GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD

9th Edition

ISBN: 9781260089042

Author: J. David Spiceland

Publisher: McGraw-Hill Education

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Textbook Question

Chapter 14, Problem 14.22P

Determine bond price; record interest; report bonds at fair value

• LO14–6

On January 1, 2018, NFB Visual Aids issued $800,000 of its 20-year, 8% bonds. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. NFB Visual Aids records interest expense at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2018, the fair value of the bonds was $668,000 as determined by their market value in the over-the-counter market.

Required:

1. Determine the price of the bonds at January 1, 2018, and prepare the journal entry to record their issuance.

2. Prepare the journal entry to record interest on June 30, 2018 (the first interest payment).

3. Prepare the journal entry to record interest on December 31, 2018 (the second interest payment).

4. Prepare the journal entry to adjust the bonds to their fair value for presentation in the December 31, 2018, balance sheet.

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Chapter 14, Problem 14.21P

Chapter 14, Problem 14.23P

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Chapter 14 Solutions

GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD

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 - On January 1, 2018, Brandon Electronics issued 85...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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Solution Summary: The author explains that bonds are a kind of interest bearing notes payable, usually issued by companies, universities, and governmental organizations.

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