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 total equal amount of each installment payment.

Question

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Answer 1

Question

Chapter 10, Problem 6PSB

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: The total equal amount of each installment payment.

1.

Expert Solution

Answer to Problem 6PSB

The total equal amount to be made every year constitutes the principal amount and accrued interest amount.

Total amount of each installment is $60,317

Explanation of Solution

Computation of the amount of each installment payment is shown below:

Annual Payment= Present Value of note / PVFA = $150,000/2.48685 = $60,317

PVFA of 10% is 2.48685

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 6PSB

Amortization table and amount showing that is $54,836

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
30/09/2016	$150,000	$150,000×10%=$15,000	$60,317−$15,000=$45,317	$60,317	$150,000−$45,317=$104,683
30/09/2017	$104,683	$104,683×10%=$10,468	$60,317−$10,468=$49,849	$60,317	$104,683−$49,849=$54,834
30/09/2018	$54,834	$54,834×10%=$5,483	$60,317−$5,483=$54,834	$60,317	$54,834−$54,834=$0

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 6PSB

Journal entries to record premium amortization and interest for six months.

Explanation of Solution

Date	Particulars	Debit	Credit
31Dec	Bond Interest Expense($150,000×10%)×3/12=$3,750	$3,750
	Interest Expense		$3,750
	(To record the interest and premium amortization for six months)

Date	Particulars	Debit	Credit
31Oct	Bond Interest Expense($150,000×10%)−$3,750=$11,250	$11,250
	Interest payable	$3,750
	Notes payable($60,317−$15,000)=$45,317	$45,317
	Cash		$60,317
	(To record initial payment towards the installment note)

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Answer 2

Question

Chapter 10, Problem 6PSB

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: The total equal amount of each installment payment.

1.

Expert Solution

Answer to Problem 6PSB

The total equal amount to be made every year constitutes the principal amount and accrued interest amount.

Total amount of each installment is $60,317

Explanation of Solution

Computation of the amount of each installment payment is shown below:

Annual Payment= Present Value of note / PVFA = $150,000/2.48685 = $60,317

PVFA of 10% is 2.48685

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 6PSB

Amortization table and amount showing that is $54,836

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
30/09/2016	$150,000	$150,000×10%=$15,000	$60,317−$15,000=$45,317	$60,317	$150,000−$45,317=$104,683
30/09/2017	$104,683	$104,683×10%=$10,468	$60,317−$10,468=$49,849	$60,317	$104,683−$49,849=$54,834
30/09/2018	$54,834	$54,834×10%=$5,483	$60,317−$5,483=$54,834	$60,317	$54,834−$54,834=$0

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 6PSB

Journal entries to record premium amortization and interest for six months.

Explanation of Solution

Date	Particulars	Debit	Credit
31Dec	Bond Interest Expense($150,000×10%)×3/12=$3,750	$3,750
	Interest Expense		$3,750
	(To record the interest and premium amortization for six months)

Date	Particulars	Debit	Credit
31Oct	Bond Interest Expense($150,000×10%)−$3,750=$11,250	$11,250
	Interest payable	$3,750
	Notes payable($60,317−$15,000)=$45,317	$45,317
	Cash		$60,317
	(To record initial payment towards the installment note)

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Answer 3

Question

Chapter 10, Problem 6PSB

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: The total equal amount of each installment payment.

1.

Expert Solution

Answer to Problem 6PSB

The total equal amount to be made every year constitutes the principal amount and accrued interest amount.

Total amount of each installment is $60,317

Explanation of Solution

Computation of the amount of each installment payment is shown below:

Annual Payment= Present Value of note / PVFA = $150,000/2.48685 = $60,317

PVFA of 10% is 2.48685

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 6PSB

Amortization table and amount showing that is $54,836

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
30/09/2016	$150,000	$150,000×10%=$15,000	$60,317−$15,000=$45,317	$60,317	$150,000−$45,317=$104,683
30/09/2017	$104,683	$104,683×10%=$10,468	$60,317−$10,468=$49,849	$60,317	$104,683−$49,849=$54,834
30/09/2018	$54,834	$54,834×10%=$5,483	$60,317−$5,483=$54,834	$60,317	$54,834−$54,834=$0

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 6PSB

Journal entries to record premium amortization and interest for six months.

Explanation of Solution

Date	Particulars	Debit	Credit
31Dec	Bond Interest Expense($150,000×10%)×3/12=$3,750	$3,750
	Interest Expense		$3,750
	(To record the interest and premium amortization for six months)

Date	Particulars	Debit	Credit
31Oct	Bond Interest Expense($150,000×10%)−$3,750=$11,250	$11,250
	Interest payable	$3,750
	Notes payable($60,317−$15,000)=$45,317	$45,317
	Cash		$60,317
	(To record initial payment towards the installment note)

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Answer 4

Question

Chapter 10, Problem 6PSB

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: The total equal amount of each installment payment.

1.

Expert Solution

Answer to Problem 6PSB

The total equal amount to be made every year constitutes the principal amount and accrued interest amount.

Total amount of each installment is $60,317

Explanation of Solution

Computation of the amount of each installment payment is shown below:

Annual Payment= Present Value of note / PVFA = $150,000/2.48685 = $60,317

PVFA of 10% is 2.48685

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 6PSB

Amortization table and amount showing that is $54,836

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
30/09/2016	$150,000	$150,000×10%=$15,000	$60,317−$15,000=$45,317	$60,317	$150,000−$45,317=$104,683
30/09/2017	$104,683	$104,683×10%=$10,468	$60,317−$10,468=$49,849	$60,317	$104,683−$49,849=$54,834
30/09/2018	$54,834	$54,834×10%=$5,483	$60,317−$5,483=$54,834	$60,317	$54,834−$54,834=$0

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 6PSB

Journal entries to record premium amortization and interest for six months.

Explanation of Solution

Date	Particulars	Debit	Credit
31Dec	Bond Interest Expense($150,000×10%)×3/12=$3,750	$3,750
	Interest Expense		$3,750
	(To record the interest and premium amortization for six months)

Date	Particulars	Debit	Credit
31Oct	Bond Interest Expense($150,000×10%)−$3,750=$11,250	$11,250
	Interest payable	$3,750
	Notes payable($60,317−$15,000)=$45,317	$45,317
	Cash		$60,317
	(To record initial payment towards the installment note)

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Answer 5

Chapter 10, Problem 6PSB

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: The total equal amount of each installment payment.

1.

Expert Solution

Answer to Problem 6PSB

The total equal amount to be made every year constitutes the principal amount and accrued interest amount.

Total amount of each installment is $60,317

Explanation of Solution

Computation of the amount of each installment payment is shown below:

Annual Payment= Present Value of note / PVFA = $150,000/2.48685 = $60,317

PVFA of 10% is 2.48685

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 6PSB

Amortization table and amount showing that is $54,836

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
30/09/2016	$150,000	$150,000×10%=$15,000	$60,317−$15,000=$45,317	$60,317	$150,000−$45,317=$104,683
30/09/2017	$104,683	$104,683×10%=$10,468	$60,317−$10,468=$49,849	$60,317	$104,683−$49,849=$54,834
30/09/2018	$54,834	$54,834×10%=$5,483	$60,317−$5,483=$54,834	$60,317	$54,834−$54,834=$0

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 6PSB

Journal entries to record premium amortization and interest for six months.

Explanation of Solution

Date	Particulars	Debit	Credit
31Dec	Bond Interest Expense($150,000×10%)×3/12=$3,750	$3,750
	Interest Expense		$3,750
	(To record the interest and premium amortization for six months)

Date	Particulars	Debit	Credit
31Oct	Bond Interest Expense($150,000×10%)−$3,750=$11,250	$11,250
	Interest payable	$3,750
	Notes payable($60,317−$15,000)=$45,317	$45,317
	Cash		$60,317
	(To record initial payment towards the installment note)

Answer 6

Chapter 10, Problem 6PSB

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: The total equal amount of each installment payment.

1.

Expert Solution

Answer to Problem 6PSB

The total equal amount to be made every year constitutes the principal amount and accrued interest amount.

Total amount of each installment is $60,317

Explanation of Solution

Computation of the amount of each installment payment is shown below:

Annual Payment= Present Value of note / PVFA = $150,000/2.48685 = $60,317

PVFA of 10% is 2.48685

Answer 7

Chapter 10, Problem 6PSB

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: The total equal amount of each installment payment.

Answer 8

1.

Expert Solution

Answer to Problem 6PSB

The total equal amount to be made every year constitutes the principal amount and accrued interest amount.

Total amount of each installment is $60,317

Answer 9

1.

Expert Solution

Answer 10

1.

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Computation of the amount of each installment payment is shown below:

Annual Payment= Present Value of note / PVFA = $150,000/2.48685 = $60,317

PVFA of 10% is 2.48685

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 6PSB

Amortization table and amount showing that is $54,836

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
30/09/2016	$150,000	$150,000×10%=$15,000	$60,317−$15,000=$45,317	$60,317	$150,000−$45,317=$104,683
30/09/2017	$104,683	$104,683×10%=$10,468	$60,317−$10,468=$49,849	$60,317	$104,683−$49,849=$54,834
30/09/2018	$54,834	$54,834×10%=$5,483	$60,317−$5,483=$54,834	$60,317	$54,834−$54,834=$0

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 6PSB

Amortization table and amount showing that is $54,836

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
30/09/2016	$150,000	$150,000×10%=$15,000	$60,317−$15,000=$45,317	$60,317	$150,000−$45,317=$104,683
30/09/2017	$104,683	$104,683×10%=$10,468	$60,317−$10,468=$49,849	$60,317	$104,683−$49,849=$54,834
30/09/2018	$54,834	$54,834×10%=$5,483	$60,317−$5,483=$54,834	$60,317	$54,834−$54,834=$0

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 6PSB

Journal entries to record premium amortization and interest for six months.

Explanation of Solution

Date	Particulars	Debit	Credit
31Dec	Bond Interest Expense($150,000×10%)×3/12=$3,750	$3,750
	Interest Expense		$3,750
	(To record the interest and premium amortization for six months)

Date	Particulars	Debit	Credit
31Oct	Bond Interest Expense($150,000×10%)−$3,750=$11,250	$11,250
	Interest payable	$3,750
	Notes payable($60,317−$15,000)=$45,317	$45,317
	Cash		$60,317
	(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 6PSB

Journal entries to record premium amortization and interest for six 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($150,000×10%)×3/12=$3,750	$3,750
	Interest Expense		$3,750
	(To record the interest and premium amortization for six months)

Date	Particulars	Debit	Credit
31Oct	Bond Interest Expense($150,000×10%)−$3,750=$11,250	$11,250
	Interest payable	$3,750
	Notes payable($60,317−$15,000)=$45,317	$45,317
	Cash		$60,317
	(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: The total equal 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: The total equal amount of each installment payment.

Answer to Problem 6PSB

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 6PSB

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 6PSB

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: The total equal 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: The total equal amount of each installment payment.

Answer to Problem 6PSB

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 6PSB

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 6PSB

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: The total equal 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.