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. Accrued interest The amount of interest that has already occurred, but the payment is not made yet, is known as accrued interest. To find out: The amount related to bonds that B would report in its balance sheet at September 30, 2018.

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Answer 1

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Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 14, Problem 14.25P

(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.

Accrued interest

The amount of interest that has already occurred, but the payment is not made yet, is known as accrued interest.

To find out: The amount related to bonds that B would report in its balance sheet at September 30, 2018.

(2)

To determine

To find out: The amount that B would report in its income statement for the year ended September 30, 2018.

(3)

To determine

To find out: The amount would be reported in the statement of cash flows for the year ended as on 30^th September 2018.

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KIARA LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER: ASSETS Property, plant and equipment (cost) Accumulated depreciation Long-term investments Inventory Accounts receivable Company tax paid in advance Bank EQUITY AND LIABILITIES 2024 2023 R R 2 490 000 1 620 000 (630 000) 660 000 1 050 000 1 230 000 30 000 (480 000) 450 000 1 290 000 900 000 0 750 000 660 000 5 580 000 4 440 000 Ordinary share capital 2 700 000 2 000 000 Retained income 1 500 000 1 158 000 Long-term loan from Kip Bank (15%) 900 000 1 000 000 Accounts payable 480 000 228 000 Company tax payable 0 54 000 5 580 000 4 440 000 ADDITIONAL INFORMATION All purchases and sales are on credit. Interim dividends paid during the year amounted to R150 750. Credit terms of 3/10 net 60 days are granted by creditors.

Accounting Question

REQUIRED Study the information given below and answer the following questions. Where discount factors are required use only the four decimals present value tables that appear after the formula sheet or in the module guide. Ignore taxes. 5.1 Calculate the Accounting Rate of Return on average investment of the second alternative (expressed to two decimal places). 5.2 Determine which of the two investment opportunities the company should choose by calculating the Net Present Value of each alternative. Your answer must include the calculation of the present values and NPV. 5.3 Calculate the Internal Rate of Return of the first alterative (expressed to two decimal places). Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation. INFORMATION The management of Bentall Incorporated is considering two investment opportunities: (5 marks) (9 marks) (6 marks) The first alternative involves the purchase of a new machine for R900 000 which…

Answer 2

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Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 14, Problem 14.25P

(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.

Accrued interest

The amount of interest that has already occurred, but the payment is not made yet, is known as accrued interest.

To find out: The amount related to bonds that B would report in its balance sheet at September 30, 2018.

(2)

To determine

To find out: The amount that B would report in its income statement for the year ended September 30, 2018.

(3)

To determine

To find out: The amount would be reported in the statement of cash flows for the year ended as on 30^th September 2018.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 14, Problem 14.25P

(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.

Accrued interest

The amount of interest that has already occurred, but the payment is not made yet, is known as accrued interest.

To find out: The amount related to bonds that B would report in its balance sheet at September 30, 2018.

(2)

To determine

To find out: The amount that B would report in its income statement for the year ended September 30, 2018.

(3)

To determine

To find out: The amount would be reported in the statement of cash flows for the year ended as on 30^th September 2018.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 14, Problem 14.25P

(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.

Accrued interest

The amount of interest that has already occurred, but the payment is not made yet, is known as accrued interest.

To find out: The amount related to bonds that B would report in its balance sheet at September 30, 2018.

(2)

To determine

To find out: The amount that B would report in its income statement for the year ended September 30, 2018.

(3)

To determine

To find out: The amount would be reported in the statement of cash flows for the year ended as on 30^th September 2018.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 14, Problem 14.25P

(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.

Accrued interest

The amount of interest that has already occurred, but the payment is not made yet, is known as accrued interest.

To find out: The amount related to bonds that B would report in its balance sheet at September 30, 2018.

(2)

To determine

To find out: The amount that B would report in its income statement for the year ended September 30, 2018.

(3)

To determine

To find out: The amount would be reported in the statement of cash flows for the year ended as on 30^th September 2018.

Answer 6

Chapter 14, Problem 14.25P

(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.

Accrued interest

The amount of interest that has already occurred, but the payment is not made yet, is known as accrued interest.

To find out: The amount related to bonds that B would report in its balance sheet at September 30, 2018.

Answer 7

Chapter 14, Problem 14.25P

(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.

Accrued interest

The amount of interest that has already occurred, but the payment is not made yet, is known as accrued interest.

To find out: The amount related to bonds that B would report in its balance sheet at September 30, 2018.

Answer 8

(2)

To determine

To find out: The amount that B would report in its income statement for the year ended September 30, 2018.

Answer 9

(2)

To determine

To find out: The amount that B would report in its income statement for the year ended September 30, 2018.

Answer 10

(3)

To determine

To find out: The amount would be reported in the statement of cash flows for the year ended as on 30^th September 2018.

Answer 11

(3)

To determine

To find out: The amount would be reported in the statement of cash flows for the year ended as on 30^th September 2018.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

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

Solution Summary: The author explains that bonds are a kind of interest bearing notes payable, usually issued by companies, universities, and governmental organizations.

To find out: The amount that B would report in its income statement for the year ended September 30, 2018.

To find out: The amount would be reported in the statement of cash flows for the year ended as on 30^th September 2018.

Want to see the full answer?

Chapter 14 Solutions

Solution Summary: The author explains that bonds are a kind of interest bearing notes payable, usually issued by companies, universities, and governmental organizations.

To find out: The amount that B would report in its income statement for the year ended September 30, 2018.

To find out: The amount would be reported in the statement of cash flows for the year ended as on 30th September 2018.

Want to see the full answer?

Chapter 14 Solutions

To find out: The amount would be reported in the statement of cash flows for the year ended as on 30^th September 2018.