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 14.8E
Investor; straight-line method
• LO14–2
(Note: This is a variation of E 14–7 modified to consider the investor’s perspective.) Universal Foods sold the entire bond issue described in the previous exercise to Wang Communications.
Required:
- 1. Prepare the
journal entry to record the purchase of the bonds by Wang Communications on January 1, 2018. - 2. Prepare the journal entry to record interest revenue on June 30, 2018.
- 3. Prepare the journal entry to record interest revenue on December 31, 2025.
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On January 1, 2023, Liu Corporation paid $262,123 to acquire bonds of Singh Investment Corp with a par value of $260,000. The
annual contract rate on the bonds is 6.0% and interest is paid semiannually on June 30 and December 31. The bonds mature after
three years. The market rate of interest was 5.7%. Liu Corporation intends to hold the bonds until maturity.
Required:
1. Prepare an amortization schedule for the investment showing only 2023. (Do not round intermediate calculations. Round your
answers to the nearest whole dollar amount. Enter all the amounts as positive values.)
Period Ending
Jan. 1/23
June 30/23
Dec. 31/23
Cash
Interest Received
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Required information
[The following information applies to the questions displayed below.]
Temptation Vacations issues $49 million in bonds on January 1, 2024, that pay interest semiannually on June 30 and
December 31. Portions of the bond amortization schedule appear below:
(1)
Date
1/1/2024
6/30/2024
12/31/2024
(2)
Cash Paid for
Interest
$1,470,000
1,470,000
Market annual interest rate
(3)
Interest Expense
$1,378,755
1,376,473
(4)
Decrease in
%
Carrying
Value
$91,245
93,527
(5)
Carrying Value
$55,150, 180
5. What is the market annual interest rate? (Round your answer to the nearest whole percent.)
55,058,935
54,965,408
4
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Chapter 14 Solutions
Intermediate Accounting
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. 14.8QCh. 14 - Compare the two commonly used methods of...Ch. 14 - Prob. 14.10Q
Ch. 14 - When a notes stated rate of interest is...Ch. 14 - How does an installment note differ from a note...Ch. 14 - Prob. 14.13QCh. 14 - Prob. 14.14QCh. 14 - Air Supply issued 6 million of 9%, 10-year...Ch. 14 - Both convertible bonds and bonds issued with...Ch. 14 - Prob. 14.17QCh. 14 - Cordova Tools has bonds outstanding during a year...Ch. 14 - If a company prepares its financial statements...Ch. 14 - (Based on Appendix 14A) Why will bonds always sell...Ch. 14 - Prob. 14.21QCh. 14 - Prob. 14.22QCh. 14 - Prob. 14.23QCh. 14 - Bank loan; accrued interest LO132 On October 1,...Ch. 14 - Non-interest-bearing note; accrued interest LO132...Ch. 14 - Determining the price of bonds LO142 A company...Ch. 14 - Determining the price of bonds LO142 A company...Ch. 14 - Effective interest on bonds LO142 On January 1, a...Ch. 14 - Effective interest on bonds LO142 On January 1, a...Ch. 14 - Straight-line interest on bonds LO142 On January...Ch. 14 - Investment in bonds LO142 On January 1, a company...Ch. 14 - Note issued for cash; borrower and lender LO143...Ch. 14 - Note with unrealistic interest rate LO143 On...Ch. 14 - Installment note LO143 On January 1, a company...Ch. 14 - Prob. 14.12BECh. 14 - Bonds with detachable warrants LO145 Hoffman...Ch. 14 - Convertible bonds LO145 Hoffman Corporation...Ch. 14 - Reporting bonds at fair value LO146 AI Tool and...Ch. 14 - Bond valuation LO142 Your investment department...Ch. 14 - Determine the price of bonds in various situations...Ch. 14 - Determine the price of bonds; issuance; effective...Ch. 14 - Investor; effective interest LO142 (Note: This is...Ch. 14 - Bonds; issuance; effective interest; financial...Ch. 14 - Bonds; issuance; effective interest LO142 The...Ch. 14 - Prob. 14.7ECh. 14 - Investor; straight-line method LO142 (Note: This...Ch. 14 - Issuance of bonds; effective interest;...Ch. 14 - Issuance of bonds; effective interest;...Ch. 14 - Bonds; effective interest; adjusting entry LO142...Ch. 14 - Prob. 14.12ECh. 14 - Issuance of bonds; effective interest LO142...Ch. 14 - Prob. 14.14ECh. 14 - Error correction; accrued interest on bonds LO142...Ch. 14 - Error in amortization schedule LO143 Wilkins Food...Ch. 14 - Prob. 14.17ECh. 14 - Note with unrealistic interest rate; lender;...Ch. 14 - Prob. 14.19ECh. 14 - Prob. 14.20ECh. 14 - Installment note LO143 LCD Industries purchased a...Ch. 14 - Prob. 14.22ECh. 14 - Early extinguishment LO145 The balance sheet of...Ch. 14 - Convertible bonds LO145 On January 1, 2018, Gless...Ch. 14 - Prob. 14.25ECh. 14 - Convertible bonds; induced conversion LO145 On...Ch. 14 - Prob. 14.27ECh. 14 - Bonds with detachable warrants LO145 On August 1,...Ch. 14 - Reporting bonds at fair value LO146 (Note: This...Ch. 14 - Reporting bonds at fair value LO146 On January 1,...Ch. 14 - Reporting bonds at fair value; calculate fair...Ch. 14 - Prob. 14.32ECh. 14 - Troubled debt restructuring; debt settled ...Ch. 14 - Prob. 14.34ECh. 14 - Troubled debt restructuring; modification of...Ch. 14 - Prob. 14.36ECh. 14 - Determining the price of bonds; discount and...Ch. 14 - Effective interest; financial statement effects ...Ch. 14 - Prob. 14.3PCh. 14 - Bond amortization schedule LO142 On January 1,...Ch. 14 - Issuer and investor; effective interest;...Ch. 14 - Prob. 14.6PCh. 14 - Prob. 14.7PCh. 14 - Bonds; effective interest; partial period...Ch. 14 - Zero-co upon bonds LO142 On January 1, 2018,...Ch. 14 - Prob. 14.10PCh. 14 - Prob. 14.11PCh. 14 - Prob. 14.12PCh. 14 - Note and installment note with unrealistic...Ch. 14 - Prob. 14.14PCh. 14 - Early extinguishment; effective interest LO145...Ch. 14 - Prob. 14.16PCh. 14 - Prob. 14.17PCh. 14 - Early extinguishment LO145 The long-term...Ch. 14 - Convertible bonds; induced conversion; bonds with...Ch. 14 - Convertible bonds; zero coupon; potentially...Ch. 14 - Prob. 14.21PCh. 14 - Determine bond price; record interest; report...Ch. 14 - Report bonds at fair value; quarterly reporting ...Ch. 14 - Prob. 14.24PCh. 14 - Prob. 14.25PCh. 14 - Troubled debt restructuring Appendix B At January...Ch. 14 - Prob. 14.1BYPCh. 14 - Real World Case 142 Zero-coupon debt; HP Inc. ...Ch. 14 - Prob. 14.4BYPCh. 14 - Prob. 14.5BYPCh. 14 - Prob. 14.6BYPCh. 14 - Prob. 14.8BYPCh. 14 - Prob. 14.9BYPCh. 14 - Research Case 1410 FASB codification research;...Ch. 14 - Prob. 14.11BYP
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- of 6 - 1:22:32 ook 17 rint ! Required information [The following information applies to the questions displayed below.] Temptation Vacations issues $49 million in bonds on January 1, 2024, that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: (1) Date 1/1/2024 6/30/2024 12/31/2024 (2) Cash Paid for Interest $1,470,000 1,470,000 Stated annual interest rate (3) Interest Expense 4. What is the stated annual interest rate? $1,378,755 1,376,473 % (4) Decrease in Carrying Value $91,245 93,527 (5) Carrying Value $55,150, 180 55,058,935 54,965,408 ↳arrow_forwardowv21 Online teachin X signment/takeAssignmentMain.do?invoker &takeAssignmentSessionLocator-assignment-take&inprogress-false еBook Calculator Print Item Present Value of Bonds Payable; Premium Moss Co. issued $105,000 of five-year, 12 % bonds, with interest payable semiannually, at a market (effective) interest rate of 11%. Determine the present value of the bonds payable, using the present value tables in Exhibit 5 and Exhibit 7. Note: Round final answer to the nearest dollar. 6,300 oeqpaay Remember, the selling price of a bond is the sum of the present values of: the face amount of the bonds due at the maturity date interest to be paid on the bonds. The market rate of interest is used to compute the present value of both the face amount and the periodic interest. Pre Check imWork de Uparrow_forwardnku.4 answer must be in table format or i will give downvotearrow_forward
- What is the total amount of interest revenue that Redbud will recognize over the life of the bonds?arrow_forward1 Saved Help Save & Ex On January 1, 2021, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Cash Effective Increase in Outstanding Payment Payment Interest Balance Balance 6,544,432 6,555,654 6,567,437 6,579,809 6,592,799 6,606,439 6,620,761 1 316, 0ее 316,000 316,000 316,000 316, е0е 316,000 327,222 327,783 328,372 328,990 329,640 330,322 11,222 11,783 12,372 12,990 13,640 14,322 3. 4 6 38 316,000 316,000 316,000 384,243 387,655 391,243 68,243 71,655 75,243 7,753,102 7,824,757 7,900,000 39 40 Required: 1. What is the face amount of the bonds? 2. What is the initial selling price of the bonds? 3. What is the term to maturity in years? 4. Interest is determined by what approach? 5. What is the stated annual interest rate? 6. What is the effective annual interest rate? 7. What is the total cash interest paid over the term to maturity? 8. What is the total effective…arrow_forwardDon't give answer in imagearrow_forward
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