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 method it is an amortization model that apportions the amount of bond discount or premium based on the market interest rate. In this method, first, interest expense is calculated based on the current carrying amount and market interest rate and cash interest payment is calculated based on the face value amount and stated interest rate and then, the different between the cash interest payment and interest expense is amortized as a decrease to the discount or premium. To Journalize: Sale of the bonds.

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Answer 1

Question

Chapter 12, Problem 12.24EX

a.

1.

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

In this method, first, interest expense is calculated based on the current carrying amount and market interest rate and cash interest payment is calculated based on the face value amount and stated interest rate and then, the different between the cash interest payment and interest expense is amortized as a decrease to the discount or premium.

To Journalize: Sale of the bonds.

2.

To determine

To Journalize: First semiannual interest payment and amortization of premium on bonds.

3.

To determine

To Journalize: Second semiannual interest payment and amortization of premium on bonds.

b.

To determine

The amount of bond interest expense for 2016.

c)

To determine

To explain: The reason why the company was able to issue the bonds for $23,829,684 rather than $22,000,000.

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Problem No. 2 The trial balance of Cleint Lumanao Nacho Supplies on February 10, 2025, before accepting Shila Tajonera as partner is shown as follows: Account Title Debit Credit Ato Cash reening smuo P 100,000 Accounts Receivable 250,000 Allowance for Uncollectible Accounts P 20,000 o Merchandise Inventory Equipment Accumulated Depreciation Accounts Payable Notes Payable 120,000 275,000 55,000 50,000 82,000 538,000 Lumanao, Capital Total P 745,000 P 745,000 Tajonera offered to invest cash to get a capital credit equal to one-half of Lumanao's capital after giving effect to the adjustments below. Lumanao accepted the offer. Valuation of some of the assets and liabilities of Lumanao, as agreed by the partners, are the following: • The merchandise is to be valued at P93,000. The accounts receivable is estimated to be 90% collectible. • The equipment is to be valued at P200,000. The partners also agreed that the name of the partnership will be Nacho Business. Required: 1. In the books of…

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Answer 2

Question

Chapter 12, Problem 12.24EX

a.

1.

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

In this method, first, interest expense is calculated based on the current carrying amount and market interest rate and cash interest payment is calculated based on the face value amount and stated interest rate and then, the different between the cash interest payment and interest expense is amortized as a decrease to the discount or premium.

To Journalize: Sale of the bonds.

2.

To determine

To Journalize: First semiannual interest payment and amortization of premium on bonds.

3.

To determine

To Journalize: Second semiannual interest payment and amortization of premium on bonds.

b.

To determine

The amount of bond interest expense for 2016.

c)

To determine

To explain: The reason why the company was able to issue the bonds for $23,829,684 rather than $22,000,000.

Expert Solution & Answer

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Answer 3

Question

Chapter 12, Problem 12.24EX

a.

1.

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

In this method, first, interest expense is calculated based on the current carrying amount and market interest rate and cash interest payment is calculated based on the face value amount and stated interest rate and then, the different between the cash interest payment and interest expense is amortized as a decrease to the discount or premium.

To Journalize: Sale of the bonds.

2.

To determine

To Journalize: First semiannual interest payment and amortization of premium on bonds.

3.

To determine

To Journalize: Second semiannual interest payment and amortization of premium on bonds.

b.

To determine

The amount of bond interest expense for 2016.

c)

To determine

To explain: The reason why the company was able to issue the bonds for $23,829,684 rather than $22,000,000.

Expert Solution & Answer

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Answer 4

Question

Chapter 12, Problem 12.24EX

a.

1.

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

In this method, first, interest expense is calculated based on the current carrying amount and market interest rate and cash interest payment is calculated based on the face value amount and stated interest rate and then, the different between the cash interest payment and interest expense is amortized as a decrease to the discount or premium.

To Journalize: Sale of the bonds.

2.

To determine

To Journalize: First semiannual interest payment and amortization of premium on bonds.

3.

To determine

To Journalize: Second semiannual interest payment and amortization of premium on bonds.

b.

To determine

The amount of bond interest expense for 2016.

c)

To determine

To explain: The reason why the company was able to issue the bonds for $23,829,684 rather than $22,000,000.

Expert Solution & Answer

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Answer 5

Chapter 12, Problem 12.24EX

a.

1.

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

In this method, first, interest expense is calculated based on the current carrying amount and market interest rate and cash interest payment is calculated based on the face value amount and stated interest rate and then, the different between the cash interest payment and interest expense is amortized as a decrease to the discount or premium.

To Journalize: Sale of the bonds.

2.

To determine

To Journalize: First semiannual interest payment and amortization of premium on bonds.

3.

To determine

To Journalize: Second semiannual interest payment and amortization of premium on bonds.

b.

To determine

The amount of bond interest expense for 2016.

c)

To determine

To explain: The reason why the company was able to issue the bonds for $23,829,684 rather than $22,000,000.

Answer 6

Chapter 12, Problem 12.24EX

a.

1.

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

In this method, first, interest expense is calculated based on the current carrying amount and market interest rate and cash interest payment is calculated based on the face value amount and stated interest rate and then, the different between the cash interest payment and interest expense is amortized as a decrease to the discount or premium.

To Journalize: Sale of the bonds.

Answer 7

Chapter 12, Problem 12.24EX

a.

1.

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

In this method, first, interest expense is calculated based on the current carrying amount and market interest rate and cash interest payment is calculated based on the face value amount and stated interest rate and then, the different between the cash interest payment and interest expense is amortized as a decrease to the discount or premium.

To Journalize: Sale of the bonds.

Answer 8

2.

To determine

To Journalize: First semiannual interest payment and amortization of premium on bonds.

Answer 9

2.

To determine

To Journalize: First semiannual interest payment and amortization of premium on bonds.

Answer 10

3.

To determine

To Journalize: Second semiannual interest payment and amortization of premium on bonds.

Answer 11

3.

To determine

To Journalize: Second semiannual interest payment and amortization of premium on bonds.

Answer 12

b.

To determine

The amount of bond interest expense for 2016.

Answer 13

b.

To determine

The amount of bond interest expense for 2016.

Answer 14

c)

To determine

To explain: The reason why the company was able to issue the bonds for $23,829,684 rather than $22,000,000.

Answer 15

c)

To determine

To explain: The reason why the company was able to issue the bonds for $23,829,684 rather than $22,000,000.

Answer 16

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Answer 17

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Answer 18

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Answer 19

Ch. 12 - Describe the two distinct obligations incurred by...Ch. 12 - Explain the meaning of each of the following terms...Ch. 12 - Prob. 3DQ Ch. 12 - A corporation issues 26,000,000 of 9% bonds to...Ch. 12 - Prob. 5DQ Ch. 12 - The following data relate to a 2,000,000, 8% bond...Ch. 12 - Prob. 7DQ Ch. 12 - Prob. 8DQ Ch. 12 - Fleeson Company needs additional funds to purchase...Ch. 12 - Prob. 10DQ

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

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To Journalize: First semiannual interest payment and amortization of premium on bonds.

To Journalize: Second semiannual interest payment and amortization of premium on bonds.

The amount of bond interest expense for 2016.

To explain: The reason why the company was able to issue the bonds for $23,829,684 rather than $22,000,000.

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Chapter 12 Solutions