FINANCIAL AND MANAGERIAL ACCOUNTING
9th Edition
ISBN: 2818440048890
Author: Wild
Publisher: MCG CUSTOM
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Chapter 10, Problem 10PSA
1.
To determine
Introduction:
Journal entries: The journal entries are prepared by the organization to record the daily transactions that are non-economic and economic in nature. The ledger accounts are prepared based on the journal entries.
To calculate: The total bond interest expense to be recognized over bond life.
2.
To determine
Introduction:
Journal entries: The journal entries are prepared by the organization to record the daily transactions that are non-economic and economic in nature. The ledger accounts are prepared based on the journal entries.
To prepare: The effective interest amortization table for the first two years.
3.
To determine
Introduction:
Journal entries: The journal entries are prepared by the organization to record the daily transactions that are non-economic and economic in nature. The ledger accounts are prepared based on the journal entries.
To prepare: The
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Compute bond proceeds, amortizing premium by interest method, and interest expense
DATA
Face amount of bonds
Contract rate of interest
Term of bonds, years
Market rate of interest
Interest payment
REQUIRED:
a. Compute the amount of cash proceeds from the sale of the bonds.
$41,000,000
11%
3
9%
Semiannual
b. Compute the amount of premium to be amortized for the first semiannual interest payment period, using the interest method.
c. Compute the amount of premium to be amortized for the second semiannual interest payment period, using the interest method.
d. Compute the amount of the bond interest expense for the first year.
Using formulas and cell references from the problem data, perform the required analysis. Formulas entered in the green cells
show in the orange cells. Transfer amounts to CNOWv2 for grading.
a. PV of cash proceeds
b. Premium amortized for the 1st interest payment period
c. Premium amortized for the 2nd interest payment period
d. Interest expense for the 1st year…
b.
The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar.
Interest Expense
Premium on Bonds Payable v
Cash V
Feedback
V Check My Work
The straight-line method of amortization provides equal amounts of amortization over the life of the bond.
3. Determine the total interest expense for 20Y1. Round to the nearest dollar.
2$
4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest?
Yes
5. Compute the price of $27,440,791 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final
answers to the nearest dollar. Your total may vary slightly from the price given due to rounding differences.
Present value of the face amount
2$
Present value of the semi-annual interest payments
Price received for the bonds
Exercise 14-15 Allocation of interest for bonds sold at a premium LO6
Tahoe Tent Ltd. issued bonds with a par value of $802,000 on January 1, 2020. The annual contract rate on the bonds was 13.00%,
and the interest is paid semiannually. The bonds mature after three years. The annual market interest rate at the date of issuance was
11.00%, and the bonds were sold for $842,064.
a. What is the amount of the original premium on these bonds? (Use financial calculator for calculating PV's. Round the final answer
to the nearest whole dollar.)
Premium
b. How much total bond interest expense will be recognized over the life of these bonds? (Do not round intermediate calculations.
Round the final answer to the nearest whole dollar.)
Total interest expense
Chapter 10 Solutions
FINANCIAL AND MANAGERIAL ACCOUNTING
Ch. 10 - Prob. 1QSCh. 10 - Prob. 2QSCh. 10 - Prob. 3QSCh. 10 - Prob. 4QSCh. 10 - Prob. 5QSCh. 10 - Prob. 6QSCh. 10 - Prob. 7QSCh. 10 - Prob. 8QSCh. 10 - Prob. 9QSCh. 10 - Prob. 10QS
Ch. 10 - Prob. 11QSCh. 10 - Prob. 12QSCh. 10 - Prob. 13QSCh. 10 - Prob. 14QSCh. 10 - Prob. 15QSCh. 10 - Prob. 16QSCh. 10 - Prob. 17QSCh. 10 - Prob. 18QSCh. 10 - Prob. 19QSCh. 10 - Prob. 20QSCh. 10 - Prob. 21QSCh. 10 - Prob. 22QSCh. 10 - Prob. 23QSCh. 10 - Prob. 24QSCh. 10 - Prob. 1ECh. 10 - Prob. 2ECh. 10 - Prob. 3ECh. 10 - Prob. 4ECh. 10 - Prob. 5ECh. 10 - Prob. 6ECh. 10 - Prob. 7ECh. 10 - Prob. 8ECh. 10 - Prob. 9ECh. 10 - Prob. 10ECh. 10 - Prob. 11ECh. 10 - Prob. 12ECh. 10 - Prob. 13ECh. 10 - Prob. 15ECh. 10 - Prob. 16ECh. 10 - Prob. 17ECh. 10 - Prob. 18ECh. 10 - Prob. 19ECh. 10 - Prob. 20ECh. 10 - Prob. 21ECh. 10 - Prob. 22ECh. 10 - Prob. 23ECh. 10 - Prob. 1PSACh. 10 - Prob. 2PSACh. 10 - Prob. 3PSACh. 10 - Prob. 4PSACh. 10 - Prob. 5PSACh. 10 - Prob. 6PSACh. 10 - Prob. 7PSACh. 10 - Prob. 8PSACh. 10 - Prob. 9PSACh. 10 - Prob. 10PSACh. 10 - Prob. 11PSACh. 10 - Prob. 12PSACh. 10 - Prob. 13PSACh. 10 - Prob. 1PSBCh. 10 - Prob. 2PSBCh. 10 - Prob. 3PSBCh. 10 - Prob. 4PSBCh. 10 - Prob. 5PSBCh. 10 - Prob. 6PSBCh. 10 - Prob. 7PSBCh. 10 - Prob. 8PSBCh. 10 - Prob. 9PSBCh. 10 - Prob. 10PSBCh. 10 - Problem 10-10BB Effective Interest: Amortization...Ch. 10 - Prob. 12PSBCh. 10 - Prob. 13PSBCh. 10 - Prob. 10SPCh. 10 - Prob. 1.1AACh. 10 - Prob. 1.2AACh. 10 - Prob. 1.3AACh. 10 - Prob. 2.1AACh. 10 - Prob. 2.2AACh. 10 - Prob. 2.3AACh. 10 - Prob. 3.1AACh. 10 - Prob. 3.2AACh. 10 - Prob. 3.3AACh. 10 - Prob. 1DQCh. 10 - Prob. 2DQCh. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - Prob. 5DQCh. 10 - Prob. 6DQCh. 10 - Prob. 7DQCh. 10 - Prob. 8DQCh. 10 - Prob. 9DQCh. 10 - What is the issue price of a $2,000 bond sold at...Ch. 10 - Prob. 11DQCh. 10 - Prob. 12DQCh. 10 - Prob. 13DQCh. 10 - Prob. 14DQCh. 10 - Prob. 15DQCh. 10 - Prob. 1BTNCh. 10 - Prob. 2BTNCh. 10 - Prob. 3BTNCh. 10 - Prob. 4BTN
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