Corporate Financial Accounting
14th Edition
ISBN: 9781305653535
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 11, Problem 11.15EX
Amortize premium by interest method
Shunda Corporation wholesales parts to appliance manufacturers. On January 1, Shunda issued $22,000,000 of five-year, 9% bonds at a market (effective) interest rate of 7%, receiving cash of $23,829,684. Interest is payable semiannually. Shunda’s fiscal year begins on January 1. The company uses the interest method.
A. Journalize the entries to record the following:
1. Sale of the bonds.
2. First semiannual interest payment, including amortization of premium. (Round to the nearest dollar.)
3. Second semiannual interest payment, including amortization of premium. (Round to the nearest dollar.)
B. Determine the bond interest expense for the first year.
C. Explain why the company was able to issue the bonds for $23,829,684 rather than for the face amount of $22,000,000.
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Chapter 11 Solutions
Corporate Financial Accounting
Ch. 11 - Describe the two distinct obligations incurred by...Ch. 11 - Explain the meaning of each of the following terms...Ch. 11 - If you asked your broker to purchase for you a 12%...Ch. 11 - A corporation issues 26,000,000 of 9% bonds to...Ch. 11 - If bonds issued by a corporation are sold at a...Ch. 11 - Prob. 6DQCh. 11 - Bonds Payable has a balance of 5,000,000 and...Ch. 11 - Prob. 8DQCh. 11 - Prob. 9DQCh. 11 - Issuing bonds at face amount On January 1, the...
Ch. 11 - Issuing bonds at a discount On the first day of...Ch. 11 - Prob. 11.3BECh. 11 - Prob. 11.4BECh. 11 - Prob. 11.5BECh. 11 - Redemption of bonds payable A 500,000 bond issue...Ch. 11 - Prob. 11.1EXCh. 11 - Entries for issuing bonds Thomson Co. produces and...Ch. 11 - Prob. 11.3EXCh. 11 - Prob. 11.4EXCh. 11 - Entries for issuing and calling bonds; loss Hoover...Ch. 11 - Entries for issuing and calling bonds; gain Mia...Ch. 11 - Prob. 11.7EXCh. 11 - Present value of amounts due Assume that you are...Ch. 11 - Prob. 11.9EXCh. 11 - Present value of an annuity On January 1 you win...Ch. 11 - Prob. 11.11EXCh. 11 - Prob. 11.12EXCh. 11 - Present value of bonds payable; premium Moss Co....Ch. 11 - Amortize discount by interest method On the first...Ch. 11 - Amortize premium by interest method Shunda...Ch. 11 - Prob. 11.16EXCh. 11 - Prob. 11.17EXCh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 11.2APRCh. 11 - Entries for bonds payable, including bond...Ch. 11 - Prob. 11.4APRCh. 11 - Prob. 11.5APRCh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 11.2BPRCh. 11 - Prob. 11.3BPRCh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 11.5BPRCh. 11 - Continuing Company AnalysisAmazon: Times interest...Ch. 11 - Arch Coal:Times interest earned Arch Coal, Inc. is...Ch. 11 - Aeropostale: Times interest earned Aeropostale,...Ch. 11 - Prob. 11.4ADMCh. 11 - Ethics in Action CLG Capital Inc. is a large...Ch. 11 - Prob. 11.3TIF
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