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Santa Corporation issued a bond on January 1 of this year with a face value of $1,000. The bond's coupon rate is 7 percent and interest is paid once a year on December 31. The bond matures in three years. The annual market rate of interest was 11 percent at the time the bond was sold. The following amortization schedule pertains to the bond issued: Cash Interest Paid Expense Amortization Balance January 1, Year 1 December 31, Year 1 December 31, Year 2 December 31, Year 3 $902 931 $70 $99 $29 70 102 32 963 70 107 37 1,000 Required: 1. What was the bond's issue price? 2. Did the bond sell at a discount or a premium? How much was the premium or discount? 3. What amount(s) should be shown on the balance sheet for bonds payable at the end of Year 1 and Year 2? 4. Show how the following amounts were computed for Year 2: (a) $70, (b) $102, (c) $32, and (d) $963. Complete this question by entering your answers in the tabs below. Req 1 to 3 Req 4 1. What was the bond's issue price? 2. Did the bond sell at a discount or a premium? How much was the premium or discount? 3. What amount(s) should be shown on the balance sheet for bonds payable at the end of Year 1 and Year 2? 1. Bond issue price 2. Discount Bonds payable year 1 3. Bonds payable year 2

Santa Corporation issued a bond on January 1 of this year with a face value of $1,000. The bond's coupon rate is 7 percent and interest is paid once a year on December 31. The bond matures in three years. The annual market rate of interest was 11 percent at the time the bond was sold. The following amortization schedule pertains to the bond issued: Cash Interest Paid Expense Amortization Balance January 1, Year 1 December 31, Year 1 December 31, Year 2 December 31, Year 3 $902 931 $70 $99 $29 70 102 32 963 70 107 37 1,000 Required: 1. What was the bond's issue price? 2. Did the bond sell at a discount or a premium? How much was the premium or discount? 3. What amount(s) should be shown on the balance sheet for bonds payable at the end of Year 1 and Year 2? 4. Show how the following amounts were computed for Year 2: (a) $70, (b) $102, (c) $32, and (d) $963. Complete this question by entering your answers in the tabs below. Req 1 to 3 Req 4 1. What was the bond's issue price? 2. Did the bond sell at a discount or a premium? How much was the premium or discount? 3. What amount(s) should be shown on the balance sheet for bonds payable at the end of Year 1 and Year 2? 1. Bond issue price 2. Discount Bonds payable year 1 3. Bonds payable year 2

FINANCIAL ACCOUNTING
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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Complete this question by entering your answers in the tabs below. Req 1 to 3 Req 4 Show how the following amounts were computed for Year 2: (a) $70, (b) $102, (c) $32, and (d) $963. (Enter percentages in decimals. Enter all amounts as positive values.) (a) $ 70 (b) $ 102 (rounded) %3D (c) $ 32 (d) $ 963 II II
Transcribed Image Text:Complete this question by entering your answers in the tabs below. Req 1 to 3 Req 4 Show how the following amounts were computed for Year 2: (a) $70, (b) $102, (c) $32, and (d) $963. (Enter percentages in decimals. Enter all amounts as positive values.) (a) $ 70 (b) $ 102 (rounded) %3D (c) $ 32 (d) $ 963 II II
Santa Corporation issued a bond on January 1 of this year with a face value of $1,000. The bond's coupon rate is 7 percent and interest is paid once a year on December 31. The bond matures in three years. The annual market rate of interest was 11 percent at the time the bond was sold. The following amortization schedule pertains to the bond issued: Cash Interest Paid Expense Amortization Balance January 1, Year 1 December 31, Year 1 December 31, Year 2 December 31, Year 3 $902 $70 $99 $29 931 70 102 32 963 70 107 37 1,000 Required: 1. What was the bond's issue price? 2. Did the bond sell at a discount or a premium? How much was the premium or discount? 3. What amount(s) should be shown on the balance sheet for bonds payable at the end of Year 1 and Year 2? 4. Show how the following amounts were computed for Year 2: (a) $70, (b) $102, (c) $32, and (d) $963. Complete this question by entering your answers in the tabs below. Req 1 to 3 Req 4 1. What was the bond's issue price? 2. Did the bond sell at a discount or a premium? How much was the premium or discount? 3. What amount(s) should be shown on the balance sheet for bonds payable at the end of Year 1 and Year 2? 1. Bond issue price 2. Discount Bonds payable year 1 3. Bonds payable year 2
Transcribed Image Text:Santa Corporation issued a bond on January 1 of this year with a face value of $1,000. The bond's coupon rate is 7 percent and interest is paid once a year on December 31. The bond matures in three years. The annual market rate of interest was 11 percent at the time the bond was sold. The following amortization schedule pertains to the bond issued: Cash Interest Paid Expense Amortization Balance January 1, Year 1 December 31, Year 1 December 31, Year 2 December 31, Year 3 $902 $70 $99 $29 931 70 102 32 963 70 107 37 1,000 Required: 1. What was the bond's issue price? 2. Did the bond sell at a discount or a premium? How much was the premium or discount? 3. What amount(s) should be shown on the balance sheet for bonds payable at the end of Year 1 and Year 2? 4. Show how the following amounts were computed for Year 2: (a) $70, (b) $102, (c) $32, and (d) $963. Complete this question by entering your answers in the tabs below. Req 1 to 3 Req 4 1. What was the bond's issue price? 2. Did the bond sell at a discount or a premium? How much was the premium or discount? 3. What amount(s) should be shown on the balance sheet for bonds payable at the end of Year 1 and Year 2? 1. Bond issue price 2. Discount Bonds payable year 1 3. Bonds payable year 2
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