A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest. To determine: Total amount of each installment payment.

Question

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Answer 1

Question

Chapter 10, Problem 6PSA

1.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: Total amount of each installment payment.

1.

Expert Solution

Answer to Problem 6PSA

An installment refers to the liability that forces the borrowers to repay the borrowed amount to the lenders in a series of periodic payments.

Total amount of each installment is $50,091

Explanation of Solution

Computation of the amount pertaining to the notes payment is shown below:

Annual Payment= Present Value of note / PVFA = $200,000/3.403 = $50,091

Present value of 8% is 0.6806

PVFA= Present Value× No. of years = 0.6806×5=3.9927

2.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: The computation of the statement showing the amortization amount.

2.

Expert Solution

Answer to Problem 6PSA

Amortization table and amount showing that is $46,382

Explanation of Solution

The computation of the statement showing the amortization amount is shown below:

Period Ending Date	Beginning Balance	Debit Interest Expense 8%	Debit Notes Payable	Credit Cash	Ending Balance
31/10/206	$200,000	$200,000×8%=$16,000	$50,091−$16,000=$34,091	$50,091	$200,000−$34,091=$16,5909
31/10/2017	$165,909	$165,909×8%=$13,273	$50,091−$13,273=$36,818	$50,091	$165,909−$36,818=$129,091
31/10/2018	$129,091	$129,091×8%=$10,327	$50,091−$10,327=$39,764	$50,091	$129,091−$39,764=$89,327
31/10/2019	$89,327	$89,327×8%=$7,146	$50,091−$7,146=$42,945	$50,091	$89,327−$42,945=$46,382
31/10/2020	$46,382	$46,382×8%=$3,709	$50,091−$3,709=$46,382	$50,091	$46,382−$46,382=$0
Total		$50,455	$200,000	$250,455

3.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: Prepare the journal entry to record the interest and amortization.

3.

Expert Solution

Answer to Problem 6PSA

To record premium amortization and interest of 6 months.

Explanation of Solution

Date	Particulars	Debit	Credit
31Dec	Bond Interest Expense($200,000×8%)*2/12=$2,667	$2,667
	Interest Expense		$2,667
	(To record the interest and premium amortization for six months)

Date	Particulars	Debit	Credit
31Oct	Bond Interest Expense($200,000×8%)−$2,667=$13,333	$13,333
	Interest payable	$2,667
	Notes payable($50,091−$16,000)=$34,091	$34,091
	Cash		$50,091
	(To record initial payment towards the installment note)

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Answer 2

Question

Chapter 10, Problem 6PSA

1.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: Total amount of each installment payment.

1.

Expert Solution

Answer to Problem 6PSA

An installment refers to the liability that forces the borrowers to repay the borrowed amount to the lenders in a series of periodic payments.

Total amount of each installment is $50,091

Explanation of Solution

Computation of the amount pertaining to the notes payment is shown below:

Annual Payment= Present Value of note / PVFA = $200,000/3.403 = $50,091

Present value of 8% is 0.6806

PVFA= Present Value× No. of years = 0.6806×5=3.9927

2.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: The computation of the statement showing the amortization amount.

2.

Expert Solution

Answer to Problem 6PSA

Amortization table and amount showing that is $46,382

Explanation of Solution

The computation of the statement showing the amortization amount is shown below:

Period Ending Date	Beginning Balance	Debit Interest Expense 8%	Debit Notes Payable	Credit Cash	Ending Balance
31/10/206	$200,000	$200,000×8%=$16,000	$50,091−$16,000=$34,091	$50,091	$200,000−$34,091=$16,5909
31/10/2017	$165,909	$165,909×8%=$13,273	$50,091−$13,273=$36,818	$50,091	$165,909−$36,818=$129,091
31/10/2018	$129,091	$129,091×8%=$10,327	$50,091−$10,327=$39,764	$50,091	$129,091−$39,764=$89,327
31/10/2019	$89,327	$89,327×8%=$7,146	$50,091−$7,146=$42,945	$50,091	$89,327−$42,945=$46,382
31/10/2020	$46,382	$46,382×8%=$3,709	$50,091−$3,709=$46,382	$50,091	$46,382−$46,382=$0
Total		$50,455	$200,000	$250,455

3.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: Prepare the journal entry to record the interest and amortization.

3.

Expert Solution

Answer to Problem 6PSA

To record premium amortization and interest of 6 months.

Explanation of Solution

Date	Particulars	Debit	Credit
31Dec	Bond Interest Expense($200,000×8%)*2/12=$2,667	$2,667
	Interest Expense		$2,667
	(To record the interest and premium amortization for six months)

Date	Particulars	Debit	Credit
31Oct	Bond Interest Expense($200,000×8%)−$2,667=$13,333	$13,333
	Interest payable	$2,667
	Notes payable($50,091−$16,000)=$34,091	$34,091
	Cash		$50,091
	(To record initial payment towards the installment note)

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Answer 3

Question

Chapter 10, Problem 6PSA

1.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: Total amount of each installment payment.

1.

Expert Solution

Answer to Problem 6PSA

An installment refers to the liability that forces the borrowers to repay the borrowed amount to the lenders in a series of periodic payments.

Total amount of each installment is $50,091

Explanation of Solution

Computation of the amount pertaining to the notes payment is shown below:

Annual Payment= Present Value of note / PVFA = $200,000/3.403 = $50,091

Present value of 8% is 0.6806

PVFA= Present Value× No. of years = 0.6806×5=3.9927

2.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: The computation of the statement showing the amortization amount.

2.

Expert Solution

Answer to Problem 6PSA

Amortization table and amount showing that is $46,382

Explanation of Solution

The computation of the statement showing the amortization amount is shown below:

Period Ending Date	Beginning Balance	Debit Interest Expense 8%	Debit Notes Payable	Credit Cash	Ending Balance
31/10/206	$200,000	$200,000×8%=$16,000	$50,091−$16,000=$34,091	$50,091	$200,000−$34,091=$16,5909
31/10/2017	$165,909	$165,909×8%=$13,273	$50,091−$13,273=$36,818	$50,091	$165,909−$36,818=$129,091
31/10/2018	$129,091	$129,091×8%=$10,327	$50,091−$10,327=$39,764	$50,091	$129,091−$39,764=$89,327
31/10/2019	$89,327	$89,327×8%=$7,146	$50,091−$7,146=$42,945	$50,091	$89,327−$42,945=$46,382
31/10/2020	$46,382	$46,382×8%=$3,709	$50,091−$3,709=$46,382	$50,091	$46,382−$46,382=$0
Total		$50,455	$200,000	$250,455

3.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: Prepare the journal entry to record the interest and amortization.

3.

Expert Solution

Answer to Problem 6PSA

To record premium amortization and interest of 6 months.

Explanation of Solution

Date	Particulars	Debit	Credit
31Dec	Bond Interest Expense($200,000×8%)*2/12=$2,667	$2,667
	Interest Expense		$2,667
	(To record the interest and premium amortization for six months)

Date	Particulars	Debit	Credit
31Oct	Bond Interest Expense($200,000×8%)−$2,667=$13,333	$13,333
	Interest payable	$2,667
	Notes payable($50,091−$16,000)=$34,091	$34,091
	Cash		$50,091
	(To record initial payment towards the installment note)

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Answer 4

Question

Chapter 10, Problem 6PSA

1.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: Total amount of each installment payment.

1.

Expert Solution

Answer to Problem 6PSA

An installment refers to the liability that forces the borrowers to repay the borrowed amount to the lenders in a series of periodic payments.

Total amount of each installment is $50,091

Explanation of Solution

Computation of the amount pertaining to the notes payment is shown below:

Annual Payment= Present Value of note / PVFA = $200,000/3.403 = $50,091

Present value of 8% is 0.6806

PVFA= Present Value× No. of years = 0.6806×5=3.9927

2.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: The computation of the statement showing the amortization amount.

2.

Expert Solution

Answer to Problem 6PSA

Amortization table and amount showing that is $46,382

Explanation of Solution

The computation of the statement showing the amortization amount is shown below:

Period Ending Date	Beginning Balance	Debit Interest Expense 8%	Debit Notes Payable	Credit Cash	Ending Balance
31/10/206	$200,000	$200,000×8%=$16,000	$50,091−$16,000=$34,091	$50,091	$200,000−$34,091=$16,5909
31/10/2017	$165,909	$165,909×8%=$13,273	$50,091−$13,273=$36,818	$50,091	$165,909−$36,818=$129,091
31/10/2018	$129,091	$129,091×8%=$10,327	$50,091−$10,327=$39,764	$50,091	$129,091−$39,764=$89,327
31/10/2019	$89,327	$89,327×8%=$7,146	$50,091−$7,146=$42,945	$50,091	$89,327−$42,945=$46,382
31/10/2020	$46,382	$46,382×8%=$3,709	$50,091−$3,709=$46,382	$50,091	$46,382−$46,382=$0
Total		$50,455	$200,000	$250,455

3.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: Prepare the journal entry to record the interest and amortization.

3.

Expert Solution

Answer to Problem 6PSA

To record premium amortization and interest of 6 months.

Explanation of Solution

Date	Particulars	Debit	Credit
31Dec	Bond Interest Expense($200,000×8%)*2/12=$2,667	$2,667
	Interest Expense		$2,667
	(To record the interest and premium amortization for six months)

Date	Particulars	Debit	Credit
31Oct	Bond Interest Expense($200,000×8%)−$2,667=$13,333	$13,333
	Interest payable	$2,667
	Notes payable($50,091−$16,000)=$34,091	$34,091
	Cash		$50,091
	(To record initial payment towards the installment note)

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Answer 5

Chapter 10, Problem 6PSA

1.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: Total amount of each installment payment.

1.

Expert Solution

Answer to Problem 6PSA

An installment refers to the liability that forces the borrowers to repay the borrowed amount to the lenders in a series of periodic payments.

Total amount of each installment is $50,091

Explanation of Solution

Computation of the amount pertaining to the notes payment is shown below:

Annual Payment= Present Value of note / PVFA = $200,000/3.403 = $50,091

Present value of 8% is 0.6806

PVFA= Present Value× No. of years = 0.6806×5=3.9927

2.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: The computation of the statement showing the amortization amount.

2.

Expert Solution

Answer to Problem 6PSA

Amortization table and amount showing that is $46,382

Explanation of Solution

The computation of the statement showing the amortization amount is shown below:

Period Ending Date	Beginning Balance	Debit Interest Expense 8%	Debit Notes Payable	Credit Cash	Ending Balance
31/10/206	$200,000	$200,000×8%=$16,000	$50,091−$16,000=$34,091	$50,091	$200,000−$34,091=$16,5909
31/10/2017	$165,909	$165,909×8%=$13,273	$50,091−$13,273=$36,818	$50,091	$165,909−$36,818=$129,091
31/10/2018	$129,091	$129,091×8%=$10,327	$50,091−$10,327=$39,764	$50,091	$129,091−$39,764=$89,327
31/10/2019	$89,327	$89,327×8%=$7,146	$50,091−$7,146=$42,945	$50,091	$89,327−$42,945=$46,382
31/10/2020	$46,382	$46,382×8%=$3,709	$50,091−$3,709=$46,382	$50,091	$46,382−$46,382=$0
Total		$50,455	$200,000	$250,455

3.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: Prepare the journal entry to record the interest and amortization.

3.

Expert Solution

Answer to Problem 6PSA

To record premium amortization and interest of 6 months.

Explanation of Solution

Date	Particulars	Debit	Credit
31Dec	Bond Interest Expense($200,000×8%)*2/12=$2,667	$2,667
	Interest Expense		$2,667
	(To record the interest and premium amortization for six months)

Date	Particulars	Debit	Credit
31Oct	Bond Interest Expense($200,000×8%)−$2,667=$13,333	$13,333
	Interest payable	$2,667
	Notes payable($50,091−$16,000)=$34,091	$34,091
	Cash		$50,091
	(To record initial payment towards the installment note)

Answer 6

Chapter 10, Problem 6PSA

1.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: Total amount of each installment payment.

1.

Expert Solution

Answer to Problem 6PSA

An installment refers to the liability that forces the borrowers to repay the borrowed amount to the lenders in a series of periodic payments.

Total amount of each installment is $50,091

Explanation of Solution

Computation of the amount pertaining to the notes payment is shown below:

Annual Payment= Present Value of note / PVFA = $200,000/3.403 = $50,091

Present value of 8% is 0.6806

PVFA= Present Value× No. of years = 0.6806×5=3.9927

Answer 7

Chapter 10, Problem 6PSA

1.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: Total amount of each installment payment.

Answer 8

1.

Expert Solution

Answer to Problem 6PSA

An installment refers to the liability that forces the borrowers to repay the borrowed amount to the lenders in a series of periodic payments.

Total amount of each installment is $50,091

Answer 9

1.

Expert Solution

Answer 10

1.

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Computation of the amount pertaining to the notes payment is shown below:

Annual Payment= Present Value of note / PVFA = $200,000/3.403 = $50,091

Present value of 8% is 0.6806

PVFA= Present Value× No. of years = 0.6806×5=3.9927

Answer 13

2.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: The computation of the statement showing the amortization amount.

2.

Expert Solution

Answer to Problem 6PSA

Amortization table and amount showing that is $46,382

Explanation of Solution

The computation of the statement showing the amortization amount is shown below:

Period Ending Date	Beginning Balance	Debit Interest Expense 8%	Debit Notes Payable	Credit Cash	Ending Balance
31/10/206	$200,000	$200,000×8%=$16,000	$50,091−$16,000=$34,091	$50,091	$200,000−$34,091=$16,5909
31/10/2017	$165,909	$165,909×8%=$13,273	$50,091−$13,273=$36,818	$50,091	$165,909−$36,818=$129,091
31/10/2018	$129,091	$129,091×8%=$10,327	$50,091−$10,327=$39,764	$50,091	$129,091−$39,764=$89,327
31/10/2019	$89,327	$89,327×8%=$7,146	$50,091−$7,146=$42,945	$50,091	$89,327−$42,945=$46,382
31/10/2020	$46,382	$46,382×8%=$3,709	$50,091−$3,709=$46,382	$50,091	$46,382−$46,382=$0
Total		$50,455	$200,000	$250,455

Answer 14

2.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: The computation of the statement showing the amortization amount.

Answer 15

2.

Expert Solution

Answer to Problem 6PSA

Amortization table and amount showing that is $46,382

Answer 16

2.

Expert Solution

Answer 17

2.

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

The computation of the statement showing the amortization amount is shown below:

Period Ending Date	Beginning Balance	Debit Interest Expense 8%	Debit Notes Payable	Credit Cash	Ending Balance
31/10/206	$200,000	$200,000×8%=$16,000	$50,091−$16,000=$34,091	$50,091	$200,000−$34,091=$16,5909
31/10/2017	$165,909	$165,909×8%=$13,273	$50,091−$13,273=$36,818	$50,091	$165,909−$36,818=$129,091
31/10/2018	$129,091	$129,091×8%=$10,327	$50,091−$10,327=$39,764	$50,091	$129,091−$39,764=$89,327
31/10/2019	$89,327	$89,327×8%=$7,146	$50,091−$7,146=$42,945	$50,091	$89,327−$42,945=$46,382
31/10/2020	$46,382	$46,382×8%=$3,709	$50,091−$3,709=$46,382	$50,091	$46,382−$46,382=$0
Total		$50,455	$200,000	$250,455

Answer 20

3.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: Prepare the journal entry to record the interest and amortization.

3.

Expert Solution

Answer to Problem 6PSA

To record premium amortization and interest of 6 months.

Explanation of Solution

Date	Particulars	Debit	Credit
31Dec	Bond Interest Expense($200,000×8%)*2/12=$2,667	$2,667
	Interest Expense		$2,667
	(To record the interest and premium amortization for six months)

Date	Particulars	Debit	Credit
31Oct	Bond Interest Expense($200,000×8%)−$2,667=$13,333	$13,333
	Interest payable	$2,667
	Notes payable($50,091−$16,000)=$34,091	$34,091
	Cash		$50,091
	(To record initial payment towards the installment note)

Answer 21

3.

Summary Introduction

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: Prepare the journal entry to record the interest and amortization.

Answer 22

3.

Expert Solution

Answer to Problem 6PSA

To record premium amortization and interest of 6 months.

Answer 23

3.

Expert Solution

Answer 24

3.

Expert Solution

Answer 25

Expert Solution

Answer 26

Explanation of Solution

Date	Particulars	Debit	Credit
31Dec	Bond Interest Expense($200,000×8%)*2/12=$2,667	$2,667
	Interest Expense		$2,667
	(To record the interest and premium amortization for six months)

Date	Particulars	Debit	Credit
31Oct	Bond Interest Expense($200,000×8%)−$2,667=$13,333	$13,333
	Interest payable	$2,667
	Notes payable($50,091−$16,000)=$34,091	$34,091
	Cash		$50,091
	(To record initial payment towards the installment note)

Answer 27

Ch. 10 - What is the main difference between notes payable...Ch. 10 - Prob. 2DQ Ch. 10 - Prob. 3DQ Ch. 10 - Prob. 4DQ Ch. 10 - Prob. 5DQ Ch. 10 - Prob. 6DQ Ch. 10 - Prob. 7DQ Ch. 10 - Prob. 8DQ Ch. 10 - Prob. 9DQ Ch. 10 - Prob. 10DQ

A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest. To determine: Total amount of each installment payment.

Videos

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: Total amount of each installment payment.

Answer to Problem 6PSA

Explanation of Solution

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: The computation of the statement showing the amortization amount.

Answer to Problem 6PSA

Explanation of Solution

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: Prepare the journal entry to record the interest and amortization.

Answer to Problem 6PSA

Explanation of Solution

Want to see more full solutions like this?

Chapter 10 Solutions

A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest. To determine: Total amount of each installment payment.

Videos

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest. To determine: Total amount of each installment payment.

Answer to Problem 6PSA

Explanation of Solution

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest. To determine: The computation of the statement showing the amortization amount.

Answer to Problem 6PSA

Explanation of Solution

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest. To determine: Prepare the journal entry to record the interest and amortization.

Answer to Problem 6PSA

Explanation of Solution

Want to see more full solutions like this?

Chapter 10 Solutions

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: Total amount of each installment payment.

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: The computation of the statement showing the amortization amount.

Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.

To determine: Prepare the journal entry to record the interest and amortization.