Cengagenowv2, 1 Term Printed Access Card For Wahlen/jones/pagach’s Intermediate Accounting: Reporting And Analysis, 2017 Update, 2nd
2nd Edition
ISBN: 9781337912259
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Chapter 14, Problem 1P
1.
To determine
Compute selling price of the bonds.
2.
To determine
Prepare
3.
To determine
Prepare journal entry to record issuance of bonds, assume Incorporation B used IFRS method.
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Barnett Industries, Inc., issued $600,000 of 8% bonds on January 1, 2019. The bonds pay interest semiannually on July 1 and January 1. The maturity date on these bonds is December 31, 2028. The firm uses the effective interest method of amortizing discounts and premiums. The bonds were sold to yield an effective interest rate of 9%. Barnett incurred legal and investment banking fees of $22,000 in issuing the bonds and amortizes these costs annually on a straight-line basis.
Required:
1.
Calculate the selling price of the bonds.
2.
Prepare journal entries for the issuance of the bonds and debt issuance costs.
You should determine the selling price by using the effective rate to determine the present value of both the future principal and periodic interest payments. When interest is paid semiannually, you should divide the effective rate by the interest periods per year to determine the effective rate per semiannual period. You should also express the time to maturity in…
On January 1, 2018, Reese Incorporated issued bonds with a face value of $140,000, a stated rate of interest of 8 percent, and a five-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 7 percent at the time the bonds were issued. The bonds sold for $145,740. Reese used the effective interest rate method to amortize bond premium.
Prepare an amortization table.
What item(s) in the table would appear on the 2020 balance sheet?
What item(s) in the table would appear on the 2020 income statement?
What item(s) and amount in the table would appear on the 2020 statement of cash flows (Direct Method) and under what section the bond liability appear?
cash payment
interest expense
discount amortization
carrying value
jan 1 2018
145740
dec 31 2018
11200
10202
998
144742
dec 31 2019
dec 31 2020
dec 31 2021
dec 31 2022
totals
56000
50260
5740
On January 1, 2024, Rupar Retallers purchased $100,000 of Anand Company bonds at a discount of $6,000. The Anand bonds pay 6% interest but were purchased when the market interest rate was
7% for bonds of similar risk and maturity. The bonds pay interest semiannually on June 30 and December 31 of each year. Rupar accounts for the bonds as a held-to-maturity Investment, and uses the
effective interest method. In Rupar's December 31, 2024, journal entry to record the second period of Interest, Rupar would record a credit to interest revenue of
Multiple Choice
O
O
$3,000
$3,500
$1.300
Chapter 14 Solutions
Cengagenowv2, 1 Term Printed Access Card For Wahlen/jones/pagach’s Intermediate Accounting: Reporting And Analysis, 2017 Update, 2nd
Ch. 14 - Prob. 1GICh. 14 - Why does issuing debt result in an income tax...Ch. 14 - What is a bond? Define face value, maturity date,...Ch. 14 - What is the difference between a mortgage bond and...Ch. 14 - Prob. 5GICh. 14 - Prob. 6GICh. 14 - Prob. 7GICh. 14 - Prob. 8GICh. 14 - Prob. 9GICh. 14 - Prob. 10GI
Ch. 14 - Prob. 11GICh. 14 - Prob. 12GICh. 14 - Prob. 13GICh. 14 - What is a call provision? Why do companies often...Ch. 14 - Prob. 15GICh. 14 - When do companies recognize gains and losses from...Ch. 14 - Prob. 17GICh. 14 - Prob. 18GICh. 14 - Prob. 19GICh. 14 - Prob. 20GICh. 14 - Prob. 21GICh. 14 - Prob. 22GICh. 14 - Prob. 23GICh. 14 - Prob. 24GICh. 14 - Prob. 25GICh. 14 - Prob. 26GICh. 14 - Prob. 27GICh. 14 - Prob. 1MCCh. 14 - Prob. 2MCCh. 14 - Prob. 3MCCh. 14 - Prob. 4MCCh. 14 - Prob. 5MCCh. 14 - Prob. 6MCCh. 14 - Prob. 7MCCh. 14 - When the cash proceeds from a bond issued with...Ch. 14 - Prob. 9MCCh. 14 - Prob. 10MCCh. 14 - Prob. 11MCCh. 14 - Prob. 12MCCh. 14 - Prob. 1RECh. 14 - Prob. 2RECh. 14 - Prob. 3RECh. 14 - Prob. 4RECh. 14 - Prob. 5RECh. 14 - Prob. 6RECh. 14 - Prob. 7RECh. 14 - Prob. 8RECh. 14 - Prob. 9RECh. 14 - Prob. 10RECh. 14 - Prob. 11RECh. 14 - Prob. 12RECh. 14 - Prob. 13RECh. 14 - Prob. 14RECh. 14 - Prob. 15RECh. 14 - Prob. 1ECh. 14 - Prob. 2ECh. 14 - Prob. 3ECh. 14 - Recording Bond Issuance On January 1, 2016, Knorr...Ch. 14 - Prob. 5ECh. 14 - Prob. 6ECh. 14 - Prob. 7ECh. 14 - Prob. 8ECh. 14 - Prob. 9ECh. 14 - Prob. 10ECh. 14 - Prob. 11ECh. 14 - Prob. 12ECh. 14 - Prob. 13ECh. 14 - Prob. 14ECh. 14 - Prob. 15ECh. 14 - Prob. 16ECh. 14 - On January 1, 2015, when its 30 par value common...Ch. 14 - Prob. 18ECh. 14 - On January 1, 2019, Conroe Corporation sold...Ch. 14 - Prob. 20ECh. 14 - Prob. 21ECh. 14 - Prob. 22ECh. 14 - Prob. 23ECh. 14 - Prob. 24ECh. 14 - Prob. 25ECh. 14 - Prob. 26ECh. 14 - Prob. 27ECh. 14 - Prob. 28ECh. 14 - Prob. 29ECh. 14 - Prob. 30ECh. 14 - Prob. 31ECh. 14 - Prob. 1PCh. 14 - Prob. 2PCh. 14 - Prob. 3PCh. 14 - Prob. 4PCh. 14 - Prob. 5PCh. 14 - Prob. 6PCh. 14 - Prob. 7PCh. 14 - Prob. 8PCh. 14 - Prob. 9PCh. 14 - Prob. 10PCh. 14 - Prob. 11PCh. 14 - Prob. 12PCh. 14 - Prob. 13PCh. 14 - Prob. 14PCh. 14 - Prob. 15PCh. 14 - Prob. 16PCh. 14 - Prob. 1CCh. 14 - One way for a corporation to accomplish long-term...Ch. 14 - Prob. 3CCh. 14 - Recording Convertible Debt Zakin Co. recently...Ch. 14 - Prob. 5CCh. 14 - Long-Term Notes Payable Business transactions...Ch. 14 - Prob. 7CCh. 14 - Prob. 8CCh. 14 - Prob. 9CCh. 14 - You are an accountant for Taos Company, which has...Ch. 14 - Prob. 11CCh. 14 - Prob. 12CCh. 14 - Prob. 13C
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