Time value of money: Any amount invested today earns an additional income, called interest income, after a certain period. This is called as time value of money. 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. 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. Amortization Schedule: An amortization schedule is a table that shows the details of each loan payment allocated between the principal amount and the overdue interest along with the beginning and ending balance of the loan. From the amortization schedule of the loan, the periodical interest expense, total interest expense and total payment made are known. To calculate: The amount (present value) that company receive upon the issuance of the bonds payable.

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Answer 1

Question

Chapter 12, Problem 12.45BP

1.

To determine

Time value of money: Any amount invested today earns an additional income, called interest income, after a certain period. This is called as time value of money.

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.

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.

Amortization Schedule: An amortization schedule is a table that shows the details of each loan payment allocated between the principal amount and the overdue interest along with the beginning and ending balance of the loan. From the amortization schedule of the loan, the periodical interest expense, total interest expense and total payment made are known.

To calculate: The amount (present value) that company receive upon the issuance of the bonds payable.

2.

To determine

To prepare: An amortization table using the effective interest amortization method for the first two semiannual interest periods.

3.

To determine

To Journalize: Issuance of the bonds on January 1, 2018.

To determine

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

To determine

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

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You are employed by an external audit firm that is hired by JBltd, a privately owned incorporated business. Accounting records are maintained on a computer using proprietary software. You have worked on the audit for three years and this year you are in charge of the audit. Your assistant is a newly recruited business graduate who has done an accounting course but has no practical experience. Because of the small size of the company there is limited opportunity for segregation of duties. You decide, as in previous years, that the appropriate audit strategy is to obtain evidence primarily through the performance of substantive procedures. You also plan to perform the audit around the computer as the proprietary software is known to be reliable and details of all transactions and balances can be readily printed out. On arriving at the company's premises in December 2019 to perform the final audit on the 31 October 2019 financial statements, you obtain a copy of the year end bank…

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Answer 2

Question

Chapter 12, Problem 12.45BP

1.

To determine

Time value of money: Any amount invested today earns an additional income, called interest income, after a certain period. This is called as time value of money.

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.

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.

Amortization Schedule: An amortization schedule is a table that shows the details of each loan payment allocated between the principal amount and the overdue interest along with the beginning and ending balance of the loan. From the amortization schedule of the loan, the periodical interest expense, total interest expense and total payment made are known.

To calculate: The amount (present value) that company receive upon the issuance of the bonds payable.

2.

To determine

To prepare: An amortization table using the effective interest amortization method for the first two semiannual interest periods.

3.

To determine

To Journalize: Issuance of the bonds on January 1, 2018.

To determine

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

To determine

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

Expert Solution & Answer

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Answer 3

Question

Chapter 12, Problem 12.45BP

1.

To determine

Time value of money: Any amount invested today earns an additional income, called interest income, after a certain period. This is called as time value of money.

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.

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.

Amortization Schedule: An amortization schedule is a table that shows the details of each loan payment allocated between the principal amount and the overdue interest along with the beginning and ending balance of the loan. From the amortization schedule of the loan, the periodical interest expense, total interest expense and total payment made are known.

To calculate: The amount (present value) that company receive upon the issuance of the bonds payable.

2.

To determine

To prepare: An amortization table using the effective interest amortization method for the first two semiannual interest periods.

3.

To determine

To Journalize: Issuance of the bonds on January 1, 2018.

To determine

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

To determine

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

Expert Solution & Answer

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Answer 4

Question

Chapter 12, Problem 12.45BP

1.

To determine

Time value of money: Any amount invested today earns an additional income, called interest income, after a certain period. This is called as time value of money.

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.

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.

Amortization Schedule: An amortization schedule is a table that shows the details of each loan payment allocated between the principal amount and the overdue interest along with the beginning and ending balance of the loan. From the amortization schedule of the loan, the periodical interest expense, total interest expense and total payment made are known.

To calculate: The amount (present value) that company receive upon the issuance of the bonds payable.

2.

To determine

To prepare: An amortization table using the effective interest amortization method for the first two semiannual interest periods.

3.

To determine

To Journalize: Issuance of the bonds on January 1, 2018.

To determine

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

To determine

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

Expert Solution & Answer

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Answer 5

Chapter 12, Problem 12.45BP

1.

To determine

Time value of money: Any amount invested today earns an additional income, called interest income, after a certain period. This is called as time value of money.

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.

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.

Amortization Schedule: An amortization schedule is a table that shows the details of each loan payment allocated between the principal amount and the overdue interest along with the beginning and ending balance of the loan. From the amortization schedule of the loan, the periodical interest expense, total interest expense and total payment made are known.

To calculate: The amount (present value) that company receive upon the issuance of the bonds payable.

2.

To determine

To prepare: An amortization table using the effective interest amortization method for the first two semiannual interest periods.

3.

To determine

To Journalize: Issuance of the bonds on January 1, 2018.

To determine

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

To determine

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

Answer 6

Chapter 12, Problem 12.45BP

1.

To determine

Time value of money: Any amount invested today earns an additional income, called interest income, after a certain period. This is called as time value of money.

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.

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.

Amortization Schedule: An amortization schedule is a table that shows the details of each loan payment allocated between the principal amount and the overdue interest along with the beginning and ending balance of the loan. From the amortization schedule of the loan, the periodical interest expense, total interest expense and total payment made are known.

To calculate: The amount (present value) that company receive upon the issuance of the bonds payable.

Answer 7

Chapter 12, Problem 12.45BP

1.

To determine

Time value of money: Any amount invested today earns an additional income, called interest income, after a certain period. This is called as time value of money.

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.

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.

Amortization Schedule: An amortization schedule is a table that shows the details of each loan payment allocated between the principal amount and the overdue interest along with the beginning and ending balance of the loan. From the amortization schedule of the loan, the periodical interest expense, total interest expense and total payment made are known.

To calculate: The amount (present value) that company receive upon the issuance of the bonds payable.

Answer 8

2.

To determine

To prepare: An amortization table using the effective interest amortization method for the first two semiannual interest periods.

Answer 9

2.

To determine

To prepare: An amortization table using the effective interest amortization method for the first two semiannual interest periods.

Answer 10

3.

To determine

To Journalize: Issuance of the bonds on January 1, 2018.

Answer 11

3.

To determine

To Journalize: Issuance of the bonds on January 1, 2018.

Answer 12

To determine

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

Answer 13

To determine

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

Answer 14

To determine

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

Answer 15

To determine

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

Answer 16

Expert Solution & Answer

Answer 17

Expert Solution & Answer

Answer 18

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Answer 19

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To prepare: An amortization table using the effective interest amortization method for the first two semiannual interest periods.

To Journalize: Issuance of the bonds on January 1, 2018.

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

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

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