Financial Accounting: Tools for Business Decision Making, 8th Edition
8th Edition
ISBN: 9781118953808
Author: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
Publisher: WILEY
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Chapter 10, Problem 16Q
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.
To calculate: The carrying
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Students have asked these similar questions
If the Bonds Payable account has a balance of $700,000 and the Discount on Bonds Payable account has a balance of $36,000, what is the carrying value
of the bonds?
Carrying value of the bonds $
If the bonds payable account has a balance of $100,000 and the premium on bonds payable account has a balance of $10,000, what is the carrying amount of the bonds?
$110,000
$100,000
$90,000
There is no way to determine.
Compute the cash proceeds from bond issues under the following terms. For each case, indicate whether the bonds sold
at a premium or discount. (Round your answers to nearest dollar amount.) Required Compute the cash proceeds from
bond issues under the following terms. For each case, indicate whether the bonds sold at a premium or discount. (Round
your answers to nearest dollar amount.) \table[[,, \table[[Cash], [Proceeds]], \table[[Discount or], [Premium]]], [a., Pear, Inc.
issued $190,000 of 10-year,8 percent bonds at 103., Premium,], [b., Apple, Inc. issued $92,000 of five-year, 12 percent
bonds at 99.,, Discount], [c., Cherry Co. issued $196,000 of five-year, 6 percent bonds at 1031/4., Premium,], [d.,
Grape, Inc. issued $39,000 of four-year, 8 percent bonds at 99.00., Discount,]]
Required
Compute the cash proceeds from bond issues under the following terms. For each case, indicate whether the bonds sold at a premium
or discount. (Round your answers to nearest dollar amount.)
a.…
Chapter 10 Solutions
Financial Accounting: Tools for Business Decision Making, 8th Edition
Ch. 10 - Prob. 1QCh. 10 - Prob. 2QCh. 10 - Prob. 3QCh. 10 - Prob. 4QCh. 10 - Prob. 5QCh. 10 - (a) Identify three taxes commonly paid by...Ch. 10 - Prob. 7QCh. 10 - Prob. 8QCh. 10 - Contrast these types of bonds: (a) Secured and...Ch. 10 - Prob. 10Q
Ch. 10 - Prob. 11QCh. 10 - Prob. 12QCh. 10 - Prob. 13QCh. 10 - Lee and Jay are discussing how the market price of...Ch. 10 - Prob. 15QCh. 10 - Prob. 16QCh. 10 - Prob. 17QCh. 10 - Prob. 18QCh. 10 - Prob. 19QCh. 10 - Prob. 20QCh. 10 - Prob. 21QCh. 10 - Prob. 22QCh. 10 - Prob. 23QCh. 10 - Prob. 24QCh. 10 - Prob. 25QCh. 10 - Prob. 26QCh. 10 - Prob. 27QCh. 10 - Prob. 28QCh. 10 - Prob. 29QCh. 10 - Prob. 30QCh. 10 - Prob. 31QCh. 10 - Prob. 10.1BECh. 10 - Prob. 10.2BECh. 10 - Prob. 10.3BECh. 10 - Prob. 10.4BECh. 10 - Prob. 10.5BECh. 10 - Prob. 10.6BECh. 10 - Prob. 10.7BECh. 10 - Prob. 10.8BECh. 10 - Prob. 10.9BECh. 10 - Prob. 10.10BECh. 10 - Prob. 10.11BECh. 10 - Prob. 10.12BECh. 10 - Prob. 10.13BECh. 10 - Prob. 10.14BECh. 10 - Prob. 10.15BECh. 10 - Prob. 10.16BECh. 10 - Prob. 10.17BECh. 10 - Prob. 10.18BECh. 10 - Prob. 10.19BECh. 10 - Prob. 10.1ADIECh. 10 - Prob. 10.1BDIECh. 10 - State whether each of the following statements is...Ch. 10 - Prob. 10.3ADIECh. 10 - Prob. 10.3BDIECh. 10 - Prob. 10.4DIECh. 10 - Prob. 10.1ECh. 10 - Prob. 10.2ECh. 10 - Prob. 10.3ECh. 10 - Prob. 10.4ECh. 10 - Prob. 10.5ECh. 10 - Prob. 10.6ECh. 10 - Prob. 10.7ECh. 10 - Prob. 10.8ECh. 10 - Prob. 10.9ECh. 10 - Prob. 10.10ECh. 10 - Prob. 10.11ECh. 10 - Prob. 10.12ECh. 10 - Prob. 10.13ECh. 10 - Prob. 10.14ECh. 10 - Prob. 10.15ECh. 10 - Prob. 10.16ECh. 10 - Prob. 10.17ECh. 10 - Prob. 10.18ECh. 10 - Prob. 10.19ECh. 10 - Prob. 10.20ECh. 10 - Prob. 10.21ECh. 10 - Prob. 10.22ECh. 10 - Prob. 10.23ECh. 10 - Prob. 10.24ECh. 10 - Prob. 10.25ECh. 10 - Prob. 10.1APCh. 10 - Prob. 10.2APCh. 10 - Prob. 10.3APCh. 10 - Prob. 10.4APCh. 10 - Prob. 10.5APCh. 10 - Prob. 10.6APCh. 10 - Prob. 10.7APCh. 10 - Prob. 10.8APCh. 10 - Prob. 10.9APCh. 10 - Prob. 10.10APCh. 10 - Prob. 10.11APCh. 10 - Prob. 10.12APCh. 10 - Prob. 10.13APCh. 10 - Prob. 10.1CACRCh. 10 - Prob. 10.1EYCTCh. 10 - Prob. 10.2EYCTCh. 10 - Prob. 10.3EYCTCh. 10 - Prob. 10.4EYCTCh. 10 - Prob. 10.5EYCTCh. 10 - DECISION-MAKING ACROSS THE ORGANIZATION On January...Ch. 10 - Prob. 10.9EYCTCh. 10 - Prob. 10.10EYCTCh. 10 - Prob. 10.14EYCTCh. 10 - Prob. 10.1IFRSECh. 10 - Prob. 10.2IFRSECh. 10 - Prob. 10.3IFRSECh. 10 - Prob. 10.4IFRSE
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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
- What kind of account is the Discount on Bonds Payable? What kind of account is the Premium on Bonds Payable?arrow_forwardA $2,600 credit balance in the Premium on Bonds Payable account represents which of the following? Select one: a. An overpayment for a bond purchase b. An underpayment for a bond purchase c. The current amount of amortization expense d. The unamortized amount of premium earned on a bond issuearrow_forwardGiven that a bond's carrying value is $185,000 and the fair value is $183,000, what is the journal entry to record the unrealized holding gain? Would it be a debit or credit to unrealized holding gain? Likewise, if this was a loss, would it be debit or credit to unrealized holding loss? Thanks!arrow_forward
- a. Assume that the market interest rates were slightly higher than 9% when the bonds were sold. Would the proceeds from the bond issue have been more than, less than, or equal to the face amount? Explain. b. Independent of your answer to part a, assume that the proceeds were $14,820,000. Use the horizontal model (or write the journal entry) to show the effect of issuing the bonds. C. Calculate the interest expense that Coley Co. will show with respect to these bonds in its income statement for the fiscal year ended September 30, 2013, assuming that the discount of $180.000 is amortized on a straight-line basis.arrow_forwardA company issues a bond with a par value of $500,000 and a contract rate of 5%. Explain the concept of market rate. Why would a company issue a bond at a discount or a premium? How is bond price impacted? If the bond is issued at a discount or a premium, does it impact the interest or principal paid? Why or why not? (Answer in 5-10 sentences)arrow_forwardA bond is issued at a price of 103 and retired early at aprice of 97. Which of the following is true?a. A gain will be reported on the income statement whenthe bond is issued.b. A loss will be reported on the income statement whenthe bond is issued.c. A gain will be reported on the income statement whenthe bond is retired.d. A loss will be reported on the income statement whenthe bond is retired.arrow_forward
- Briggs and Stratton recently issued debt with issue costs of$5.1 million. How should the costs of issuing these bondsbe accounted for and classified in the financial statements?arrow_forwardWhen a company uses the the effective-interest method to amortize a bond discount amortization, the interest expense is equal to a) the market rate multiplied by the beginning-of-period carrying amount of the bonds. b) the market rate of interest multiplied by the face value of the bonds. c) the stated rate multiplied by the beginning-of-period carrying amount of the bonds. d) the stated (nominal) rate of interest multiplied by the face value of the bonds.arrow_forwardWhen bonds are issued at face value, the debit to Cash and credit to Bonds Payable are for the same amount.arrow_forward
- The principal of a bond is ________. A. the person who sold the bond for the company B. the person who bought the bond C. the interest rate printed on the front of the bond D. the face amount of the bond that will be paid back at maturityarrow_forwardOn the balance sheet, the account Premium on Bonds Payable is: Select one: a. Added to Bonds Payable b. Added to Bond Interest Expense c. Deducted from Bond Interest Expense d. Deducted from Bonds Payablearrow_forwardI need help with this question.arrow_forward
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