Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Question
Chapter 14, Problem 4MC
To determine
Identify the effect of cash received by the issuer, if the interest payments dates of a bond are May 1 and November 1.
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When the interest payment dates of a bond are May 1 and November 1,and a bond issue is sold on June 1, the amount of cash received by theissuer will be:
a. increased by accrued interest from June 1 to November 1b. increased by accrued interest from May 1 to June 1c. decreased by accrued interest from June 1 to November 1d. decreased by accrued interest from May 1 to June 1
The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the straight-line
method. Round to the nearest dollar.
a.
Bonds Payable
b. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the straight-line method. Round to
the nearest dollar.
3. Determine the total interest expense for Year 1. Round to the nearest dollar.
4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate
of interest?
5. Compute the price of $65,332,160 received for the bonds by using Present value at compound interest, and Present value of an
annuity. Round to the nearest dollar. Your total may vary slightly from the price given due to rounding differences.
Present value of the face amount
Present value of the semiannual interest payments
Campbell, Inc. produces and sells outdoor equipment. On July 1, 20Y1, Campbell issued $40,000,000 of 10-year, 10% bonds at a market (effective) interest rate of 9%, receiving cash of
$42,601,480. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds.
2. Journalize the entries to record the following:
a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the interest method.
b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the interest method.
3. Determine the total interest expense for 20Y1.
Chapter 14 Solutions
Intermediate Accounting: Reporting And Analysis
Ch. 14 - Prob. 1GICh. 14 - Why does issuing debt result in an income tax...Ch. 14 - At the beginning of 2018, corporate tax rates...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. 6GICh. 14 - Prob. 7GICh. 14 - Prob. 8GICh. 14 - Prob. 9GICh. 14 - Prob. 10GI
Ch. 14 - Prob. 11GICh. 14 - Prob. 12GICh. 14 - Prob. 13GICh. 14 - Prob. 14GICh. 14 - What is a call provision? Why do companies often...Ch. 14 - Prob. 16GICh. 14 - When do companies recognize gains and losses from...Ch. 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. 28GICh. 14 - On January 1, 2019, Bay Company issues bonds with...Ch. 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 - On December 31, 2019, Dare Corporation had...Ch. 14 - Prob. 10MCCh. 14 - On January 1, 2019, Onslow Company borrowed...Ch. 14 - (Appendix 14.1)Pamlico Company has a 500,000, 15%,...Ch. 14 - Prob. 1RECh. 14 - Refer to the information in RE14-1. Assume Canglon...Ch. 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 - On January 1, 2019, Langdon Co. issues bonds with...Ch. 14 - Nolan Corporation has outstanding convertible...Ch. 14 - On January 1, 2019, Branson Corporation issued...Ch. 14 - On January 1, 2019, Boater Company issues a 20,000...Ch. 14 - On January 2, 2019, Jennings Company purchases...Ch. 14 - Determining the Proceeds from Bond Issues Madison...Ch. 14 - Prob. 2ECh. 14 - Prob. 3ECh. 14 - On January 1, 2019, Knorr Corporation issued...Ch. 14 - On January 1, 2019, Hackman Corporation issued 1...Ch. 14 - Prob. 6ECh. 14 - Chowan Corporation issued 100,000 of 10% bonds...Ch. 14 - Prob. 8ECh. 14 - Taylor Company issued 100,000 of 13% bonds on...Ch. 14 - On January 1, 2019, Calvert Company issues 12%,...Ch. 14 - Prob. 11ECh. 14 - On October 1, 2019, Ball Company issued 9% bonds...Ch. 14 - Prob. 13ECh. 14 - Prob. 14ECh. 14 - On December 1, 2017, Cone Company issued its 10%,...Ch. 14 - Prob. 16ECh. 14 - Prob. 17ECh. 14 - On July 1, 2020, Tuttle Company had bonds payable...Ch. 14 - On January 1, 2019, Conroe Corporation sold...Ch. 14 - Prob. 20ECh. 14 - On July 2, 2018, McGraw Corporation issued 500,000...Ch. 14 - Prob. 22ECh. 14 - January 1, 2019, Johnson Corporation issued a...Ch. 14 - Spath Company borrows 75,000 by issuing a 4-year,...Ch. 14 - Webb Corporation purchased an asset from Shaw...Ch. 14 - On January 1, 2019, Sanders Corporation purchased...Ch. 14 - On January 1, 2019, Billips Corporation purchased...Ch. 14 - On January 1, 2019, Northfield Corporation becomes...Ch. 14 - Prob. 29ECh. 14 - Prob. 30ECh. 14 - Prob. 31ECh. 14 - Prob. 1PCh. 14 - Prob. 2PCh. 14 - Prob. 3PCh. 14 - Prob. 4PCh. 14 - Bats Corporation issued 800,000 of 12% face value...Ch. 14 - Prob. 6PCh. 14 - Wilbury Corporation issued 1 million of 13.5%...Ch. 14 - Prob. 8PCh. 14 - Prob. 9PCh. 14 - Prob. 10PCh. 14 - Prob. 11PCh. 14 - Hamlet Corporation purchases computer equipment at...Ch. 14 - Prob. 13PCh. 14 - Restructuring (Debtor) Oakwood Corporation is...Ch. 14 - Prob. 15PCh. 14 - Tenth National Bank has a 200,000, 12% note...Ch. 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 - On January 1, 2019, Brewster Company issued 2,000...Ch. 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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Similar questions
- After accruing interest at year end, the company's December 31, Year 1 balance sheet should reflect total liabilities associated with the bond the amount of:arrow_forwardThe discount on bonds payable is charged to interest expense a.Using the effective interest method b.Only in the year the bond matures c.Equally over the life of the bond d.only in the year the bond is issuedarrow_forward[The following information applies to the questions displayed below.] Hillside issues $4,000,000 of 6%, 15-year bonds dated January 1, 2021, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $3,456,448. Required: 1. Prepare the January 1 journal entry to record the bonds' issuance. 2(a) For each semiannual period, complete the table below to calculate the cash payment. 2(b) For each semiannual period, complete the table below to calculate the straight-line discount amortization. 2(c) For each semiannual period, complete the table below to calculate the bond interest expense. 3. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life. 4. Prepare the first two years of a straight-line amortization table. 5. Prepare the journal entries to record the first two interest payments. Complete this question by entering your answers in the tabs below. Req 1 Req 2A to 2C Req 3 Req 4 Req 5 For each…arrow_forward
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