Working Papers for Warren/Reeve/Duchac's Corporate Financial Accounting, 14th
Working Papers for Warren/Reeve/Duchac's Corporate Financial Accounting, 14th
14th Edition
ISBN: 9781305878839
Author: Carl Warren, Jonathan Duchac, James M. Reeve
Publisher: Cengage Learning
Question
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Chapter 11, Problem 11.5BPR

1.

To determine

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

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

To prepare: Journal entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.

2.

A.

To determine

To prepare: Journal entry to record first semiannual interest payment and amortization of bond premium on December 31, Year 1.

B.

To determine

To prepare: Journal entry to record second interest payment and amortization of bond discount on June 30, Year 2.

3.

To determine

The amount of total interest expense for Year 1.

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Chapter 11 Solutions

Working Papers for Warren/Reeve/Duchac's Corporate Financial Accounting, 14th

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