Reporting bonds at fair value; calculate fair value • LO14–6 On January 1, 2018, Essence Communications issued $800,000 of its 10-year, 8% bonds for $700,302. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. Essence Communications records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2018, the market interest rate for bonds of similar risk and maturity was 9%. The bonds are not traded on an active exchange. The increase in the market interest rate was due to a 1% increase in general (risk-free) interest rates. Required: 1. Using the information provided, estimate the fair value of the bonds at December 31, 2018. 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 .
Reporting bonds at fair value; calculate fair value • LO14–6 On January 1, 2018, Essence Communications issued $800,000 of its 10-year, 8% bonds for $700,302. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. Essence Communications records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2018, the market interest rate for bonds of similar risk and maturity was 9%. The bonds are not traded on an active exchange. The increase in the market interest rate was due to a 1% increase in general (risk-free) interest rates. Required: 1. Using the information provided, estimate the fair value of the bonds at December 31, 2018. 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 .
Solution Summary: The author calculates the fair value of bonds as on 1st December 2018. They are a debt instrument used for the purpose of raising funds of corporations or governmental agencies.
Reporting bonds at fair value; calculate fair value
• LO14–6
On January 1, 2018, Essence Communications issued $800,000 of its 10-year, 8% bonds for $700,302. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. Essence Communications records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2018, the market interest rate for bonds of similar risk and maturity was 9%. The bonds are not traded on an active exchange. The increase in the market interest rate was due to a 1% increase in general (risk-free) interest rates.
Required:
1. Using the information provided, estimate the fair value of the bonds at December 31, 2018.
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.
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.
Denver Processing had 2,850 units, one-third completed at the beginning of the period. 13,420 units were transferred to Department B from Department A during the period, and 750 units were one-half completed at the end of the period. What is the total number of units to be assigned cost on the cost of production report for Department A?
Compute the cost of goods sold for September
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