Tuku limited issued a 5% K70 million bond on 1/1/2018. The bond attract an issue costs of 10% as well as discount of 2%. The effective interest rate is 8%. Required to explain and show how the above instrument will be accounted for the years 2018 to 2020. The company has a year that ends in December

Tuku limited issued a 5% K70 million bond on 1/1/2018. The bond attract an issue costs of 10% as well as discount of 2%. The effective interest rate is 8%. Required to explain and show how the above instrument will be accounted for the years 2018 to 2020. The company has a year that ends in December

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

On October 1, 2020, Ross Wind Energy Inc. issued a $1,610,000, 7.0%, seven-year bond. Interest is to be paid annually each October 1. Assume a November 30 year-end. (Use TABLE 14A.1 and TABLE 14A.2.). (Use appropriate factor(s) from the tables provided.) Required: a. Calculate the issue price of the bond assuming a market interest rate of 6% on the date of the bond issue. (Do not round intermediate calculations. Round the final answer to the nearest whole dollar.) Issue price of the bond b. Using the effective interest method, prepare an amortization schedule. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar. Enter all the amounts as positive values.) Dorind Cash Period Dromium Unamortized Carring
On March 1, 2020, Quinto Mining Inc. issued a $690,000, 8%, three-year bond. Interest is payable semiannually beginning September 1, 2020. 1. Calculate the bond issue price assuming a market interest rate of 7% on the date of issue 2. Using the effective interest method, prepare an amortization schedule. (Image attached) This question has a follow up, posted separately. Thanks!
The Werner Company issued 10-year bonds on January 1, 2020. The debt has a face value of $800,000 and an annual stated interest rate of 6%. Interest payments are due semiannually beginning June 30, 2020. The market interest rate on the bonds is 6%. a.What will this bond be priced at on January 1, 2020? b.More advanced: On January 1, 2023, the market rate of interest for these bonds is 8%. What will you be willing to pay for these bonds on that date?
On February 1, 2021, Nalawi ltd, issued a 5% , 8-year bond with a face value of 500,000. The semi-annual interest (Coupon) Payments are made on January 31 and July 31. Nikawi LTD receives $468,597 in cash. The company uses the effective interest method. The market rate is 6% Prepare a bond amortization table for the first two semi-annual interest periods. Record the journal entries for the insurance of the bond on February 1st, 2021 and the semi annual interest payments for July 31st, 2021, and January 31st 2022 dd on questions What is the interest payment on July 31st, 2021 What is the interest expense on July 31st, 2021 What is the carrying amount of the bond July 31st, 2021 What is the interest payment on January 31st, 2022 What is the interest expense on January 31st, 2022 What is the carrying amount of the bond on January 31st, 2022.
On March 1, 2023, Quinto Mining Inc. issued a $600,000, 8%, three-year bond. Interest is payable semiannually beginning September 1, 2023. Please do this fasttt
The bonds mature on December 31, 2033 (10 years). For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31. Required: 1. Determine the price of the bonds at January 1, 2024. 2. to 4. Prepare the journal entries to record their issuance by The Bradford Company on January 1, 2024, interest on June 30, 2024 (at the effective rate) and interest on December 31, 2024 (at the effective rate). Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Complete this question by entering your answers in the tabs below. Req 1 Req 2 to 4 Determine the price of the bonds at January 1, 2024. Note: Enter your answer in whole dollars. Price of bonds
On June 30, 2024, Single Computers issued 6% stated rate bonds with a face amount of $200 million. The bonds mature on June 30, 2039 (15 years). The market rate of interest for similar bond issues was 5% (2.5% semiannual rate). Interest is paid semiannually (3%) on June 30 and December 31, beginning on December 31, 2024. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Required: 1. Determine the price of the bonds on June 30, 2024. 2. Calculate the interest expense Single reports in 2024 for these bonds using the effective interest method.