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. Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value. Effective-interest method of amortization: It is an amortization model that apportions the amount of bond discount or premium based on the market interest rate. 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. To calculate: The amount of cash proceeds (present value) from the sale of the bonds.

Question

1: An employer in Cleveland, OH, employs two individuals, whose taxable earnings to date (prior to the current pay period) are $5,000 and $12,000. During the current pay period, these employees earn $1,800 and $2,000, respectively. FUTA tax = $ 126.66 2: An employer in Nesconset, NY, employs three individuals, whose taxable earnings to date (prior to the current pay period) are $6,900, $1,000, and $24,200. During the current pay period, these employees earn $2,400, $1,750, and $3,000, respectively. FUTA tax = $ 235.50 × 3: An employer in The U.S. Virgin Islands employs two individuals, whose taxable earnings to date (prior to the current pay period) are $8,500, and $3,400. During the current pay period, these employees earn $880 and $675, respectively. FUTA tax = $ 664.50 × 4: An employer in Cary, NC, employs three individuals, whose taxable earnings to date (prior to the current pay period) are $5,900, $8,900, and $6,600. During the current pay period, these employees earn $940,…

Answer 1

Question

Chapter 14, Problem 14.25EX

(a)

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.

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

Effective-interest method of amortization: It is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

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.

To calculate: The amount of cash proceeds (present value) from the sale of the bonds.

(b)

To determine

To calculate: The amount of premium to be amortized for the first semiannual interest payment period.

(c)

To determine

To calculate: The amount of premium to be amortized for the second semiannual interest payment period.

(d)

To determine

The amount of bond interest expense for first year.

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1: An employer in Cleveland, OH, employs two individuals, whose taxable earnings to date (prior to the current pay period) are $5,000 and $12,000. During the current pay period, these employees earn $1,800 and $2,000, respectively. FUTA tax = $ 126.66 2: An employer in Nesconset, NY, employs three individuals, whose taxable earnings to date (prior to the current pay period) are $6,900, $1,000, and $24,200. During the current pay period, these employees earn $2,400, $1,750, and $3,000, respectively. FUTA tax = $ 235.50 × 3: An employer in The U.S. Virgin Islands employs two individuals, whose taxable earnings to date (prior to the current pay period) are $8,500, and $3,400. During the current pay period, these employees earn $880 and $675, respectively. FUTA tax = $ 664.50 × 4: An employer in Cary, NC, employs three individuals, whose taxable earnings to date (prior to the current pay period) are $5,900, $8,900, and $6,600. During the current pay period, these employees earn $940,…

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Answer 2

Question

Chapter 14, Problem 14.25EX

(a)

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.

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

Effective-interest method of amortization: It is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

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.

To calculate: The amount of cash proceeds (present value) from the sale of the bonds.

(b)

To determine

To calculate: The amount of premium to be amortized for the first semiannual interest payment period.

(c)

To determine

To calculate: The amount of premium to be amortized for the second semiannual interest payment period.

(d)

To determine

The amount of bond interest expense for first year.

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Answer 3

Question

Chapter 14, Problem 14.25EX

(a)

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.

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

Effective-interest method of amortization: It is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

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.

To calculate: The amount of cash proceeds (present value) from the sale of the bonds.

(b)

To determine

To calculate: The amount of premium to be amortized for the first semiannual interest payment period.

(c)

To determine

To calculate: The amount of premium to be amortized for the second semiannual interest payment period.

(d)

To determine

The amount of bond interest expense for first year.

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Answer 4

Question

Chapter 14, Problem 14.25EX

(a)

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.

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

Effective-interest method of amortization: It is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

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.

To calculate: The amount of cash proceeds (present value) from the sale of the bonds.

(b)

To determine

To calculate: The amount of premium to be amortized for the first semiannual interest payment period.

(c)

To determine

To calculate: The amount of premium to be amortized for the second semiannual interest payment period.

(d)

To determine

The amount of bond interest expense for first year.

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Answer 5

Chapter 14, Problem 14.25EX

(a)

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.

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

Effective-interest method of amortization: It is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

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.

To calculate: The amount of cash proceeds (present value) from the sale of the bonds.

(b)

To determine

To calculate: The amount of premium to be amortized for the first semiannual interest payment period.

(c)

To determine

To calculate: The amount of premium to be amortized for the second semiannual interest payment period.

(d)

To determine

The amount of bond interest expense for first year.

Answer 6

Chapter 14, Problem 14.25EX

(a)

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.

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

Effective-interest method of amortization: It is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

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.

To calculate: The amount of cash proceeds (present value) from the sale of the bonds.

Answer 7

Chapter 14, Problem 14.25EX

(a)

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.

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

Effective-interest method of amortization: It is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

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.

To calculate: The amount of cash proceeds (present value) from the sale of the bonds.

Answer 8

(b)

To determine

To calculate: The amount of premium to be amortized for the first semiannual interest payment period.

Answer 9

(b)

To determine

To calculate: The amount of premium to be amortized for the first semiannual interest payment period.

Answer 10

(c)

To determine

To calculate: The amount of premium to be amortized for the second semiannual interest payment period.

Answer 11

(c)

To determine

To calculate: The amount of premium to be amortized for the second semiannual interest payment period.

Answer 12

(d)

To determine

The amount of bond interest expense for first year.

Answer 13

(d)

To determine

The amount of bond interest expense for first year.

Answer 14

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Answer 25

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 method of amortization that apportions the amount of bond discount or premium based on the market interest rate

To calculate: The amount of premium to be amortized for the first semiannual interest payment period.

To calculate: The amount of premium to be amortized for the second semiannual interest payment period.

The amount of bond interest expense for first year.

Chapter 14 Solutions