Spice Company issued $200,000 of 10 percent first mortgage bonds on January 1, 20X4, at 105. The bonds mature in 10 years and pay interest semiannually on January 1 and July 1. Pumpkin Corporation purchased $140,000 of Spice's bonds from the original purchaser on January 1, 20X8, for $122,000. Pumpkin owns 75 percent of Spice's voting common stock. Spice's partial bond amortization schedule is as follows: Amort of Interest $ PMT Interest Premium Bonds BV of PMT Discount Expense (Discount) Payable Bonds # (Premium) 1/1/20X4 10,000.00 200,000.00 210,000.00 1 7/1/20X4 10,000.00 9,684.96 (315.04 ) 9,684.96 1/1/20X5 10,000.00 9,670.43 (329.57 ) 9,355.38 200,000.00 209,355.38 200,000.00 209,684.96 2 7/1/20X5 10,000.00 9,655.23 (344.77 ) 9,010.61 200,000.00 209,010.61 4 1/1/20X6 10,000.00 9,639.33 (360.67 ) 8,649.94 200,000.00 208,649.94 7/1/20X6 10,000.00 9,622.69 (377.31 ) 8,272.63 200,000.00 208,272.63 1/1/20X7 10,000.00 9,605.29 (394.71 ) 7,877.92 200,000.00 207,877.92 7/1/20X7 10,000.00 9,587.09 (412.91 ) 7,465.01 1/1/20X8 10,000.00 9,568.04 (431.96 ) 7,033.05 200,000.00 207,033.05 7/1/20X8 10,000.00 9,548.12 (451.88 ) 6,581.18 1/1/20X9 10,000.00 9,527.28 (472.72 ) 6,108.46 7/1/20X9 10,000.00 9,505.48 (494.52 ) 5,613.94 200,000.00 205,613.94 1/1/20X0 10,000.00 9,482.68 (517.32 ) 5,096.62 200,000.00 205,096.62 7/1/20X0 10,000.00 9,458.82 (541.18 ) 4,555.44 200,000.00 204,555.44 7 200,000.00 207,465.01 200,000.00 206,581.18 10 200,000.00 206,108.46 11 12 13 Based on the information given above, what amount of premium on bonds payable will be eliminated in the preparation of the 20X9 year-end consolidated financial statements? Selected Answer: O [None Given] Answers: $3,568 $4,276 $6,108 $5,097
Spice Company issued $200,000 of 10 percent first mortgage bonds on January 1, 20X4, at 105. The bonds mature in 10 years and pay interest semiannually on January 1 and July 1. Pumpkin Corporation purchased $140,000 of Spice's bonds from the original purchaser on January 1, 20X8, for $122,000. Pumpkin owns 75 percent of Spice's voting common stock. Spice's partial bond amortization schedule is as follows: Amort of Interest $ PMT Interest Premium Bonds BV of PMT Discount Expense (Discount) Payable Bonds # (Premium) 1/1/20X4 10,000.00 200,000.00 210,000.00 1 7/1/20X4 10,000.00 9,684.96 (315.04 ) 9,684.96 1/1/20X5 10,000.00 9,670.43 (329.57 ) 9,355.38 200,000.00 209,355.38 200,000.00 209,684.96 2 7/1/20X5 10,000.00 9,655.23 (344.77 ) 9,010.61 200,000.00 209,010.61 4 1/1/20X6 10,000.00 9,639.33 (360.67 ) 8,649.94 200,000.00 208,649.94 7/1/20X6 10,000.00 9,622.69 (377.31 ) 8,272.63 200,000.00 208,272.63 1/1/20X7 10,000.00 9,605.29 (394.71 ) 7,877.92 200,000.00 207,877.92 7/1/20X7 10,000.00 9,587.09 (412.91 ) 7,465.01 1/1/20X8 10,000.00 9,568.04 (431.96 ) 7,033.05 200,000.00 207,033.05 7/1/20X8 10,000.00 9,548.12 (451.88 ) 6,581.18 1/1/20X9 10,000.00 9,527.28 (472.72 ) 6,108.46 7/1/20X9 10,000.00 9,505.48 (494.52 ) 5,613.94 200,000.00 205,613.94 1/1/20X0 10,000.00 9,482.68 (517.32 ) 5,096.62 200,000.00 205,096.62 7/1/20X0 10,000.00 9,458.82 (541.18 ) 4,555.44 200,000.00 204,555.44 7 200,000.00 207,465.01 200,000.00 206,581.18 10 200,000.00 206,108.46 11 12 13 Based on the information given above, what amount of premium on bonds payable will be eliminated in the preparation of the 20X9 year-end consolidated financial statements? Selected Answer: O [None Given] Answers: $3,568 $4,276 $6,108 $5,097
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Spice Company issued $200,000 of 10 percent first mortgage bonds on January 1, 20X4,
at 105. The bonds mature in 10 years and pay interest semiannually on January 1 and
July 1. Pumpkin Corporation purchased $140,000 of Spice's bonds from the original
purchaser on January 1, 20X8, for $122,000. Pumpkin owns 75 percent of Spice's voting
common stock. Spice's partial bond amortization schedule is as follows:
Amort of
Interest
$ PMT
Interest
Premium
Bonds
BV of
PMT
Discount
Expense
(Discount) Payable
Bonds
#
(Premium)
1/1/20X4
10,000.00 200,000.00 210,000.00
1
7/1/20X4 10,000.00 9,684.96 (315.04 ) 9,684.96
1/1/20X5 10,000.00 9,670.43 (329.57 ) 9,355.38 200,000.00 209,355.38
200,000.00 209,684.96
2
7/1/20X5 10,000.00 9,655.23 (344.77 ) 9,010.61
200,000.00 209,010.61
4
1/1/20X6 10,000.00 9,639.33 (360.67 ) 8,649.94 200,000.00 208,649.94
7/1/20X6 10,000.00 9,622.69 (377.31 ) 8,272.63 200,000.00 208,272.63
1/1/20X7 10,000.00 9,605.29 (394.71 ) 7,877.92 200,000.00 207,877.92
7/1/20X7 10,000.00 9,587.09 (412.91 ) 7,465.01
1/1/20X8 10,000.00 9,568.04 (431.96 ) 7,033.05 200,000.00 207,033.05
7/1/20X8 10,000.00 9,548.12 (451.88 ) 6,581.18
1/1/20X9 10,000.00 9,527.28 (472.72 ) 6,108.46
7/1/20X9 10,000.00 9,505.48 (494.52 ) 5,613.94 200,000.00 205,613.94
1/1/20X0 10,000.00 9,482.68 (517.32 ) 5,096.62 200,000.00 205,096.62
7/1/20X0 10,000.00 9,458.82 (541.18 ) 4,555.44 200,000.00 204,555.44
7
200,000.00 207,465.01
200,000.00 206,581.18
10
200,000.00 206,108.46
11
12
13
Based on the information given above, what amount of premium on bonds payable will
be eliminated in the preparation of the 20X9 year-end consolidated financial statements?
Selected Answer: O [None Given]
Answers:
$3,568
$4,276
$6,108
$5,097](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1d39f439-c0df-4260-bff7-863bf3eaa9a0%2Fa3229dd2-4444-4e68-9f44-ad7966643f49%2Fuvkbot5_processed.png&w=3840&q=75)
Transcribed Image Text:Spice Company issued $200,000 of 10 percent first mortgage bonds on January 1, 20X4,
at 105. The bonds mature in 10 years and pay interest semiannually on January 1 and
July 1. Pumpkin Corporation purchased $140,000 of Spice's bonds from the original
purchaser on January 1, 20X8, for $122,000. Pumpkin owns 75 percent of Spice's voting
common stock. Spice's partial bond amortization schedule is as follows:
Amort of
Interest
$ PMT
Interest
Premium
Bonds
BV of
PMT
Discount
Expense
(Discount) Payable
Bonds
#
(Premium)
1/1/20X4
10,000.00 200,000.00 210,000.00
1
7/1/20X4 10,000.00 9,684.96 (315.04 ) 9,684.96
1/1/20X5 10,000.00 9,670.43 (329.57 ) 9,355.38 200,000.00 209,355.38
200,000.00 209,684.96
2
7/1/20X5 10,000.00 9,655.23 (344.77 ) 9,010.61
200,000.00 209,010.61
4
1/1/20X6 10,000.00 9,639.33 (360.67 ) 8,649.94 200,000.00 208,649.94
7/1/20X6 10,000.00 9,622.69 (377.31 ) 8,272.63 200,000.00 208,272.63
1/1/20X7 10,000.00 9,605.29 (394.71 ) 7,877.92 200,000.00 207,877.92
7/1/20X7 10,000.00 9,587.09 (412.91 ) 7,465.01
1/1/20X8 10,000.00 9,568.04 (431.96 ) 7,033.05 200,000.00 207,033.05
7/1/20X8 10,000.00 9,548.12 (451.88 ) 6,581.18
1/1/20X9 10,000.00 9,527.28 (472.72 ) 6,108.46
7/1/20X9 10,000.00 9,505.48 (494.52 ) 5,613.94 200,000.00 205,613.94
1/1/20X0 10,000.00 9,482.68 (517.32 ) 5,096.62 200,000.00 205,096.62
7/1/20X0 10,000.00 9,458.82 (541.18 ) 4,555.44 200,000.00 204,555.44
7
200,000.00 207,465.01
200,000.00 206,581.18
10
200,000.00 206,108.46
11
12
13
Based on the information given above, what amount of premium on bonds payable will
be eliminated in the preparation of the 20X9 year-end consolidated financial statements?
Selected Answer: O [None Given]
Answers:
$3,568
$4,276
$6,108
$5,097
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