Starmount Inc. sold bonds with a $50,000 face value, 12% interest, and 10-year term at $48,000. What is the total amount of interest expense over the life of the bonds?
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Starmount Inc. sold bonds with a $50,000 face value, 12% interest, and 10-year term at $48,000. What is the total amount of interest expense over the life of the bonds?
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- Enviro Company issues 11.00%, 10-year bonds with a par value of $310,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 8.00%, which implies a selling price of 124.875. The straight-line method is used to allocate interest expense. 1. What are the issuer’s cash proceeds from issuance of these bonds?2. What total amount of bond interest expense will be recognized over the life of these bonds?3. What is the amount of bond interest expense recorded on the first interest payment date?On January 1, 2020, Joe Construction issued $350,000, 3-year bonds for $320,000. The stated rateof interest was 7% and interest is paid annually on December 31.1. Calculate the amount of discount that will be amortized each period. Discount/period:2. Calculate the amount of interest expense for each period.Interest/period:3. Complete the amortization table below for Joe Constructions bonds. Joe ConstructionAmortization for BondsPeriod Cash Payment (credit)Interest Expense(debit)Discount onBondsPayable(Credit)Discount onBondsPayableBalance Book ValueAt issue $ - $ - $ - $ 320,00012/31/202012/31/202112/31/2022Jacobs Company issued bonds with a $168,000 face value on January 1, Year 1. The bonds were issued at 105 and carried a 5-year term to maturity. They had a 9% stated rate of interest that was payable in cash on December 31st of each year. Jacobs uses the straight-line method to amortize bond discounts and premiums. Based on this information alone, how does the recognition of interest expense during Year 1 affect the company's accounting equation? Multiple Choice Decreases both assets and stockholders' equity by $13,440 Decreases stockholders' equity by $13,440, decreases liabilities $1,680, and decreases assets by $15,120 Increases liabilities by $1,680, decreases assets by $13,440, and decreases stockholders' equity by $15,120 Decreases both assets and stockholders' equity by $15,120
- a company issued a 5% , 10-year bonds with a face amount of $92 million. the market yield for bonds of similar risk and maturity is 5% interest is paid semiannually. at what price did the bonds sell?Garcia Company issues 10%, 15-year bonds with a par value of $310,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 8%, which implies a selling price of 117 %. The effective interest method is used to allocate interest expense. 1. What are the issuer's cash proceeds from issuance of these bonds? 2. What total amount of bond interest expense will be recognized over the life of these bonds? 3. What amount of bond interest expense is recorded on the first interest payment date? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What amount of bond interest expense is recorded on the first interest payment date? Bond interest expenseEnviro Company issues 8%, 10-year bonds with a par value of $340,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87 1/2. The straight-line method is used to allocate interest expense. 1. What are the issuer's cash proceeds from issuance of these bonds? 2. What total amount of bond interest expense will be recognized over the life of these bonds? 3. What is the amount of bond interest expense recorded on the first interest payment date? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What total amount of bond interest expense will be recognized over the life of these bonds? Note: Round final answers to the nearest whole dollar amount. Total Bond Interest Expense Over Life of Bonds: Amount repaid: 20 payments of Par value at maturity $ 13,600 $ Total repayments Less amount borrowed (cash proceeds from part 1) Total bond interest expense < $ Required…
- . On 1/1/21, Ehrlich Co. issued 4 year bonds with a face value of $700,000. The stated (bond) rate is 8%, payable semiannually on 1/1 and 7/1. The market rate at the time of issuance was 10%. a. Calculate the issue price of the bonds. b. Prepare the journal entry for the issuance of the bonds. c. Complete the amortization table below. Date cash paid interest expense amortization carrying value 1/1/21 7/1/21 1/1/22 7/1/22 d. Prepare the journal entries for the 7/1/21 interest payment and amortization, 12/31/21 interest accrual and amortization, and 1/1/22 interest payment. e. Prepare the journal entry for retirement of the bonds at maturity f. Assume instead that the bonds were redeemed on 7/1/22 at 102. Prepare the journal entry.Enviro Company issues 12.00%, 10-year bonds with a par value of $460,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 9.00%, which implies a selling price of 128.625. The straight-line method is used to allocate interest expense. What are the issuer's cash proceeds from issuance of these bonds? What total amount of bond interest expense will be recognized over the life of these bonds? What is the amount of bond interest expense recorded on the first interest payment date?Eli Inc. issued $110,000 of 9% annual, 5-year bonds for $112,900. What is the total amount of interest expense over the life of the bonds? $ ______________
- Lee Corporation has 10-year, 12% bonds payable of $136,000 that were sold on January 2, 20X1 at a premium of $20,400. The amortization on the premium is recorded at the end of every year. Determine the amount of Net bonds payable to be presented in the Balance Sheet at December 31, 20X3. What is the Net bonds payable?Presented below are two independent situations. (a) Pharoah Co. sold $1,890,000 of 12%, 10-year bonds at 105 on January 1, 2020. The bonds were dated January 1, 2020, and pay interest on July 1 and January 1. If Pharoah uses the straight-line method to amortize bond premium or discount, determine the amount of interest expense to be reported on July 1, 2020, and December 31, 2020. (Round answer to O decimal places, e.g. 38,548.) Interest expense to be recorded $ (b) Novak Inc. issued $570,000 of 9%, 10-year bonds on June 30, 2020, for $471,929. This price provided a yield of 12% on the bonds. Interest is payable semiannually on December 31 and June 30. If Novak uses the effective-interest method, determine the amount of interest expense to record if financial statements are issued on October 31, 2020. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to O decimal places, e.g. 38,548.) Interest expense to be recorded $Moss Co. issued $790,000 of four-year, 12% bonds, with interest payable semiannually, at a market (effective) interest rate of 10%. Determine the present value of the bonds payable using the present value tables in Exhibit 5 and Exhibit 7. Round to the nearest dollar.