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 Incorporation PP as on 1 st January 2016.

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Answer 1

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 14.9E

(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 Incorporation PP as on 1^st January 2016.

(2)

To determine

To Prepare: The journal entry to record the issuance of the bonds for Incorporation PP as son 1^st January 2016.

(3)

To determine

To Prepare: The amortization schedule using effective interest rate method.

(4)

To determine

To Prepare: The journal entry to record interest on June 30, 2016.

(5)

To determine

The amount that P will report in its balance sheet at December 31, 2016.

(6)

To determine

To calculate: The amount that P will report in its income statement for the year ended December 31, 2016.

(7)

To determine

To Prepare: The Journal entry to record the maturity as on 31^st December 2019.

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Groot Co. (GC) sells $1,200,000 of 6-year, 10% bonds at par plus accrued interest. The bonds are dated January 1, 2026 but due to market conditions are not issued until May 1, 2026. Interest is payable on June 30 and December 31 each year. The market rate of interest at time of issue is the same as the stated rate. Required The issuance of the bonds on May 1, 2026. Assume that GC has adopted a policy of crediting accrued interest payable for the accrued interest on the date of sale. Payment of interest on June 30, 2026. Payment of interest on December 31, 2026.

Answer 2

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 14.9E

(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 Incorporation PP as on 1^st January 2016.

(2)

To determine

To Prepare: The journal entry to record the issuance of the bonds for Incorporation PP as son 1^st January 2016.

(3)

To determine

To Prepare: The amortization schedule using effective interest rate method.

(4)

To determine

To Prepare: The journal entry to record interest on June 30, 2016.

(5)

To determine

The amount that P will report in its balance sheet at December 31, 2016.

(6)

To determine

To calculate: The amount that P will report in its income statement for the year ended December 31, 2016.

(7)

To determine

To Prepare: The Journal entry to record the maturity as on 31^st December 2019.

Expert Solution & Answer

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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 14.9E

(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 Incorporation PP as on 1^st January 2016.

(2)

To determine

To Prepare: The journal entry to record the issuance of the bonds for Incorporation PP as son 1^st January 2016.

(3)

To determine

To Prepare: The amortization schedule using effective interest rate method.

(4)

To determine

To Prepare: The journal entry to record interest on June 30, 2016.

(5)

To determine

The amount that P will report in its balance sheet at December 31, 2016.

(6)

To determine

To calculate: The amount that P will report in its income statement for the year ended December 31, 2016.

(7)

To determine

To Prepare: The Journal entry to record the maturity as on 31^st December 2019.

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 14.9E

(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 Incorporation PP as on 1^st January 2016.

(2)

To determine

To Prepare: The journal entry to record the issuance of the bonds for Incorporation PP as son 1^st January 2016.

(3)

To determine

To Prepare: The amortization schedule using effective interest rate method.

(4)

To determine

To Prepare: The journal entry to record interest on June 30, 2016.

(5)

To determine

The amount that P will report in its balance sheet at December 31, 2016.

(6)

To determine

To calculate: The amount that P will report in its income statement for the year ended December 31, 2016.

(7)

To determine

To Prepare: The Journal entry to record the maturity as on 31^st December 2019.

Expert Solution & Answer

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Answer 5

Chapter 14, Problem 14.9E

(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 Incorporation PP as on 1^st January 2016.

(2)

To determine

To Prepare: The journal entry to record the issuance of the bonds for Incorporation PP as son 1^st January 2016.

(3)

To determine

To Prepare: The amortization schedule using effective interest rate method.

(4)

To determine

To Prepare: The journal entry to record interest on June 30, 2016.

(5)

To determine

The amount that P will report in its balance sheet at December 31, 2016.

(6)

To determine

To calculate: The amount that P will report in its income statement for the year ended December 31, 2016.

(7)

To determine

To Prepare: The Journal entry to record the maturity as on 31^st December 2019.

Answer 6

Chapter 14, Problem 14.9E

(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 Incorporation PP as on 1^st January 2016.

Answer 7

Chapter 14, Problem 14.9E

(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 Incorporation PP as on 1^st January 2016.

Answer 8

(2)

To determine

To Prepare: The journal entry to record the issuance of the bonds for Incorporation PP as son 1^st January 2016.

Answer 9

(2)

To determine

To Prepare: The journal entry to record the issuance of the bonds for Incorporation PP as son 1^st January 2016.

Answer 10

(3)

To determine

To Prepare: The amortization schedule using effective interest rate method.

Answer 11

(3)

To determine

To Prepare: The amortization schedule using effective interest rate method.

Answer 12

(4)

To determine

To Prepare: The journal entry to record interest on June 30, 2016.

Answer 13

(4)

To determine

To Prepare: The journal entry to record interest on June 30, 2016.

Answer 14

(5)

To determine

The amount that P will report in its balance sheet at December 31, 2016.

Answer 15

(5)

To determine

The amount that P will report in its balance sheet at December 31, 2016.

Answer 16

(6)

To determine

To calculate: The amount that P will report in its income statement for the year ended December 31, 2016.

Answer 17

(6)

To determine

To calculate: The amount that P will report in its income statement for the year ended December 31, 2016.

Answer 18

(7)

To determine

To Prepare: The Journal entry to record the maturity as on 31^st December 2019.

Answer 19

(7)

To determine

To Prepare: The Journal entry to record the maturity as on 31^st December 2019.

Answer 20

Expert Solution & Answer

Answer 21

Expert Solution & Answer

Answer 22

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Answer 23

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 - Prob. 14.5Q 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

Concept explainers

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To Prepare: The journal entry to record the issuance of the bonds for Incorporation PP as son 1^st January 2016.

To Prepare: The amortization schedule using effective interest rate method.

To Prepare: The journal entry to record interest on June 30, 2016.

The amount that P will report in its balance sheet at December 31, 2016.

To calculate: The amount that P will report in its income statement for the year ended December 31, 2016.

To Prepare: The Journal entry to record the maturity as on 31^st December 2019.

Want to see the full answer?

Chapter 14 Solutions

Concept explainers

Videos

To Prepare: The journal entry to record the issuance of the bonds for Incorporation PP as son 1st January 2016.

To Prepare: The amortization schedule using effective interest rate method.

To Prepare: The journal entry to record interest on June 30, 2016.

The amount that P will report in its balance sheet at December 31, 2016.

To calculate: The amount that P will report in its income statement for the year ended December 31, 2016.

To Prepare: The Journal entry to record the maturity as on 31st December 2019.

Want to see the full answer?

Chapter 14 Solutions

To Prepare: The journal entry to record the issuance of the bonds for Incorporation PP as son 1^st January 2016.

To Prepare: The Journal entry to record the maturity as on 31^st December 2019.