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 3PSB

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-2

To determine

Amortization table:

The amortization table under straight line method reflects the premium amortized at each interest period, cash interest paid, total interest expense of each period, unamortized premium left at the end of period and carrying value of bonds in the books.

The Amortization table has to be computed for the lifetime of bonds.

Sub Part-3

To determine

Accounting treatment of interest payment and amortized discount:

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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Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's assets, Liabilities, and Equity?

Answer 2

Question

Chapter 14, Problem 3PSB

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-2

To determine

Amortization table:

The amortization table under straight line method reflects the premium amortized at each interest period, cash interest paid, total interest expense of each period, unamortized premium left at the end of period and carrying value of bonds in the books.

The Amortization table has to be computed for the lifetime of bonds.

Sub Part-3

To determine

Accounting treatment of interest payment and amortized discount:

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 3PSB

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-2

To determine

Amortization table:

The amortization table under straight line method reflects the premium amortized at each interest period, cash interest paid, total interest expense of each period, unamortized premium left at the end of period and carrying value of bonds in the books.

The Amortization table has to be computed for the lifetime of bonds.

Sub Part-3

To determine

Accounting treatment of interest payment and amortized discount:

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 3PSB

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-2

To determine

Amortization table:

The amortization table under straight line method reflects the premium amortized at each interest period, cash interest paid, total interest expense of each period, unamortized premium left at the end of period and carrying value of bonds in the books.

The Amortization table has to be computed for the lifetime of bonds.

Sub Part-3

To determine

Accounting treatment of interest payment and amortized discount:

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 3PSB

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-2

To determine

Amortization table:

The amortization table under straight line method reflects the premium amortized at each interest period, cash interest paid, total interest expense of each period, unamortized premium left at the end of period and carrying value of bonds in the books.

The Amortization table has to be computed for the lifetime of bonds.

Sub Part-3

To determine

Accounting treatment of interest payment and amortized discount:

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 3PSB

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 3PSB

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-2

To determine

Amortization table:

The amortization table under straight line method reflects the premium amortized at each interest period, cash interest paid, total interest expense of each period, unamortized premium left at the end of period and carrying value of bonds in the books.

The Amortization table has to be computed for the lifetime of bonds.

Answer 9

Sub Part-2

To determine

Amortization table:

The amortization table under straight line method reflects the premium amortized at each interest period, cash interest paid, total interest expense of each period, unamortized premium left at the end of period and carrying value of bonds in the books.

The Amortization table has to be computed for the lifetime of bonds.

Answer 10

Sub Part-3

To determine

Accounting treatment of interest payment and amortized discount:

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 11

Sub Part-3

To determine

Accounting treatment of interest payment and amortized discount:

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 12

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Answer 13

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Answer 14

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Answer 15

Ch. 14 - Prob. 1QS Ch. 14 - QS 14-2 Issuing bonds at par P1 Dunphy Company...Ch. 14 - QS 14-3 Issuing bonds at par P1 Madrid Company...Ch. 14 - QS 14-4 Recording bond issuance and interest P1 P2...Ch. 14 - QS 14-5 Journalizing discount bond issuance...Ch. 14 - Prob. 6QS Ch. 14 - OS 14-6 Straight line: Bond computations...Ch. 14 - QS 14-8 Recording bond issuance and discount...Ch. 14 - QS 14-9 Straight-Line: Premium bond computations...Ch. 14 - On July 1. Aloha Co. s a call option that...

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