Answered: SEED Company

Business

Accounting

SEED Company

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 8RE

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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?
Volunteer 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 annually. The premium is amortized using the straightline method. Prepare journal entries for the following transactions. 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
On Jan. 1, Year 1, Foxcroft Inc. issued 100 bonds with a face value of $1,000 for $104,000. The bonds had a stated rate of 6% and paid interest semiannually. What is the journal entry to record the issuance of the bonds?
Eli Inc. issued $100,000 of 8% annual, 5-year bonds for $103,000. What is the total amount of interest expense over the life of the bonds?
On June 1, 2021, NEX Company received ₱1,077,200 plus accrued interest for 12% bonds with face amount of ₱1,000,000. The bonds were sold to yield 10%. Interest is payable semiannually every July 1 and December 31. The entity elected the fair value option for measuring financial liabilities. On December 31, 2021, the fair value of the bonds is at 108. The change in fair value of the bonds is attributable to market factors. Requirements: Prepare all necessary entries for calendar year 2021. Compute or provide the answers for the following: How much is initial valuation of the bonds? How much cash was received upon the sale of the bonds? How much is the interest expense for the year ended December 31, 2021? How much is the gain or loss from change in fair value of the bonds for 2021? What is the carrying amount of the bonds payable on December 31, 2021?
On January 1, 2021, RANCY Company received ₱107,720 for a ₱100,000 face amount, 12% bond, a price that yields 10%. The bonds pay interest semi-annually. The entity elects the fair value option for valuing financial liabilities. On December 31, 2021, the fair value of the bond is determined to be ₱106,460. The entity recognized interest expense of ₱12,000 in the 2021 income statement. What was the gain or loss recognized in the income statement to report this bond at fair value? (IF gain, leave the numerical figure as is; if LOSS, put a negative (-) sign before the numerical figure)
On June 1, 2021, VIXEN Company received ₱1,077,200 plus accrued interest for 12% bonds with face amount of ₱1,000,000. The bonds were sold to yield 10%. Interest is payable semiannually every July 1 and December 31. The entity elected the fair value option for measuring financial liabilities. On December 31, 2020, the fair value of the bonds is at 108. The change in fair value of the bonds is attributable to market factors. 1. How much is the gain or loss from change in fair value of the bonds for 2021? 2. What is the carrying amount of the bonds payable on December 31, 2021?
On June 1, 2021, VIXEN Company received ₱1,077,200 plus accrued interest for 12% bonds with face amount of ₱1,000,000. The bonds were sold to yield 10%. Interest is payable semiannually every July 1 and December 31. The entity elected the fair value option for measuring financial liabilities. On December 31, 2020, the fair value of the bonds is at 108. The change in fair value of the bonds is attributable to market factors. 1. How much cash was received upon the sale of the bonds?2. How much is the interest expense for the year ended December 31, 2021?
ANSWER IN GOOD ACCOUNTING FORM. THANK YOU :) On April 30, CHIA-SEED Company issued 7,000 of 15% ₱1,000 bonds at 95. The bonds have a five-year term and interest is payable semi-annually, May 1 and November 1. The entity elected the fair value option. The entity paid bond issue cost of ₱125,000. On December 31, 2021, the fair value of the bonds is 104. It is reliably determined that the fair value increase comprised of 25% attributable to credit risk and the remainder is attributable to change in market interest rate. What amount of gain or loss should be recognized in profit or loss for 2021 to conform with the fair value option?
On August 31, 2021, BEAST Company issued at 104 plus accrued interest, three thousand 10% bonds with a face amount of ₱1,000 per bond. The bonds are dated April 1, 2021, mature on March 31, 2026, and pay interest every April 1 and October 1. The bonds were issued through an underwriter to whom the entity paid bond issue cost of ₱120,000. REQUIRED: 1. How much is the interest paid for the year ended December 31, 2021?2. How much accrued interest payable should be recognized at year end, December 31, 2021?3. How much is the interest expense for the year ended December 31, 2021?4. How much is the carrying value of the bond on December 31, 2021?
On January 1, 2020, Latvia Company issued 3-year bonds with face amount of 5,000,000 at 98. Additionally, the entity paid bond issue cost of 140,000. The nominal rate is 10% and the effective rate after considering bond issue cost is 12%. The interest is payable annually on December 31. The entity used the effective interest method. How muchis the interest expense on December 31, 2020?
On May 31, 2020, BLUE Company issued 6% bonds with face amount of ₱4,000,000 for net proceeds of ₱3,677,600, a price that yields 8%. Interest is payable annually every December 31. The entity elected the fair value option. On December 31, 2020, the bonds are quoted at 97. What amount should be reported as interest expense for the year ended December 31, 2020?