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. Discount on bonds payable: It occurs when the bonds are issued at a low price than the face value. Effective-interest amortization method: Effective-interest amortization methodit 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.

Question

Amortize Discount by Interest Method On the first day of its fiscal year, Ebert Company issued $24,000,000 of 5-year, 11% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 12%, resulting in Ebert receiving cash of $23,116,919. The company uses the interest method. a. Journalize the entries to record the following: 1. Sale of the bonds. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. fill in the blank 75d57bff7072073_2 fill in the blank 75d57bff7072073_3 fill in the blank 75d57bff7072073_5 fill in the blank 75d57bff7072073_6 fill in the blank 75d57bff7072073_8 fill in the blank 75d57bff7072073_9 2. First semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. fill in the blank 977a63fce061fea_2 fill in the blank…

Answer 1

Question

Chapter 14, Problem 14.23EX

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.

Discount on bonds payable: It occurs when the bonds are issued at a low price than the face value.

Effective-interest amortization method: Effective-interest amortization methodit 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.

b (2)

To determine

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

c (3)

To determine

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

(b)

To determine

The amount of bond interest expense for first year.

C.

To determine

To explain: The reason why the company was able to issue the bonds for $43,495,895 rather than $50,000,000.

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Amortize Discount by Interest Method On the first day of its fiscal year, Ebert Company issued $24,000,000 of 5-year, 11% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 12%, resulting in Ebert receiving cash of $23,116,919. The company uses the interest method. a. Journalize the entries to record the following: 1. Sale of the bonds. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. fill in the blank 75d57bff7072073_2 fill in the blank 75d57bff7072073_3 fill in the blank 75d57bff7072073_5 fill in the blank 75d57bff7072073_6 fill in the blank 75d57bff7072073_8 fill in the blank 75d57bff7072073_9 2. First semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. fill in the blank 977a63fce061fea_2 fill in the blank…

Amortize Discount by Interest Method On the first day of its fiscal year, Ebert Company issued $16,000,000 of 5-year, 10% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 12%, resulting in Ebert receiving cash of $14,822,472. The company uses the interest method. a. Journalize the entries to record the following: 1. Sale of the bonds. Round to the nearest dollar. If an amount box does not require an entry, leave it blank Use these accounts to journalize: Cash Discount on Bonds Payable Bonds Payable 2. First semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Use these accounts to journalize: interest Expense Discount on Bonds Payable Cash 3. Second semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.…

Amortize Discount by Interest Method On the first day of its fiscal year, Ebert Company issued $27,000,000 of 5-year, 9% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 11%, resulting in Ebert receiving cash of $24,964,830. The company uses the interest method. a. Journalize the entries to record the following: 1. Sale of the bonds. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. 2. First semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. 3. Second semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. b. Compute the amount of the bond interest expense for the first year. Round to the nearest dollar. Annual interest paid Discount amortized Interest expense for first…

Answer 2

Question

Chapter 14, Problem 14.23EX

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.

Discount on bonds payable: It occurs when the bonds are issued at a low price than the face value.

Effective-interest amortization method: Effective-interest amortization methodit 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.

b (2)

To determine

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

c (3)

To determine

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

(b)

To determine

The amount of bond interest expense for first year.

C.

To determine

To explain: The reason why the company was able to issue the bonds for $43,495,895 rather than $50,000,000.

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Answer 3

Question

Chapter 14, Problem 14.23EX

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.

Discount on bonds payable: It occurs when the bonds are issued at a low price than the face value.

Effective-interest amortization method: Effective-interest amortization methodit 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.

b (2)

To determine

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

c (3)

To determine

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

(b)

To determine

The amount of bond interest expense for first year.

C.

To determine

To explain: The reason why the company was able to issue the bonds for $43,495,895 rather than $50,000,000.

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Answer 4

Question

Chapter 14, Problem 14.23EX

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.

Discount on bonds payable: It occurs when the bonds are issued at a low price than the face value.

Effective-interest amortization method: Effective-interest amortization methodit 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.

b (2)

To determine

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

c (3)

To determine

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

(b)

To determine

The amount of bond interest expense for first year.

C.

To determine

To explain: The reason why the company was able to issue the bonds for $43,495,895 rather than $50,000,000.

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Answer 5

Chapter 14, Problem 14.23EX

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.

Discount on bonds payable: It occurs when the bonds are issued at a low price than the face value.

Effective-interest amortization method: Effective-interest amortization methodit 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.

b (2)

To determine

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

c (3)

To determine

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

(b)

To determine

The amount of bond interest expense for first year.

C.

To determine

To explain: The reason why the company was able to issue the bonds for $43,495,895 rather than $50,000,000.

Answer 6

Chapter 14, Problem 14.23EX

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.

Discount on bonds payable: It occurs when the bonds are issued at a low price than the face value.

Effective-interest amortization method: Effective-interest amortization methodit 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 14, Problem 14.23EX

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.

Discount on bonds payable: It occurs when the bonds are issued at a low price than the face value.

Effective-interest amortization method: Effective-interest amortization methodit 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

b (2)

To determine

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

Answer 9

b (2)

To determine

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

Answer 10

c (3)

To determine

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

Answer 11

c (3)

To determine

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

Answer 12

(b)

To determine

The amount of bond interest expense for first year.

Answer 13

(b)

To determine

The amount of bond interest expense for first year.

Answer 14

C.

To determine

To explain: The reason why the company was able to issue the bonds for $43,495,895 rather than $50,000,000.

Answer 15

C.

To determine

To explain: The reason why the company was able to issue the bonds for $43,495,895 rather than $50,000,000.

Answer 16

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Ch. 14 - Describe the two distinct obligations incurred by...Ch. 14 - Explain the meaning of each of the following terms...Ch. 14 - If you asked your broker to buy you a 12% bond...Ch. 14 - Prob. 4DQ Ch. 14 - If bonds issued by a corporation are sold at...Ch. 14 - The following data relate to a 2,000,000, 8% bond...Ch. 14 - Bonds Payable has a balance of 5,000,000, and...Ch. 14 - What is a mortgage note?Ch. 14 - Fleeson Company needs additional funds to purchase...Ch. 14 - In what section of the balance sheet would a bond...

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.

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

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

The amount of bond interest expense for first year.

To explain: The reason why the company was able to issue the bonds for $43,495,895 rather than $50,000,000.

Chapter 14 Solutions