Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations. Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value. Effective-interest method of amortization: It is an amortization model that apportions the amount of bond discount or premium based on the market interest rate. Present Value: The value of today’s amount expected to be paid or received in the future at a compound interest rate is called as present value. To calculate: The amount of cash proceeds (present value) from the sale of the bonds.

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Answer 1

Question

Chapter 11, Problem 11.16EX

A.

To determine

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

Effective-interest method of amortization: It is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

Present Value: The value of today’s amount expected to be paid or received in the future at a compound interest rate is called as present value.

To calculate: The amount of cash proceeds (present value) from the sale of the bonds.

B.

To determine

To calculate: The amount of premium to be amortized for the first semiannual interest payment period.

C.

To determine

To calculate: The amount of premium to be amortized for the second semiannual interest payment period.

D.

To determine

The amount of bond interest expense for first year.

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Answer 2

Question

Chapter 11, Problem 11.16EX

A.

To determine

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

Effective-interest method of amortization: It is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

Present Value: The value of today’s amount expected to be paid or received in the future at a compound interest rate is called as present value.

To calculate: The amount of cash proceeds (present value) from the sale of the bonds.

B.

To determine

To calculate: The amount of premium to be amortized for the first semiannual interest payment period.

C.

To determine

To calculate: The amount of premium to be amortized for the second semiannual interest payment period.

D.

To determine

The amount of bond interest expense for first year.

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Answer 3

Question

Chapter 11, Problem 11.16EX

A.

To determine

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

Effective-interest method of amortization: It is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

Present Value: The value of today’s amount expected to be paid or received in the future at a compound interest rate is called as present value.

To calculate: The amount of cash proceeds (present value) from the sale of the bonds.

B.

To determine

To calculate: The amount of premium to be amortized for the first semiannual interest payment period.

C.

To determine

To calculate: The amount of premium to be amortized for the second semiannual interest payment period.

D.

To determine

The amount of bond interest expense for first year.

Expert Solution & Answer

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Answer 4

Question

Chapter 11, Problem 11.16EX

A.

To determine

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

Effective-interest method of amortization: It is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

Present Value: The value of today’s amount expected to be paid or received in the future at a compound interest rate is called as present value.

To calculate: The amount of cash proceeds (present value) from the sale of the bonds.

B.

To determine

To calculate: The amount of premium to be amortized for the first semiannual interest payment period.

C.

To determine

To calculate: The amount of premium to be amortized for the second semiannual interest payment period.

D.

To determine

The amount of bond interest expense for first year.

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Answer 5

Chapter 11, Problem 11.16EX

A.

To determine

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

Effective-interest method of amortization: It is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

Present Value: The value of today’s amount expected to be paid or received in the future at a compound interest rate is called as present value.

To calculate: The amount of cash proceeds (present value) from the sale of the bonds.

B.

To determine

To calculate: The amount of premium to be amortized for the first semiannual interest payment period.

C.

To determine

To calculate: The amount of premium to be amortized for the second semiannual interest payment period.

D.

To determine

The amount of bond interest expense for first year.

Answer 6

Chapter 11, Problem 11.16EX

A.

To determine

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

Effective-interest method of amortization: It is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

Present Value: The value of today’s amount expected to be paid or received in the future at a compound interest rate is called as present value.

To calculate: The amount of cash proceeds (present value) from the sale of the bonds.

Answer 7

Chapter 11, Problem 11.16EX

A.

To determine

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

Effective-interest method of amortization: It is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

Present Value: The value of today’s amount expected to be paid or received in the future at a compound interest rate is called as present value.

To calculate: The amount of cash proceeds (present value) from the sale of the bonds.

Answer 8

B.

To determine

To calculate: The amount of premium to be amortized for the first semiannual interest payment period.

Answer 9

B.

To determine

To calculate: The amount of premium to be amortized for the first semiannual interest payment period.

Answer 10

C.

To determine

To calculate: The amount of premium to be amortized for the second semiannual interest payment period.

Answer 11

C.

To determine

To calculate: The amount of premium to be amortized for the second semiannual interest payment period.

Answer 12

D.

To determine

The amount of bond interest expense for first year.

Answer 13

D.

To determine

The amount of bond interest expense for first year.

Answer 14

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Answer 15

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Answer 16

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Answer 17

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Solution Summary: The author explains the effective-interest method of amortization, which apportions the amount of bond discount or premium based on the market interest rate.

To calculate: The amount of premium to be amortized for the first semiannual interest payment period.

To calculate: The amount of premium to be amortized for the second semiannual interest payment period.

The amount of bond interest expense for first year.

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Chapter 11 Solutions