Shuttle Company issued $1,000,000, three-year, 10 percent bonds on January 1, year 1. The bond interest is paid each December 31,the end of the company's fiscal year. The bond was sold to yield 9 percent. Use Table 9C.1, Table 9C.2. (Round time value factor to 4decimal places.)Required:1. Complete a bond payment schedule. Use the effective-interest amortization method. (Make sure that the unamortizeddiscount/premium equals to '0' and the Net Liability equals to face value of the bond in the last period. Interest expense in the lastperiod should be calculated as Cash Interest (+) discount / (−) premium amortized. Round intermediate and final answers to thenearest whole dollar.)Date1/1/year 112/31/year 112/31/year 212/31/year 3Interest expenseBonds payableInterest paymentIssuance of bondsPayment of bondsBond Payment ScheduleInterestExpenseCash Payment$100,000100,000100,000Amortizationof Premium2. What amounts will be reported on the financial statements (statement of financial position, statement of earnings, and statement ofcash flows) for year 1, year 2, and year 3? (Round intermediate and final answers to the nearest whole dollar.)Year 1CarryingAmountYear 2Year 3 TABLE 9C.1Present Value of $1, p = 1/(1+i)nPeriods 1.5% 1.75% 2% 2.25% 2.5% 2.75% 3% 3.25% 3.5%10.96620.9732 0.9709 0.96850.94720.9472 0.9426 0.938020.93350.9852 0.9828 0.9804 0.9780 0.97560.9707 0.9659 0.9612 0.9565 0.95183 0.9563 0.9493 0.9423 0.9354 0.92860.9422 0.9330 0.9238 0.91480.9218 0.91510.9151 0.90850.901940.90600.8972 0.8885 0.87990.871450.9283 0.91690.9057 0.89470.88390.883960.9145 0.9011 0.88800.88800.87500.87500.8623 0.84980.86230.8498 0.8375 0.8254 0.813570.9010 0.88560.87060.85580.8413 0.8270 0.81310.8131 0.79940.7994 0.786080.8877 0.8704 0.85350.8369 0.82070.80490.7894 0.7742 0.759490.8746 0.85540.83680.81850.78340.8007 0.78340.80070.7664 0.74990.7664 0.74990.7337100.8617 0.84070.82030.80050.78120.7624 0.7441 0.7263 0.708911121314150.87320.8732 0.862612345670.85220.8626 0.8522 0.84200.8489 0.82630.8043 0.7829 0.76210.8043 0.7829 0.76210.74200.7420 0.7224 0.7034 0.68490.8364 0.81210.78850.76570.74360.7221 0.7014 0.6813 0.66180.6810 0.6598 0.63940.7488 0.72540.66110.6611 0.63910.61780.8240 0.7981 0.77300.70280.8118 0.7844 0.7579 0.7323 0.7077 0.68400.7999 0.7709 0.74300.6905 0.66570.7880 0.7576 0.7284 0.70050.71620.6419 0.6189 0.5969160.67360.64790.6232 0.5995 0.5767170.65720.6305 0.6050 0.5806 0.55720.7764 0.7446 0.7142 0.68510.6700 0.6412180.61370.5874 0.5623 0.5384190.7649 0.7318 0.70020.7536 0.7192 0.6864 0.65520.7425 0.7068 0.6730 0.64080.62550.5972 0.57030.5703 0.54460.52022030400.6103 0.5813 0.5537 0.5275 0.50260.6398 0.5942 0.5521 0.5130 0.4767 0.44310.5130 0.4767 0.4431 0.4120 0.3831 0.35630.5513 0.4996 0.4529 0.4106 0.3724 0.3379 0.3066 0.2782 0.252650 0.4750 0.4200 0.3715 0.3287 0.2909 0.2576 0.2281 0.2021 0.1791Periods 3.75% 4% 4.5% 5%6%7%8% 9% 10%0.9639 0.9615 0.9569 0.9524 0.9434 0.93460.9524 0.9434 0.9346 0.9259 0.9174 0.90910.9290 0.9246 0.9157 0.9070 0.89000.8954 0.8890 0.8763 0.8638 0.83960.8386 0.8227 0.79210.8025 0.7835 0.74730.8734 0.8573 0.8417 0.82640.8163 0.7938 0.7722 0.75130.76290.8631 0.85480.7350 0.7084 0.68300.8319 0.82190.71300.6806 0.6499 0.62090.7462 0.7050 0.6663 0.6302 0.5963 0.56450.8018 0.79030.76790.7728 0.7599 0.73480.71070.66510.62270.5835 0.5470 0.513280.67680.62740.58200.54030.5403 0.50190.50190.46650.7449 0.7307 0.70320.7180 0.7026 0.6729 0.644690.5919 0.54390.5002 0.4604 0.4241100.5083 0.4632 0.4224 0.3855110.4751 0.4289 0.3875 0.3505120.3971 0.3555 0.3186130.6197 0.6006 0.5643 0.5303140.5973 0.5775 0.5400 0.5051150.6920 0.6756 0.6439 0.6139 0.55840.6670 0.6496 0.6162 0.5847 0.52680.6429 0.6246 0.5897 0.5568 0.4970 0.44400.4688 0.4150 0.36770.3677 0.3262 0.28970.4423 0.38780.4423 0.3878 0.3405 0.2992 0.26330.5757 0.5553 0.5167 0.4810 0.4173 0.3624 0.3152 0.2745 0.23940.5549 0.5339 0.4945 0.4581 0.3936 0.3387 0.2919 0.2519 0.21760.5348 0.5134 0.4732 0.4363 0.3714 0.3166 0.2703 0.2311 0.19780.5155 0.4936 0.4528 0.4155 0.3503 0.29590.4969 0.4746 0.4333 0.3957 0.33050.4789 0.4564 0.4146 0.3769 0.3118 0.25840.31180.3314 0.3083 0.2670 0.23141617180.2959 0.2502 0.2120 0.1799190.2765 0.2317 0.1945 0.16350.2765200.2584 0.2145 0.1784 0.14860.17410.1314 0.0994 0.0754 0.05733040 0.2293 0.2083 0.1719 0.14200.0972 0.06680.0972 0.06680.0460 0.0318 0.0221500.1587 0.1407 0.1107 0.08720.0213 0.0134 0.00850.0543 0.03390.0543 0.0339

Bond valuation is a method of determining the price of a bond. This method is adopted by the bond…

Shuttle Company issued $1,000,000, three-year, 10 percent bonds on January 1, year 1. The bond interest is paid each December 31 he end of the company's fiscal year. The bond was sold to yield 9 percent. Use Table 9C.1, Table 9C.2. (Round time value factor to decimal places.) Required: . Complete a bond payment schedule. Use the effective-interest amortization method. (Make sure that the unamortized discount/premium equals to 'O' and the Net Liability equals to face value of the bond in the last period. Interest expense in the period should be calculated as Cash Interest (+) discount / (-) premium amortized. Round intermediate and final answers to the hearest whole dollar.) Date 1/1/year 1 12/31/year 1 12/31/year 2 12/31/year 3 Interest expense Bonds payable Interest payment Bond Payment Schedule Interest Expense Cash Payment $ 100,000 100,000 100,000 Amortization of Premium 2. What amounts will be reported on the financial statements (statement of financial position, statement of earnings, and statement cash flows) for year 1, year 2, and year 3? (Round intermediate and final answers to the nearest whole dollar.) Year 1 Carrying Amount Year 2 Year 3

Shuttle Company issued $1,000,000, three-year, 10 percent bonds on January 1, year 1. The bond interest is paid each December 31 he end of the company's fiscal year. The bond was sold to yield 9 percent. Use Table 9C.1, Table 9C.2. (Round time value factor to decimal places.) Required: . Complete a bond payment schedule. Use the effective-interest amortization method. (Make sure that the unamortized discount/premium equals to 'O' and the Net Liability equals to face value of the bond in the last period. Interest expense in the period should be calculated as Cash Interest (+) discount / (-) premium amortized. Round intermediate and final answers to the hearest whole dollar.) Date 1/1/year 1 12/31/year 1 12/31/year 2 12/31/year 3 Interest expense Bonds payable Interest payment Bond Payment Schedule Interest Expense Cash Payment $ 100,000 100,000 100,000 Amortization of Premium 2. What amounts will be reported on the financial statements (statement of financial position, statement of earnings, and statement cash flows) for year 1, year 2, and year 3? (Round intermediate and final answers to the nearest whole dollar.) Year 1 Carrying Amount Year 2 Year 3

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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Mitchell Inc. issued 600 of its 6%, $1,000 bonds on January 1 of Year 1. The bonds pay cash interest semiannually each June 30 and December 31 and were issued to yield 5%. The bonds mature in five years on December 31, and the company uses the effective interest method to amortize bond discounts or premiums. Required a. Determine the selling price of the bonds.
For each of the following three examples, provide the journal entry that the company would make on the date the bonds are issued. Note that you will need to do a present value calculation to determine the cash proceeds from each bond issue. You can round your answer to the nearest dollar. 1. Andersson Inc. issues 8-year bonds with a face value of $50,000,000 and a stated annual interest rate of 6%. The bonds pay interest semiannually on June 30 and December 31. The annual market rate of interest on the date of issue is 8%.
On January 1, Year 1, Hackman Corporation issued $600,000 face value 6% bonds dated January 1, Year 1, for $621,430. The bonds pay interest semiannually on June 30 and December 31 and are due December 31, Year 5. Hackman uses the straight-line amortization method. Required: Record the issuance of the bonds and the first two interest payments. Record the issuance of the bonds on January 1 and the first two interest payments on June 30 and December 3
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On the first day of the fiscal year, a company issues a $4,900,000, 6%, 6-year bond that pays semiannual interest of $147,000 ($4,900,000 × 6% × ½), receiving cash of $4,440,130. Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.
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