the increase of the Debt investment account of the Spring Company at December, 31 for $100 000 of Flower Company 10% bond purchased at January, 1. Payments are annual on January, 1. The purchase price is $96 304 to yield 11%. The bond is held to collection and matures in 5 years.

the increase of the Debt investment account of the Spring Company at December, 31 for $100 000 of Flower Company 10% bond purchased at January, 1. Payments are annual on January, 1. The purchase price is $96 304 to yield 11%. The bond is held to collection and matures in 5 years.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: A business is planning to issue 10%, 6-year bonds with a par value of $555,000 on January 1 of the…

A: Bonds are a type of loan that you make to the issuer in exchange for interest. The issuer repays…

Q: On January 1, Boston Enterprises issues bonds that have a $1,850,000 par value, mature in 20 years,…

A: Step 1:Answer 1.Computation of the amount of interest payment every six months:Par (maturity) Value…

Q: Landmark buys $320,000 of SRW Company's 12%, 6-year bonds payable, at par value on July 1. Interest…

A: Each journal entry has its dual effect.A asset has debit balance and revenue has credit balance. And…

Q: Bloom Corporation issued the following Face Value: $12,000,000 Stated Rate: 6.00% Effective Rate:…

A: Given information : Face value $ 1,20,00,000.00 Stated rate 6% Effective rate 6.25% Term…

Q: Gia Company had the following bond issue: Date of issue/sale: April 1, 20-A Face value: $200,000…

A: Cash received on bonds issue =Face value of bonds x issue price = $200,000 x 99/100 = $198,000

Q: Jan. 1, Year 1 June 30, Year 1 Dec. 31, Year 1 June 30, Year 2 Dec. 31, Year 2 June 30, Year 3 Dec.…

A: Bond amortization table is a table prepared by company which shows the amount of interest expenses,…

Q: On January 1, Boston Enterprises issues bonds that have a $1,500,000 par value, mature in 20 years,…

A: The bonds are issued generally to raise money and these are issued by the government and…

Q: At the beginning of current year, Samal Company Issued P5,000,000 8% serial bonds, to be repaid in…

A: The correct answer for the above mentioned question is given in the following steps for your…

Q: On January 1, Year 1, a company issues $570,000 of 7% bonds, due in 10 years, with interest payable…

A: A bond refers to the instrument which is issued by the government to borrow money when needed. It is…

Q: payable annually on January 1. Effective interest rate is 12 %. Set up a schedule of interest…

A: It is given that 10% bonds having a maturity value of $2,000,000 for $1,855,816 &…

Q: On January 1, Boston Enterprises issues bonds that have a $3,400,000 par value, mature in 20 years,…

A: The question is based on the concept of Financial Accounting.

Q: Wolf Creek Inc has available for issue a $3,200,000 bond due in eight years. Interest at the rate of…

A: The accrued interest is the interest due but not paid yet. It is recorded as liability in the…

Q: On January 1, a company issues $500,000, 5-year, 12% bonds at 96 with interest payable on January 1.…

A: Given information:Face value of the bonds: $500,000Bonds issued at 96% of face value (discount at…

Q: Christmas Anytime issues $750,000 of 7% bonds, due in 10 years, with interest payable semiannually…

Q: Crane issued 7%, 15-year bonds with a face value of $152,000,000. The bonds will pay interest…

A: The objective of the question is to calculate the cash Crane will receive from issuing bonds under…

Q: Extreme Motion issues $500,000 of 6% bonds due in 20 years with interest payable semiannually on…

A: a and b

Q: On October 1 a company sells a 3-year, $2,500,000 bond with an 8% stated interest rate. Interest is…

A: Given, Face value = $2,500,000 Coupon rate = 8% Issue at 89.35%

Q: On the first day of the fiscal year, a company issues a $8,600,000, 11%, 10-year bond that pays…

A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in…

Q: On April 1, 2XX6, a company bought a 10-year, 8% P 400,000 bonds for P 350,000, a price which will…

A: Bonds :— It is one of the source of capital that pays fixed periodic interest and face value amount…

Q: Darby company issues a $100,000 on 12/31/x0, 10%, bond that matures in 3 years. interest is paid on…

A: Amortization refers to the process of spreading out the cost of an intangible asset or capital asset…

Q: Shamrock Inc. issues $2,700,000 of 7% bonds due in 10 years with interest payable at year-end. The…

A: Issue price of the bonds = Present value of principal + Present value of interest paymentswhere,…

Q: On the first day of the fiscal year, a company issues a $4,100,000, 6%, 7-year bond that pays…

A: Bonds :Bonds is a long-term debts issued by the government and companies to raise funds for their…

Q: the carrying value of the bonds after one year?

A: Here is the calculation for the above question.

Q: On January 1, Boston Enterprises issues bonds that have a $1,500,000 par value, mature in 20 years,…

A: The bonds are the financial instruments that are issued to raise money from the market or investors.…

Q: Christmas Anytime issues $850,000 of 6% bonds, due in 10 years, with interest payable semiannually…

A: Bonds: Bonds are a debt instrument on which interest is paid. They can be issued at a discount/par…

Q: Abbington Inc. issues $385,000 of 9% bonds that pay interest semiannually and mature in 10 years.…

A: Time value of money:— According to this concept, the value of money in the present day is greater…

Q: KCC Corporation has the following transactions for the year. Prepare all the necessary entries for…

A: Bond Valuation The valuation of bond can be either par value or discount or premium as well. There…

Q: On January 1, Year 1, a company issues $460,000 of 5% bonds, due in 15 years, with interest payable…

A: Journal entry is the process of recording the business transactions in the books of accounts for the…

Q: At the beginning of January 2021, Luminiscence Company purchased ten-year bonds with a face amoun of…

A: The Purchase price of the bond = Present Value of Interest + Present value of Bond at Maturity.…

Q: On January 1, Boston Enterprises issues bonds that have a $1,750,000 par value, mature in 20 years,…

A: Bonds payable refers to a type of long-term debt that a company or organization issues to borrow…

Q: what is the carrying value of the bonds after one year?

A: Carrying Value of Bonds It is the total of bond's face value and any un-amortized premiums or…

Q: On January 1, Boston Enterprises issues bonds that have a $1,650,000 par value, mature in 20 years,…

A: BOND A Bond is a Type of Financial Security under which the issuer owes the Holder a Debt, &…

Q: On January 1, 2021, Silk Corp, issued eight-year, 6% bonds with a face value of $500,000, with…

A: The bonds are the financial instruments that are used by business to raise money from investors. The…

Q: On January 1, a company issues 8%, 5 year, $300,000 bonds that pay interest semiannually each June…

A: Companies often use bonds to raise money to expand its business, to conduct normal operations etc…

Q: Bart's Moving Company bonds pay $50 semiannually. The bonds have a par value of $1,000 and mature in…

A: A bond refers to an instrument that provides the issuing organization access to debt capital from…

Q: Solar Energy Inc. issued a $915,000, 7.0%, five-year bond on October 1, 2023. Interest is paid…

A: A journal entry is a formal accounting record that documents a financial transaction by recording…

Q: At the beginning of the current year, Chacha Company purchased 5-year bonds with a face amount of…

A: As per the amortization method, the value of the financial instrument is recognized at present…

Q: Wookie company issues 10% five year bonds on January 1 of this year with a par value of $200,000 and…

A: The issue of bond is a practice to raise loan for companies. The investor promises to pay the…

Q: Oak Branch Inc. issued $860,000 of 5%, 10-year bonds when the market rate was 4%. They received…

A: Definition: Interest: Amount charged on the borrowed principal amount.

Q: On January 1, Boston Enterprises issues bonds that have a $1,450,000 par value, mature in 20 years,…

A: The issuance of bonds is one method that businesses may use to obtain capital. A bond may be thought…

Q: February 1, 20x2, Patey Pontoons issued 11% 10-year bonds with a face value of $750,000 for $750,000…

A: Bonds are issued by the company for raising finance for the business working. It is considered a…

Q: ABCorporation issues 20-year, $1,000,000 bonds that pay semiannual interest of $40,000. If the…

A: Bond financing is an instrument for borrowing the funds. The borrower has to pay a fix amount of…

Q: Gia Company had the following bond issue: Date of issue/sale: April 1, 20-A Face value: $200,000…

A: Bonds are a form of liability being incurred by the business. It can be short term or long term,…

Q: Waldron Inc. issued $400,000 bonds with a stated rate of 7% when the market rate was 5%. They are…

A: Bond is a financial instrument which is used to raise the fund by large organizations. Government…

Q: View Policies Current Attempt in Progress Crane Company issued $920,000, 8-year bonds. It agreed to…

A: Future Value of Annuity = Annual Payment * FV Factor(5%,8 years)Future Value of Annuity =…

Q: The bond indenture for the 10-year, 9% debenture bonds issued January 2, 20Y5, required working…

A: Formula Working Capital = Current assets - Current Liabilities Current ratio = Current…

Question

100%

Calculate the increase of the Debt investment account of the Spring Company at December, 31 for $100 000 of Flower Company 10% bond purchased at January, 1. Payments are annual on January, 1. The purchase price is $96 304 to yield 11%. The bond is held to collection and matures in 5 years.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

On January 1 of the current year, Vikings Comapny purchased serial bonds with face value of P4,500,000 and stated 12% interest payable annually every December 31. The bonds are to be held as financial assets at amortized cost with a 10% effective yield. The bonds mature annually every December 31 for three years. The rounded present value of 1 at 10% for: One period 0.91 Tow periods 0.83 Three periods 0.75 . What is the market price of the investment?
Discount Amortization On the first day of the fiscal year, a company issues a $8,600,000, 10%, 10-year bond that pays semiannual interest of $430,000 ($8,600,000 × 10% × ½), receiving cash of $7,613,587. 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.
Diana Inc. issued $300,000 of its 5%, 5-year bonds for $287,215 when the market rate was 6%. The bonds pay interest semi-annually. Prepare an amortization table for the first three payments. Round intermediate and final answers to whole dollar amount. Cash InterestPayment Interest onCarrying Value Amortization ofDiscount Carrying Value Jan. 1, Year 1 $fill in the blank 1 June 30, Year 1 $fill in the blank 2 $fill in the blank 3 $fill in the blank 4 fill in the blank 5 Dec. 31, Year 1 fill in the blank 6 fill in the blank 7 fill in the blank 8 fill in the blank 9 June 30, Year 2 fill in the blank 10 fill in the blank 11 fill in the blank 12 fill in the blank 13
Metlock Inc. issues $4,200,000 of 7% bonds due in 10 years with interest payable at year-end. The current market rate of interest for bonds of similar risk is 12%. What amount will Metlock receive when it issues the bonds?
Belmont Corporation issues $100,000 of 7% bonds, due in 10 years, when the market rate of interest is 5%. Interest is paid semiannually on June 30 and December 31. The issue price of the bonds is:
A company issues $75000 face value bonds with a state interest rate of 10% paying interest semi-annually and maturing in 5 years. the market rate on the date the bonds are issued is 8%. Complete the partial amortization schedule schedule provided, the journal entry at issuance, and the journal entry for the second interest payment.
On the first day of the fiscal year, a company issues a $8,500,000, 6%, 5-year bond that pays semiannual interest of $255,000 ($8,500,000 \times 6% \times (1)/(2)), receiving cash of $7,491, 128. Using straight - line amortization, 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.
Solar Energy Inc. issued a $910,000, 10.0%, five-year bond on October 1, 2023. Interest is paid annually each October 1. Solar’s year-end is December 31. Period Ending CashInterestPaid PeriodInterestExpense DiscountAmort. UnamortizedDiscount CarryingValue Oct. 1/23 $ 33,633 $ 876,367 Oct. 1/24 $ 91,000 $ 96,400 $ 5,400 28,232 881,768 Oct. 1/25 91,000 96,994 5,994 22,238 887,762 Oct. 1/26 91,000 97,654 6,654 15,584 894,416 Oct. 1/27 91,000 98,386 7,386 8,198 901,802 Oct. 1/28 91,000 99,198 8,198 0 910,000 $ 455,000 $ 488,633 $ 33,633 Assume that interest has already been paid on October 1, 2026.Required:Using the amortization schedule provided above, record the entry to retire the bonds on…
Oak Branch Inc. issued $900,000 of 5%, 10-year bonds when the market rate was 4%. They received $973,595. Interest was paid semi-annually. Prepare an amortization table for the first three years of the bonds. Round intermediate and final answers to whole dollar amount. Jan. 1, Year 1 June 30, Year 1 Dec. 31, Year 1 June 30, Year 2 Dec. 31, Year 2 June 30, Year 3 Dec. 31, Year 3 Cash Interest Payment ✔ 22,500 22,500 ✓ 22,500 ✔ 22,500 ✔ 22,500 ✓ 22,500 ✓ Interest on Carrying Value 19,472 19,411 V ✓ 19,350 ✔ 19,287 ✔ 19,222 ✔ 19,157 ✔ Amortization of Premium 3,028 3,089 3,150 ✔ ✓ 3,213 3,278 ✓ 3,343 ✔ Carrying Value 973,595 970,567 967,478 ✔ 964,328 ✔ 961,114 X 957,837 ✔ 954,493 X
3. Your company issues $10,000,000 in 4% bonds maturing in 10 years on January 1, Year 1 Interest will be paid annually on January 1, On the day the bonds are issued, the market rate was 3%, resulting in a bond price of $10,853,000. Prepare all of the journal entries to record issuance of these bonds and any end of year adjustments for Year 1. 1/1/X1 12/31/X1 4. Please record all of the necessary journal entries for Year 2. 1/1/X2 12/31/X2
Company G has outstanding bonds with a face value of $1,000,000 and a stated interest rate of 5%. The bonds pay interest semi-annually and have 10 years remaining until maturity. Calculate the total interest expense for the year.
On January 1, Boston Enterprises issues bonds that have a $1,500,000 par value, mature in 20 years, and pay 6% interest semiannually on June 30 and December 31. The bonds are sold at par. 1. How much interest will the issuer pay (in cash) to the bondholders every six months? 2. Prepare journal entries to record (a) the issuance of bonds on January 1, (b) the first interest payment on June 30, and (c) the second interest payment on December 31. 3. Prepare the journal entry for issuance assuming the bonds are issued at (a) 96 and (b) 104. Complete this question by entering your answers in the tabs below. Required 1 Required 2 How much interest will the issuer pay (in cash) to the bondholders every six months? Semiannual Rate Par (maturity) Value Required 3 X Semiannual Cash Interest Payment