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. To Determine: The price of the bonds for Instruments M as on 1 st January 2018.

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Answer 1

Question

Chapter 14, Problem 14.7P

(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.

To Determine: The price of the bonds for Instruments M as on 1^st January 2018.

(2)

(a)

To determine

To Prepare: The journal entries to record the issuance of the bonds by Instruments M.

(3)

(a)

To determine

To Prepare: The journal entry to record interest on June 30, 2018 of Instruments M.

(4)

(a)

To determine

To Prepare: The journal entry to record interest on December 31, 2018.

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Students have asked these similar questions

a1

18 A company issues P5,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2022. Interest is paid on June 30 and December 31. The proceeds from the bonds are P4,901,036. Using effective-interest amortization, what will the carrying value of the bonds be on the December 31, 2022 statement of financial position? 4,903,160.00 4903160 4,903,160 4903160

What is the total amount of interest revenue that Redbud will recognize over the life of the bonds?

Answer 2

Question

Chapter 14, Problem 14.7P

(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.

To Determine: The price of the bonds for Instruments M as on 1^st January 2018.

(2)

(a)

To determine

To Prepare: The journal entries to record the issuance of the bonds by Instruments M.

(3)

(a)

To determine

To Prepare: The journal entry to record interest on June 30, 2018 of Instruments M.

(4)

(a)

To determine

To Prepare: The journal entry to record interest on December 31, 2018.

Expert Solution & Answer

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Answer 3

Question

Chapter 14, Problem 14.7P

(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.

To Determine: The price of the bonds for Instruments M as on 1^st January 2018.

(2)

(a)

To determine

To Prepare: The journal entries to record the issuance of the bonds by Instruments M.

(3)

(a)

To determine

To Prepare: The journal entry to record interest on June 30, 2018 of Instruments M.

(4)

(a)

To determine

To Prepare: The journal entry to record interest on December 31, 2018.

Expert Solution & Answer

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Answer 4

Question

Chapter 14, Problem 14.7P

(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.

To Determine: The price of the bonds for Instruments M as on 1^st January 2018.

(2)

(a)

To determine

To Prepare: The journal entries to record the issuance of the bonds by Instruments M.

(3)

(a)

To determine

To Prepare: The journal entry to record interest on June 30, 2018 of Instruments M.

(4)

(a)

To determine

To Prepare: The journal entry to record interest on December 31, 2018.

Expert Solution & Answer

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Answer 5

Chapter 14, Problem 14.7P

(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.

To Determine: The price of the bonds for Instruments M as on 1^st January 2018.

(2)

(a)

To determine

To Prepare: The journal entries to record the issuance of the bonds by Instruments M.

(3)

(a)

To determine

To Prepare: The journal entry to record interest on June 30, 2018 of Instruments M.

(4)

(a)

To determine

To Prepare: The journal entry to record interest on December 31, 2018.

Answer 6

Chapter 14, Problem 14.7P

(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.

To Determine: The price of the bonds for Instruments M as on 1^st January 2018.

Answer 7

Chapter 14, Problem 14.7P

(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.

To Determine: The price of the bonds for Instruments M as on 1^st January 2018.

Answer 8

(2)

(a)

To determine

To Prepare: The journal entries to record the issuance of the bonds by Instruments M.

Answer 9

(2)

(a)

To determine

To Prepare: The journal entries to record the issuance of the bonds by Instruments M.

Answer 10

(3)

(a)

To determine

To Prepare: The journal entry to record interest on June 30, 2018 of Instruments M.

Answer 11

(3)

(a)

To determine

To Prepare: The journal entry to record interest on June 30, 2018 of Instruments M.

Answer 12

(4)

(a)

To determine

To Prepare: The journal entry to record interest on December 31, 2018.

Answer 13

(4)

(a)

To determine

To Prepare: The journal entry to record interest on December 31, 2018.

Answer 14

Expert Solution & Answer

Answer 15

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Answer 16

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Answer 17

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.

Concept explainers

To Prepare: The journal entries to record the issuance of the bonds by Instruments M.

To Prepare: The journal entry to record interest on June 30, 2018 of Instruments M.

To Prepare: The journal entry to record interest on December 31, 2018.

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Chapter 14 Solutions