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Supreme Autoparts Inc. issued $190,000 of 4%, five-year bonds at a price of 86 on January 31, 20X1 (Note: When the issue price of bonds is provided, as in this case, you do not need to calculate it yourself; just use the stated price.). The market interest rate at the date of issuance was 7%, and the standard bonds pay interest semi-annually. Read the requirements. Dale July 31, 20X1 Account Times DUDIL Credit Interest Expense 5719 Discount on Bonds Payable Cash 1919 3800 Requirement 3. How much cash did Supreme Autoparts borrow on January 31, 20X1? How much cash will Supreme Autoparts pay back at maturity on January 31, 20X6? Amount of cash Supreme Autoparts borrowed on January 31, 20X1: Amount of cash Supreme Autoparts will pay back on January 31, 20X6: Requirement 4. How much cash interest will Supreme Autoparts pay each six months? Amount of cash interest Supreme Autoparts will pay each six months: Requirement 5. How much interest expense will Supreme Autoparts report on July 31, 20X1, and on January 31, 20X2? Why does the amount of interest expense increase each period? Explain in detail. In this step, enter the interest expense amounts Supreme Autoparts will report on July 31, 20X1, and on January 31, 20X2. Interest expense Supreme Autoparts will report on July 31, 20X1: Interest expense Supreme Autoparts will report on January 31, 20X2: Why does the amount of interest expense increase each period? Interest expense increases because the bond carrying amount produces as the bonds move toward maturity, and the must be amortized over the life of the bond. The amount of interest expense each period. Next

Supreme Autoparts Inc. issued $190,000 of 4%, five-year bonds at a price of 86 on January 31, 20X1 (Note: When the issue price of bonds is provided, as in this case, you do not need to calculate it yourself; just use the stated price.). The market interest rate at the date of issuance was 7%, and the standard bonds pay interest semi-annually. Read the requirements. Dale July 31, 20X1 Account Times DUDIL Credit Interest Expense 5719 Discount on Bonds Payable Cash 1919 3800 Requirement 3. How much cash did Supreme Autoparts borrow on January 31, 20X1? How much cash will Supreme Autoparts pay back at maturity on January 31, 20X6? Amount of cash Supreme Autoparts borrowed on January 31, 20X1: Amount of cash Supreme Autoparts will pay back on January 31, 20X6: Requirement 4. How much cash interest will Supreme Autoparts pay each six months? Amount of cash interest Supreme Autoparts will pay each six months: Requirement 5. How much interest expense will Supreme Autoparts report on July 31, 20X1, and on January 31, 20X2? Why does the amount of interest expense increase each period? Explain in detail. In this step, enter the interest expense amounts Supreme Autoparts will report on July 31, 20X1, and on January 31, 20X2. Interest expense Supreme Autoparts will report on July 31, 20X1: Interest expense Supreme Autoparts will report on January 31, 20X2: Why does the amount of interest expense increase each period? Interest expense increases because the bond carrying amount produces as the bonds move toward maturity, and the must be amortized over the life of the bond. The amount of interest expense each period. Next

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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Supreme Autoparts Inc. issued $190,000 of 4%, five-year bonds at a price of 86 on January 31, 20X1 (Note: When the issue price of bonds is provided, as in this case, you do not need to calculate it yourself; just use the stated price.). The market interest rate at the date of issuance was 7%, and the standard bonds pay interest semi-annually. Read the requirements. Dale July 31, 20X1 Account Times DUDIL Credit Interest Expense 5719 Discount on Bonds Payable Cash 1919 3800 Requirement 3. How much cash did Supreme Autoparts borrow on January 31, 20X1? How much cash will Supreme Autoparts pay back at maturity on January 31, 20X6? Amount of cash Supreme Autoparts borrowed on January 31, 20X1: Amount of cash Supreme Autoparts will pay back on January 31, 20X6: Requirement 4. How much cash interest will Supreme Autoparts pay each six months? Amount of cash interest Supreme Autoparts will pay each six months: Requirement 5. How much interest expense will Supreme Autoparts report on July 31, 20X1, and on January 31, 20X2? Why does the amount of interest expense increase each period? Explain in detail. In this step, enter the interest expense amounts Supreme Autoparts will report on July 31, 20X1, and on January 31, 20X2. Interest expense Supreme Autoparts will report on July 31, 20X1: Interest expense Supreme Autoparts will report on January 31, 20X2: Why does the amount of interest expense increase each period? Interest expense increases because the bond carrying amount produces as the bonds move toward maturity, and the must be amortized over the life of the bond. The amount of interest expense each period. Next
Transcribed Image Text:Supreme Autoparts Inc. issued $190,000 of 4%, five-year bonds at a price of 86 on January 31, 20X1 (Note: When the issue price of bonds is provided, as in this case, you do not need to calculate it yourself; just use the stated price.). The market interest rate at the date of issuance was 7%, and the standard bonds pay interest semi-annually. Read the requirements. Dale July 31, 20X1 Account Times DUDIL Credit Interest Expense 5719 Discount on Bonds Payable Cash 1919 3800 Requirement 3. How much cash did Supreme Autoparts borrow on January 31, 20X1? How much cash will Supreme Autoparts pay back at maturity on January 31, 20X6? Amount of cash Supreme Autoparts borrowed on January 31, 20X1: Amount of cash Supreme Autoparts will pay back on January 31, 20X6: Requirement 4. How much cash interest will Supreme Autoparts pay each six months? Amount of cash interest Supreme Autoparts will pay each six months: Requirement 5. How much interest expense will Supreme Autoparts report on July 31, 20X1, and on January 31, 20X2? Why does the amount of interest expense increase each period? Explain in detail. In this step, enter the interest expense amounts Supreme Autoparts will report on July 31, 20X1, and on January 31, 20X2. Interest expense Supreme Autoparts will report on July 31, 20X1: Interest expense Supreme Autoparts will report on January 31, 20X2: Why does the amount of interest expense increase each period? Interest expense increases because the bond carrying amount produces as the bonds move toward maturity, and the must be amortized over the life of the bond. The amount of interest expense each period. Next
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