Horngren's Financial & Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780133866292
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 12, Problem 12.5SE
Determining bond amounts
Quick Drive-Ins borrowed money by issuing $4,000,000 of 4% bonds payable at 96.5.
Requirements
1. How much cash did Quick receive when it issued the bonds payable?
2. How much must Quick pay back at maturity?
3. How much cash interest will Quick pay each six months?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
2. Deccan Corporation issued 10% 1,000,000 bond on January 1.2011 The market rate of interest is 12% Interest is paid semi annual The term of the bond is 5 years. V. How much would an investor pay for this bond?
VI. Make Journal entries to record the receipt of cash from the sale of the bond in Deccan Corporations books VII. Amortize the bond discount over the term of bond using a. Straight line Method b. interest rate method
VIII. Make Journal entries to record the payment of interest on 31 December 2011.
Your company issues $3,500,000 bonds at 7% interest with annual interest payments. Bonds
have a maturity date in 30 years. At the time of issue, the market rate is 5%.
а.
Calculate the issue price of the bond.
b. Record the journal entry for the issue of the bond
С.
Record the journal entry for the first interest payment
d. How much interest is recorded on the income statement in Year 1?
е.
Record the journal entry for the final entry at the bond maturity date.
Q4. A long term bond with a face value of $10,000 has a bond interest rate of 6% per year pay:
quarterly. What are the amount of the interest payments?
(a) $160 (b) $150 (c) $170 (d) $155 (e) your answer (... ......)
Chapter 12 Solutions
Horngren's Financial & Managerial Accounting (5th Edition)
Ch. 12 - Flipco signed a 10-year note payable on January 1,...Ch. 12 - Daniels's bonds payable carry a stated interest...Ch. 12 - A bond that matures in installments at regular...Ch. 12 - Prob. 4QCCh. 12 - Nicholas Smith Fitness Gym has 700,000 of 20-year...Ch. 12 - Prob. 6QCCh. 12 - Prob. 7QCCh. 12 - The debt to equity ratio is calculated as a. Total...Ch. 12 - Mike Gordon wishes to have 80,000 in five years....Ch. 12 - Prob. 10BQC
Ch. 12 - Prob. 1RQCh. 12 - What is an amortization schedule?Ch. 12 - What is a mortgage payable?Ch. 12 - What is a bond payable?Ch. 12 - What is the difference between the stated interest...Ch. 12 - When does a discount on bonds payable occur?Ch. 12 - When does a premium on bonds payable occur?Ch. 12 - When a bond is issued, what is its present value?Ch. 12 - Why would a company choose to issue bonds instead...Ch. 12 - Prob. 10RQCh. 12 - Prob. 11RQCh. 12 - What is the normal balance of the account Discount...Ch. 12 - Prob. 13RQCh. 12 - Prob. 14RQCh. 12 - Prob. 15RQCh. 12 - Prob. 16RQCh. 12 - Prob. 17RQCh. 12 - Prob. 18ARQCh. 12 - Prob. 19ARQCh. 12 - Prob. 20ARQCh. 12 - Prob. 21BRQCh. 12 - Prob. 12.1SECh. 12 - Prob. 12.2SECh. 12 - Determining bond prices Bond prices depend on the...Ch. 12 - Prob. 12.4SECh. 12 - Determining bond amounts Quick Drive-Ins borrowed...Ch. 12 - Prob. 12.6SECh. 12 - Prob. 12.7SECh. 12 - Prob. 12.8SECh. 12 - Prob. 12.9SECh. 12 - Prob. 12.10SECh. 12 - Prob. 12.11SECh. 12 - Computing the debt to equity ratio Richards...Ch. 12 - Prob. 12.13SECh. 12 - Prob. 12.14SECh. 12 - Prob. 12.15SECh. 12 - Prob. 12.16SECh. 12 - Accounting for long-term notes payable...Ch. 12 - Prob. 12.18ECh. 12 - Prob. 12.19ECh. 12 - Prob. 12.20ECh. 12 - Prob. 12.21ECh. 12 - Prob. 12.22ECh. 12 - Prob. 12.23ECh. 12 - Prob. 12.24ECh. 12 - Prob. 12.25ECh. 12 - Prob. 12.26ECh. 12 - Prob. 12.27ECh. 12 - Prob. 12.28ECh. 12 - Prob. 12.29ECh. 12 - Prob. 12.30ECh. 12 - Journalizing liability transactions and reporting...Ch. 12 - Analyzing, journalizing, and reporting bond...Ch. 12 - Analyzing and journalizing bond transactions On...Ch. 12 - Analyzing and journalizing bond transactions On...Ch. 12 - Prob. 12.35APCh. 12 - Prob. 12.36APCh. 12 - A Determining the present value of bonds payable...Ch. 12 - Prob. 12.38BPCh. 12 - Prob. 12.39BPCh. 12 - Analyzing and journalizing bond transactions On...Ch. 12 - Analyzing and journalizing bond transactions On...Ch. 12 - Prob. 12.42BPCh. 12 - Prob. 12.43BPCh. 12 - Prob. 12.44BPCh. 12 - Prob. 12.45CPCh. 12 - The following questions are not related....Ch. 12 - Raffle's Kids, a nonprofit organization that...Ch. 12 - Bill and Edna had been married two years and had...Ch. 12 - Prob. 12.1CTFSC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Superior Drive-Ins Ltd. borrowed money by issuing $4,500,000 of 6% bonds payable at 96.5 on July 1, 2018. The bonds are 10-year bonds and pay interest each January 1 and July 1. Requirements 1. How much cash did Superior receive when it issued the bonds payable? Journalize this transaction. 2. How much must Superior pay back at maturity? When is the maturity date? 3. How much cash interest will Superior pay each six months? 4. How much interest expense will Superior report each six months? Use the straight-line amortization method. Journalize the entries for the accrual of interest and amortization of discount on December 31, 2018, and the payment of interest on January 1, 2019.arrow_forwardDiscounting a bond dealer in a bank, the principal value of which is due at the end of 6 months at an average interest of 10% annually, and it was found that the difference between the trade discount and the correct discount is 25 riyals. If you know that the interest rate the discount rate, calculate the following: I) The principal value of the bond. II) Trade discount and trade present value. Correct discount and correct present value. III)arrow_forwardKnowledge Check A bond issue of 6%, 7-year bonds with a face value of $35,500 with interest payable annually on January 1. Market interest rate is 8%. What is the present value of the bonds? (For calculation purposes, use five decimal places as displayed in the factor table provided. Round your answers to O decimal places (e.g., 5,275).) Click here to view the factor table. Present value of interest payments $ Present value of principal $ Present value of the bonds $arrow_forward
- On January 1, a company issues bonds: Par Value: $2,000,000 Bond Term, in years: 10 Interest Payments: 2x/year Stated Interest Rate: 8% Market Interest Rate: 6% How much will the bond sell for? What dollar amount will be booked to Bonds Payable on the date of sale? How much is Interest Expense on the FIRST interest payment? How much is the amortization of the Bond Premium on the FIRST interest payment? How much is the Interest Expense on the SECOND interest payment? How much is the Amortization of the Premium on the SECOND interest payment?arrow_forwardFind the value of 1,000 bonds with annual interest rate of 5% making semiannual interest payment for 2 years, after which the bonds matures and principal must be repaid. Yield to maturity is 3%. a• 888.49 b• 92.93 c• 1,000 d• 981.42arrow_forwardFinancial Statement Impact On July 1, 2014 Botwin Company issues $1,000,000, 10%, bonds payable due in 10 years. Click here and use the slider to select the relevant interest rate to answer the following questions. 2.a. If the market rate of interest is 14%, what is the selling price of the bonds payable? b. If the market rate of interest is 14%, what is the discount on the bonds payable? c. If the market rate of interest is 14%, what is the carrying amount of the bonds payable on the date of issuance?arrow_forward
- Please answer all yellow boxes, and show the formulas (work). Thank you!arrow_forwardFinancial Statement Impact On July 1, 2014 Botwin Company issues $1,000,000, 10%, bonds payable due in 10 years. Click here and use the slider to select the relevant interest rate to answer the following questions. 1.a. If the market rate of interest is 12%, what is the issue price of the bonds payable? b. If the market rate of interest is 12%, what is the discount on the bonds payable? c. If the market rate of interest is 12%, what is the carrying amount of the bonds payable on the date of issuance?arrow_forwardplease explain how each section is calculated. And how to come up with the numbersarrow_forward
- Assume that a bond will make payments every six months as shown on the following timeline (using six-month periods): The timeline starts at Period 0 and ends at Period 20. The timeline shows a cash flow of $ 20.72 each from Period 1 to Period 19. In Period 20, the cash flow is $ 20.72 plus $ 1,000. Period0121920 Cash Flows$20.72$20.72$20.72$20.72+$1,000 a. What is the maturity of the bond (in years)? b. What is the coupon rate (as a percentage)? c. What is the face value?arrow_forward1arrow_forwardCalculate the selling price of the following 5-year bond issue: e. # bonds Bond rate of interest Interest payable Market rate of interest Bond maturity (face) value 600 5.8% semi-annually 6.0% $1,000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT
What is Fund Accounting?; Author: Aplos;https://www.youtube.com/watch?v=W5D5Dr0j9j4;License: Standard Youtube License