Bonds Issuance: The Bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period. Straight line Amortization of Premium: The Straight line amortization of Premium is a technique of writing off the total discount over a period of bonds with an equal amount on each interest period. This equal amount can be computed by dividing the total amount of discount by the number of interest periods over a life of bonds. The Total interest expenses over the life of bonds.

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Answer 1

Question

Chapter 14, Problem 3APSA

Sub Part-1

To determine

Bonds Issuance:

The Bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

Straight line Amortization of Premium:

The Straight line amortization of Premium is a technique of writing off the total discount over a period of bonds with an equal amount on each interest period. This equal amount can be computed by dividing the total amount of discount by the number of interest periods over a life of bonds.

The Total interest expenses over the life of bonds.

Sub Part-3

To determine

Accounting treatment of interest payment and amortized premium:

The Accounting entry required to be passed at each interest period is debiting the total interest expense as per amortization chart and also, Premium on bonds payable is debited for the amount of premium amortized and credit being made to the cash account for cash interest paid.

The Journal entries for two interest payments.

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Answer 2

Question

Chapter 14, Problem 3APSA

Sub Part-1

To determine

Bonds Issuance:

The Bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

Straight line Amortization of Premium:

The Straight line amortization of Premium is a technique of writing off the total discount over a period of bonds with an equal amount on each interest period. This equal amount can be computed by dividing the total amount of discount by the number of interest periods over a life of bonds.

The Total interest expenses over the life of bonds.

Sub Part-3

To determine

Accounting treatment of interest payment and amortized premium:

The Accounting entry required to be passed at each interest period is debiting the total interest expense as per amortization chart and also, Premium on bonds payable is debited for the amount of premium amortized and credit being made to the cash account for cash interest paid.

The Journal entries for two interest payments.

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Answer 3

Question

Chapter 14, Problem 3APSA

Sub Part-1

To determine

Bonds Issuance:

The Bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

Straight line Amortization of Premium:

The Straight line amortization of Premium is a technique of writing off the total discount over a period of bonds with an equal amount on each interest period. This equal amount can be computed by dividing the total amount of discount by the number of interest periods over a life of bonds.

The Total interest expenses over the life of bonds.

Sub Part-3

To determine

Accounting treatment of interest payment and amortized premium:

The Accounting entry required to be passed at each interest period is debiting the total interest expense as per amortization chart and also, Premium on bonds payable is debited for the amount of premium amortized and credit being made to the cash account for cash interest paid.

The Journal entries for two interest payments.

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Answer 4

Question

Chapter 14, Problem 3APSA

Sub Part-1

To determine

Bonds Issuance:

The Bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

Straight line Amortization of Premium:

The Straight line amortization of Premium is a technique of writing off the total discount over a period of bonds with an equal amount on each interest period. This equal amount can be computed by dividing the total amount of discount by the number of interest periods over a life of bonds.

The Total interest expenses over the life of bonds.

Sub Part-3

To determine

Accounting treatment of interest payment and amortized premium:

The Accounting entry required to be passed at each interest period is debiting the total interest expense as per amortization chart and also, Premium on bonds payable is debited for the amount of premium amortized and credit being made to the cash account for cash interest paid.

The Journal entries for two interest payments.

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Answer 5

Chapter 14, Problem 3APSA

Sub Part-1

To determine

Bonds Issuance:

The Bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

Straight line Amortization of Premium:

The Straight line amortization of Premium is a technique of writing off the total discount over a period of bonds with an equal amount on each interest period. This equal amount can be computed by dividing the total amount of discount by the number of interest periods over a life of bonds.

The Total interest expenses over the life of bonds.

Sub Part-3

To determine

Accounting treatment of interest payment and amortized premium:

The Accounting entry required to be passed at each interest period is debiting the total interest expense as per amortization chart and also, Premium on bonds payable is debited for the amount of premium amortized and credit being made to the cash account for cash interest paid.

The Journal entries for two interest payments.

Answer 6

Chapter 14, Problem 3APSA

Sub Part-1

To determine

Bonds Issuance:

The Bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

Straight line Amortization of Premium:

The Straight line amortization of Premium is a technique of writing off the total discount over a period of bonds with an equal amount on each interest period. This equal amount can be computed by dividing the total amount of discount by the number of interest periods over a life of bonds.

The Total interest expenses over the life of bonds.

Answer 7

Chapter 14, Problem 3APSA

Sub Part-1

To determine

Bonds Issuance:

The Bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.

Straight line Amortization of Premium:

The Straight line amortization of Premium is a technique of writing off the total discount over a period of bonds with an equal amount on each interest period. This equal amount can be computed by dividing the total amount of discount by the number of interest periods over a life of bonds.

The Total interest expenses over the life of bonds.

Answer 8

Sub Part-3

To determine

Accounting treatment of interest payment and amortized premium:

The Accounting entry required to be passed at each interest period is debiting the total interest expense as per amortization chart and also, Premium on bonds payable is debited for the amount of premium amortized and credit being made to the cash account for cash interest paid.

The Journal entries for two interest payments.

Answer 9

Sub Part-3

To determine

Accounting treatment of interest payment and amortized premium:

The Accounting entry required to be passed at each interest period is debiting the total interest expense as per amortization chart and also, Premium on bonds payable is debited for the amount of premium amortized and credit being made to the cash account for cash interest paid.

The Journal entries for two interest payments.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 14 - Prob. 1DQ Ch. 14 - Prob. 2DQ Ch. 14 - Prob. 3DQ Ch. 14 - Prob. 4DQ Ch. 14 - Prob. 5DQ Ch. 14 - Prob. 6DQ Ch. 14 - Prob. 7DQ Ch. 14 - Explain the concept of accrued interest on bonds...Ch. 14 - Prob. 9DQ Ch. 14 - Prob. 10DQ

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