Tarheel Inc., a calendar yearend company, issued bonds on 1/nX1. It uses the effective interest method to amortize bond discounts and premiums. The following facts are known about these bonds: Issue Date: 1/1/X1 Face Value: $200,000 Issue Price: $217,965 Face Rate: 6% compounded semi-annually (in other words, 3% every six months) Market (Effective) Rate: 4% compounded semi-annually (in other words, 2% every six months) Term: 5 years Semi-Annual Interest Payment Dates: June 30 and Dec 31 First interest payment will occur on: June 30, 20X1 Note: Round all calculations to the nearest whole dollar. Required: Using the above information, prepare the journal entries to record: (1) the issuance of the bonds and (2) the first cash interest payment on 6/30/X1. Remember to round all amounts to the nearest whole dollar. Decimals or cents should not be shown in the numerical response portion of your journal entry. Date |Account Name Debit Credit 1/1/X1 6/30/X1

Tarheel Inc., a calendar yearend company, issued bonds on 1/nX1. It uses the effective interest method to amortize bond discounts and premiums. The following facts are known about these bonds: Issue Date: 1/1/X1 Face Value: $200,000 Issue Price: $217,965 Face Rate: 6% compounded semi-annually (in other words, 3% every six months) Market (Effective) Rate: 4% compounded semi-annually (in other words, 2% every six months) Term: 5 years Semi-Annual Interest Payment Dates: June 30 and Dec 31 First interest payment will occur on: June 30, 20X1 Note: Round all calculations to the nearest whole dollar. Required: Using the above information, prepare the journal entries to record: (1) the issuance of the bonds and (2) the first cash interest payment on 6/30/X1. Remember to round all amounts to the nearest whole dollar. Decimals or cents should not be shown in the numerical response portion of your journal entry. Date |Account Name Debit Credit 1/1/X1 6/30/X1

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Best Beans Coffee Company issued bonds with a $270,000 face value on January 1, Year 1. The bonds had a 6 percent stated rate of interest and a four-year term. Interest is paid in cash annually, beginning December 31, Year 1. The bonds were issued at 96. The straight-line method is used for amortization. Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, Year 1. Determine the amount of interest expense reported on the Year 1 income statement.
On January 1, Year 1, the Diamond Association issued bonds with a face value of $210,000, a stated rate of interest of 9 percent, and a 10-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 11 percent at the time the bonds were issued. The bonds sold for $185,265. Diamond used the effective interest rate method to amortize the bond discount. a. Determine the amount of the discount on the day of issue. b. Determine the amount of interest expense recognized on December 31, Year 1. (Round answer to nearest dollar amount) c. Determine the carrying value of the bond liability on December 31, Year 1. ( Round answer to nearest dollar amount)
Ellis Company issues 6.5%, five-year bonds dated January 1, 2021, with a $250,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $255,333. The annual market rate is 6% on the issue date. Required: 1. Calculate the total bond interest expense over the bonds' life. 2. Prepare a straight-line amortization table for the bonds' life. 3. Prepare the journal entries to record the first two interest payments. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Calculate the total bond interest expense over the bonds' life. Total bond interest expense over life of bonds: Amount repaid: payments of Par value at maturity Total repaid Less amount borrowed Total bond interest expense $ 0 0
Sheridan Products Ltd. issued bonds and received proceeds of $53,124,565. The bonds mature in 13 years and carry a 8% interest rate paid semi-annually. The bonds were issued at a price of 95.035 to yield 8.643%. (a) Show the journal entry to record the issuance of the bonds. (Credit account titles are automatically Indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Account Titles and Explanation Debit Credit
1. Haiku Inc. issued $600,000 of 10-year bonds with a stated rate of 11% when the market rate was 12%. The bonds pay interest semi-annually. Assume that the bonds were issued for $565,710. Prepare an amortization table for the first three payments. Semiannual Interest Period Semiannual Interest Expense Semiannual Interest Payment Amortization of Discount Ending Carrying Value 1 2 3 PLEASE NOTE: All dollar amounts will be rounded to whole dollars with "$" and commas as needed (i.e. $12,345).
Krystian Inc. issued 8-year bonds with a face value of $100,000 and a stated rate of 5% when the market rate was 7%. Interest was paid semi-annually. A. Calculate the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. NOTE: The requirement is referring to total interest and principal. B. Would an investor be willing to pay more or less than face value for this bond? Less than
Cramer Corp. issued $20,000,000 of 5-year, 9% bonds at a market (effective) interest rate of 10%, receiving cash of $19,227.757. Interest on the bonds is payable semiannually. What is the entry to record the first semiannual interest payment, and the amortization of the bond discount, using the interest method?
Monty Corporation issues $460,000 of 9% bonds, due in 9 years, with interest payable semiannually. At the time of issue, the market rate for such bonds is 10%.Click here to view factor tables.Compute the issue price of the bonds. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.) Issue price of the bonds= $
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
The notes to the Thorson Ltd.financial statements reported the following data on December 31, Year 1 (end of the fiscal year): Thorson amortizes bond discounts using the effective-interest method and pays all interestamounts at December 31. Requirements1. Assume the market interest rate is 6% on January 1 of year 1, the date the bonds are issued.a. Using the PV function in Excel, what is the issue price of the bonds?b. What is the maturity value of the bonds?c. What is Thorson’s annual cash interest payment on the bonds?d. What is the carrying amount of the bonds at December 31, year 1?2. Prepare an amortization table through the maturity date for the bonds using Excel. (Roundall amounts to the nearest dollar.) How much is Thorson’s interest expense on the bonds forthe year ended December 31, Year 4?3. Show how Thorson would report these bonds and notes at December 31, Year 4.
5 On January 1, Ruiz Company issued bonds as follows: Face Value: Number of Years: Stated Interest Rate: Interest payments per year 7 B 9 0 1 2 AWN IC $500,000 a) Required: 1) Calculate the bond selling price given the two market interest rates below. Use formulas that reference data from this worksheet and from the appropriate future or present value tables (found by clicking the tabs at the botto this worksheet). Note: Rounding is not required. 15 7% 2 Annual Market Rate Semiannual Interest Payment: PV of Face Value: +PV of Interest Payments: Bond Selling Price: Annual Market Rate Semiannual Interest Payment: PV of Face Value: +PV of Interest Payments: = Bond Selling Price: 9% $17,500 133,500.01 285,055.55 418,555.56 6.00% $17,500 205,993.38 5343,007.72 $549,001.10 +
Krystian Inc. issued 12-year bonds with a face value of $110,000 and a stated rate of 5% when the market rate was 7%. Interest was paid semi-annually. A. Calculate the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. NOTE: The requirement is referring to total interest and principal. X B. Would an investor be willing to pay more or less than face value for this bond? Less than