Bonds Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond. Effective interest rate of amortization bond Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but a constant percentage rate. To prepare: The journal entry to record issue of bonds for Company L on Jan 1, 2015.

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Answer 1

Question

Chapter 10, Problem 10.18E

a)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but a constant percentage rate.

To prepare: The journal entry to record issue of bonds for Company L on Jan 1, 2015.

b)

To determine

To prepare: The adjustment entry to record accrual of interest and bonds premium amortization for Company L on July 1, 2015.

(c)

To determine

To prepare: The journal entry to record the payment of accrued interest for Company L on Dec 31, 2015.

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Answer 2

Question

Chapter 10, Problem 10.18E

a)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but a constant percentage rate.

To prepare: The journal entry to record issue of bonds for Company L on Jan 1, 2015.

b)

To determine

To prepare: The adjustment entry to record accrual of interest and bonds premium amortization for Company L on July 1, 2015.

(c)

To determine

To prepare: The journal entry to record the payment of accrued interest for Company L on Dec 31, 2015.

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Answer 3

Question

Chapter 10, Problem 10.18E

a)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but a constant percentage rate.

To prepare: The journal entry to record issue of bonds for Company L on Jan 1, 2015.

b)

To determine

To prepare: The adjustment entry to record accrual of interest and bonds premium amortization for Company L on July 1, 2015.

(c)

To determine

To prepare: The journal entry to record the payment of accrued interest for Company L on Dec 31, 2015.

Expert Solution & Answer

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Answer 4

Question

Chapter 10, Problem 10.18E

a)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but a constant percentage rate.

To prepare: The journal entry to record issue of bonds for Company L on Jan 1, 2015.

b)

To determine

To prepare: The adjustment entry to record accrual of interest and bonds premium amortization for Company L on July 1, 2015.

(c)

To determine

To prepare: The journal entry to record the payment of accrued interest for Company L on Dec 31, 2015.

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Answer 5

Chapter 10, Problem 10.18E

a)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but a constant percentage rate.

To prepare: The journal entry to record issue of bonds for Company L on Jan 1, 2015.

b)

To determine

To prepare: The adjustment entry to record accrual of interest and bonds premium amortization for Company L on July 1, 2015.

(c)

To determine

To prepare: The journal entry to record the payment of accrued interest for Company L on Dec 31, 2015.

Answer 6

Chapter 10, Problem 10.18E

a)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but a constant percentage rate.

To prepare: The journal entry to record issue of bonds for Company L on Jan 1, 2015.

Answer 7

Chapter 10, Problem 10.18E

a)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but a constant percentage rate.

To prepare: The journal entry to record issue of bonds for Company L on Jan 1, 2015.

Answer 8

b)

To determine

To prepare: The adjustment entry to record accrual of interest and bonds premium amortization for Company L on July 1, 2015.

Answer 9

b)

To determine

To prepare: The adjustment entry to record accrual of interest and bonds premium amortization for Company L on July 1, 2015.

Answer 10

(c)

To determine

To prepare: The journal entry to record the payment of accrued interest for Company L on Dec 31, 2015.

Answer 11

(c)

To determine

To prepare: The journal entry to record the payment of accrued interest for Company L on Dec 31, 2015.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 10 - Prob. 1Q Ch. 10 - Prob. 2Q Ch. 10 - Prob. 3Q Ch. 10 - Prob. 4Q Ch. 10 - Prob. 5Q Ch. 10 - Prob. 6Q Ch. 10 - 6 What are long-term liabilities? Give three...Ch. 10 - 17 As a source of long-term financing, what are...Ch. 10 - Prob. 9Q Ch. 10 - Prob. 10Q

To prepare: The adjustment entry to record accrual of interest and bonds premium amortization for Company L on July 1, 2015.

To prepare: The journal entry to record the payment of accrued interest for Company L on Dec 31, 2015.

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