RNB Corporation issued ten thousand P1,000 bonds on January 1, 2018. They have a ten-year term and pay interest semiannually.This is the partial bond amortization schedule for the bonds.PaymentCashEffective interestDecrease in balanceOutstanding balance11,487,7471400,000344,63255,36811,432,3792400,000342,97157,02911,375,3503400,000341,26158,73911,316,611400,000What is the effective annual rate of interest on the bonds?O 6%O 4%O 3%O 8%

Bonds are a form of loan or debt issued by the business, on which regular interest payments needs to…

Answered: RNB Corporation issued ten thousand…

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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Legacy issues $740,000 of 7.5%, four-year bonds dated January 1, 2021, that pay interest semiannually on June 30 and December 31. They are issued at $680,186 when the market rate is 10%. 2. Determine the total bond interest expense to be recognized over the bonds' life.
On January 1, 2021, Tango Company issued a 10-year 9% bonds payable of P10,000,000 for a market rate of 8.5%. The company incurred P642,007.30 in bond issue costs. The amortization of bond discount was recorded using the effective interest method. Interest will be paid every January 1 of each year. 1. What is the total net proceeds from the issuance of the bond? 2. What is the effective interest rate used? 3. How much was the interest expense for 2021? 4. What is the balance of unamortized discount/premium as of December 31, 2023? ( Premium/discount)
On January 1, 2024, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Payment Cash Payment Effective Interest Increase in Balance Outstanding Balance 6,221,759 1 356,000 373,306 17,306 6,239,065 2 356,000 374,344 18,344 6,257,409 3 356,000 375,445 19,445 6,276,854 4 356,000 376,611 20,611 6,297,465 5 356,000 377,848 21,848 6,319,313 6 356,000 379,159 23,159 6,342,472 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 38 356,000 505,452 149,452 8,573,656 39 356,000 514,419 158,419 8,732,075 40 356,000 523,925 167,925 8,900,000 Required: What is the face amount of the bonds? What is the initial selling price of the bonds? What is the term to maturity in years? Interest is determined by what approach? What is the stated annual interest rate? What is the effective annual interest rate? What is the total cash interest paid over the term to maturity? What is the total effective…
On January 1, 2021, Lambda, Inc. issued ten-year bonds with a face value of $1,000,000 and an annual stated interest rate of 8%. Interest payments are made semi-annually on June 30th and December 31st. The bonds were issued for $875,378, when the market rate of interest was 10%. What amount of interest expense will Lambda record for 2021? Multiple Choice $43,957 $92,462 $80,000 $87,726
Volunteer Inc. issued bonds with a $650,000 face value, 12% interest rate, and a 4-year term on July 1, 2018 and received $700,000. Interest is payable annually. The premium is amortized using the straight-line method. A. July 1, 2018: entry to record issuing the bonds B. June 30, 2019: entry to record payment of interest to bondholders C. June 30, 2019: entry to record amortization of premium D. June 30, 2020: entry to record payment of interest to bondholders E. June 30, 2020: entry to record amortization of premium Prepare journal entries for the above transactions. If an amount box does not require an entry, leave it blank. A. July 1, 2018 Cash Bonds Payable Premium on Bonds Payable B. June 30, 2019 Interest Expense Cash C. June 30, 2019 Premium on Bonds Payable Interest Expense D. June 30, 2020 Interest Expense Cash E. June 30, 2020 Premium on Bonds Payable Interest Expense
On June 30, 2021, Allen Corporation issued $4 million of its 8% bonds for $3.5 million. The bonds were priced to yield 9.4%. The bonds are dated June 30, 2021. Interest is payable semiannually on December 31 and July 1. If the effective interest method is used, by how much should the bond discount be reduced for the six months ended December 31, 2021? A. $4,800. B. $4,500. C. $3,500. D. $9,000.
Ellis Company issues 6.5%, five-year bonds dated January 1, 2021, with a $250,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $255,333. The annual market rate is 6% on the issue date. Required: 1. Compute the total bond interest expense over the bonds' life. 2. Prepare an effective interest amortization table for the bonds' life. 3. Prepare the journal entries to record the first two interest payments.
Legacy issues $670,000 of 6.0%, four-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31. They are issued at $624,896 when the market rate is 8%. Required: 1. Prepare the January 1 journal entry to record the bonds' issuance.2. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life.3. Prepare an effective interest amortization table for the bonds' first two years.4. Prepare the journal entries to record the first two interest payments.
On March 1, 2021, Patriot Company issued at 97, including accrued interest, 2,550 of its 10%, ₱1,000 bonds. The bonds are dated January 1, 2021 to mature on January 1, 2031. Interest is payable semi-annually on January 1 and July 1. From the bond issuance, how much cash did Patriot receive?
On January 1, 2021, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Cash Effective Increase in Outstanding Payment Payment Interest Balance Balance 5,802,315 1 332,000 348,139 16,139 5,818,454 2 332,000 349,107 17,107 5,835,561 3 332,000 350,134 18,134…
Temptation Vacations issues $58 million in bonds on January 1, 2021, that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: (1) (2) (3) (4) (5) Cash Paid for Interest Interest Expense Decrease in Carrying Value Carrying Value Date 1/1/2021 $65,279,805 6/30/2021 $1,740,000 1,631,995 $108,005 $65,279,805 12/31/2021 1,740,000 1,629,295 $110,705 65,171,800 5. What is the market annual interest rate? (Round your answer to the nearest whole percent.) Market annual interest rate
Roarie LLC issued 10,000, $1,000 bonds on January 1, 2020. The bonds have a 10-year term and pay interest semiannually. This is a partial bond amortization schedule for the bonds: Cash Payment Interest A. $4,261,329 B. $7,738,658 C. $4,000,000 D. $3,738,658 Effective Decrease in Interest Balance Disct Cash 1 200,000 313,067 113,067 2 200,000 318,720 118,720 3 200,000 324,657 124,657 4 200,000 330,889 130,889 What would be the total interest cost of the bonds over their full term? Outstanding Balance 10,000,000 (6,261,343) 3,738,658 4,000,000 7,738,658 6,261,343 6,374,410 6,493,130 6,617,787 6,748,676

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