0 General Journal Description 0$ 0 0 + 수 수 + Book Value of…
Godo
On January 1, Year 1, Kennard Co. issued $2,000,000, 5%, 10-year bonds, with interest payable on June 30 and December 31 to yield 6%. The bonds were issued for $1,851,234. a. Prepare an amortization schedule for Year 1 and Year 2 using the effective interest rate method. Round answers to the nearest dollar. Enter all amounts as positive numbers. Amortization Table The Effective Interest Rate Method Interest Paid Interest Expense Amortization Bond Carrying Amount Date 1/1/Year 1 6/30/Year 1 12/31/Year 1 6/30/Year 2 12/31/Year 2 b. Show how this bond would be reported on the balance sheet at December 31, Year 2. Kennard Co. Partial Balance Sheet

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