Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 14, Problem 14.5BE
Effective interest on bonds
• LO14–2
On January 1, a company issued 7%, 15-year bonds with a face amount of $90 million for $82,218,585 to yield 8%. Interest is paid semiannually. What was interest expense at the effective interest rate on June 30, the first interest date?
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Accounting Problem 2.5
Required information
Exercise 9-11B Record bonds issued at a discount and related semiannual interest (LO9-6)
[The following information applies to the questions displayed below]
On January 1, Year 1, a company issues $500,000 of 6% bonds, due in 20 years, with interest payable semiannually on
June 30 and December 31 each year.
Assuming the market interest rate on the issue date is 7%, the bonds will issue at $446,611.
Exercise 9-11B Part 2
2. Record the bond issue on January 1, Year 1, and the first two semiannual interest payments on June 30, Year 1, and December 31,
Year 1. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Round
your final answers to the nearest whole dollar.)
View transaction list
Journal entry worksheet
1
2
3
Record the bond issue.
Note: Enter debits before credits.
Date
General Journal
Debit
Credit
January 01
Cash
446,611
Discount on Bonds Payable
Bonds Payable
Record entry
Clear entry
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Sh3
Chapter 14 Solutions
Intermediate Accounting
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- Required information Exercise 9-11B Record bonds issued at a discount and related semiannual interest (LO9-6) [The following information applies to the questions displayed below.] On January 1, Year 1, a company issues $440,000 of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 8%, the bonds will issue at $410,103. Exercise 9-11B Part 1 Required: 1. Complete the first three rows of an amortization schedule. (Round your final answers to the nearest whole dollar.) Interest Increase in Date Cash Paid Carrying Value Expense Carrying Value 01/01/Year 1 06/30/Year 1 12/31/Year 1arrow_forwardQuestion 9 Vadercat Limited issued $15 million 4.0 percent, 8 year bonds on September 1, 2023. The market rate of interest on the date of the issue was 4.5 percent. Interest is payable semi-annually on March 1 and September 1. The company's year-end is December 31. Required: a. Prepare all journal entries required to record the bonds in the company's financial records for the first full year the bonds are outstanding. The company uses the straight-line method of amortizations. b. Indicate how the bond obligation would be shown on the company's year-end statement of financial position. c. How much interest expense, related to this security, is shown on the 2023 year end income statement? d. How much interest expense, related to this security, will be shown on the 2024 year end income statement?arrow_forwardcharrow_forward
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