Bonds Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond. Effective interest rate of amortization bond Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but at a constant percentage rate. Adjusting entries Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. The purpose of adjusting entries is to adjust the revenue, and the expenses during the period in which they actually occurs. To Prepare: The journal entry to record issuance of bonds on February 1, 2016.

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Answer 1

Question

Chapter 14, Problem 14.11E

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but at a constant percentage rate.

Adjusting entries

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. The purpose of adjusting entries is to adjust the revenue, and the expenses during the period in which they actually occurs.

To Prepare: The journal entry to record issuance of bonds on February 1, 2016.

(2)

To determine

To Prepare: The journal entry to record interest on July 31, 2016.

(3)

To determine

To Prepare: The adjustment entry to accrue interest on December 31, 2016.

(4)

To determine

To Prepare: The journal entry to record interest on January 31, 2017.

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Answer 2

Question

Chapter 14, Problem 14.11E

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but at a constant percentage rate.

Adjusting entries

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. The purpose of adjusting entries is to adjust the revenue, and the expenses during the period in which they actually occurs.

To Prepare: The journal entry to record issuance of bonds on February 1, 2016.

(2)

To determine

To Prepare: The journal entry to record interest on July 31, 2016.

(3)

To determine

To Prepare: The adjustment entry to accrue interest on December 31, 2016.

(4)

To determine

To Prepare: The journal entry to record interest on January 31, 2017.

Expert Solution & Answer

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Answer 3

Question

Chapter 14, Problem 14.11E

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but at a constant percentage rate.

Adjusting entries

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. The purpose of adjusting entries is to adjust the revenue, and the expenses during the period in which they actually occurs.

To Prepare: The journal entry to record issuance of bonds on February 1, 2016.

(2)

To determine

To Prepare: The journal entry to record interest on July 31, 2016.

(3)

To determine

To Prepare: The adjustment entry to accrue interest on December 31, 2016.

(4)

To determine

To Prepare: The journal entry to record interest on January 31, 2017.

Expert Solution & Answer

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Answer 4

Question

Chapter 14, Problem 14.11E

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but at a constant percentage rate.

Adjusting entries

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. The purpose of adjusting entries is to adjust the revenue, and the expenses during the period in which they actually occurs.

To Prepare: The journal entry to record issuance of bonds on February 1, 2016.

(2)

To determine

To Prepare: The journal entry to record interest on July 31, 2016.

(3)

To determine

To Prepare: The adjustment entry to accrue interest on December 31, 2016.

(4)

To determine

To Prepare: The journal entry to record interest on January 31, 2017.

Expert Solution & Answer

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Answer 5

Chapter 14, Problem 14.11E

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but at a constant percentage rate.

Adjusting entries

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. The purpose of adjusting entries is to adjust the revenue, and the expenses during the period in which they actually occurs.

To Prepare: The journal entry to record issuance of bonds on February 1, 2016.

(2)

To determine

To Prepare: The journal entry to record interest on July 31, 2016.

(3)

To determine

To Prepare: The adjustment entry to accrue interest on December 31, 2016.

(4)

To determine

To Prepare: The journal entry to record interest on January 31, 2017.

Answer 6

Chapter 14, Problem 14.11E

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but at a constant percentage rate.

Adjusting entries

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. The purpose of adjusting entries is to adjust the revenue, and the expenses during the period in which they actually occurs.

To Prepare: The journal entry to record issuance of bonds on February 1, 2016.

Answer 7

Chapter 14, Problem 14.11E

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but at a constant percentage rate.

Adjusting entries

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. The purpose of adjusting entries is to adjust the revenue, and the expenses during the period in which they actually occurs.

To Prepare: The journal entry to record issuance of bonds on February 1, 2016.

Answer 8

(2)

To determine

To Prepare: The journal entry to record interest on July 31, 2016.

Answer 9

(2)

To determine

To Prepare: The journal entry to record interest on July 31, 2016.

Answer 10

(3)

To determine

To Prepare: The adjustment entry to accrue interest on December 31, 2016.

Answer 11

(3)

To determine

To Prepare: The adjustment entry to accrue interest on December 31, 2016.

Answer 12

(4)

To determine

To Prepare: The journal entry to record interest on January 31, 2017.

Answer 13

(4)

To determine

To Prepare: The journal entry to record interest on January 31, 2017.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 14 - How is periodic interest determined for...Ch. 14 - As a general rule, how should long-term...Ch. 14 - How are bonds and notes the same? How do they...Ch. 14 - What information is contained in a bond indenture?...Ch. 14 - Prob. 14.5Q Ch. 14 - How is the price determined for a bond (or bond...Ch. 14 - A zero-coupon bond pays no interest. Explain.Ch. 14 - Prob. 14.8Q Ch. 14 - Compare the two commonly used methods of...Ch. 14 - Prob. 14.10Q

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To Prepare: The journal entry to record interest on July 31, 2016.

To Prepare: The adjustment entry to accrue interest on December 31, 2016.

To Prepare: The journal entry to record interest on January 31, 2017.

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