
(a)
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 calculate: The amount of premium to be amortized for the first semiannual interest payment period.
(c)
To calculate: The amount of premium to be amortized for the second semiannual interest payment period.
(d)
The amount of bond interest expense for first year.

Trending nowThis is a popular solution!

Chapter 14 Solutions
CUSTOM PKG FOR AC114
- Beethoven Corp. had net sales of 45,600 and ending accounts receivable of 5,700 for the current period. Its days' sales uncollected equals: (Use 365 days a year.) a. 40.25 days b. 36.17 days c. 45.63 days d. 32.43 days e. 30.47 daysarrow_forwardAQUA SYSTEMS REPORTS THE FOLLOWING SALES OF $150,000; INFORMATION: BEGINNING ASSETS OF $300,000, ENDING ASSETS OF OF $360,000; NET INCOME $9,000. OF THE RETURN ON ASSETS (TO THE NEAREST WHOLE NUMBER) IS: A. 555% B. 30% c. 3% D. 6%arrow_forwardDetermine the cash payments made during marcharrow_forward
- Provide answerarrow_forwardWhich of the following is NOT considered a fixed asset? A. Machinery B. Accounts Receivable C. Building D. Landarrow_forwardStark Corp is in the process of acquiring another business. In light of the acquisition, shareholders are currently re-evaluating the appropriateness of the firm's capital structure (the types of and relative levels of debt and equity). The two proposals being contemplated are detailed below: Proposal 1 Proposal 2 Estimated earnings before interest and taxes (EBIT) $ 450,000 $ 450,000 Long term debt 1,000,000 2,000,000 Market value of equity 1,000,000 500,000 Interest rate on long term debt 10% 10% Tax rate 25% 25% Required Calculate the estimated return on equity (ROE) under the two proposals. (ROE = net income after taxes / market value of equity; net income after taxes = (EBIT - interest on long-term debt) × (1 - tax rate)).arrow_forward
- The equity method of accounting is suitable for investments representing what? (1) Less than 20% ownership (2) Between 20% and 50% ownership (3) More than 50% ownership (4) Only for foreign investments answerarrow_forwardHelp this answerarrow_forwardGentry Co. reported total gross sales of $320,000, with 60% of these being credit sales. Sales returns and allowances of $18,000 apply only to the credit sales. A 1.5% sales discount was taken on all net credit sales. Additionally, credit card sales amounted to $110,000 and were subject to a 2.5% credit card fee. What is the dollar amount of net sales?arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





