Determine cash paid for bond interest
• LO21–3
For each of the four independent situations below, prepare a single
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- 48 Which of the following is true with regards to the accrued interest on bonds payable that are sold between interest dates? Group of answer choices The accrued interest is computed using the effective rate The accrued interest is extra income to the buyer and treated as bond issue cost of the buyer The accrued interest is added to the issue price of the bond to determine the total cash proceeds from bond issuance The accrued interest will be paid to the seller when the bonds maturearrow_forwardCalculator The journal entry a company records for the issuance of bonds when the contract rate and the market rate are the same is to debit Cash and Discount on Bonds Payable, credit Bonds Payable debit Cash, credit Premium on Bonds Payable and Bonds Payable debit Cash, credit Bonds Payable debit Bonds Payable, credit Cash 4:14 PMarrow_forwardWhat is the journal entry to record the bond interest payment if you do not have to neither a premium or discount is involved? O Debit Interest Expense; Credit Cash O Debit Cash; Credit Interest Payable O Credit Cash; Debit Interest Expense O Debit Interest Payable; Credit Interest Expensearrow_forward
- Instructions On the first day of the fiscal year, a company issues a $1,350,000, 11%, five-year bond that pays semiannual interest of $74,250 ($1,350,000 x 11% x %), receiving cash of $1,512,610. Journalize the first interest payment and the amortization of the related bond premium. Round to the nearest dollar. Refer to the Chart of Accounts for exact wording of account titles. 10:49 PM 0 40 4/28/2022 MacBook Airarrow_forward05:26 a-2. If Agatha had sold the bonds at their face amount, what amount of cash would Agatha have received? b. Prepare the liabilities section of the balance sheet at December 31, Year 1 and Year 2. c. Determine the amount of interest expense that will be reported on the income statements for Year 1 and Year 2. d. Determine the amount of interest that will be paid in cash to the bondholders in Year 1 and Year 2. Complete this question by entering your answers in the tabs below. Required A1 Required A2 Required B Required C Required D Determine the amount of interest that will be paid in cash to the bondholders in Year 1 and Year 2. Interest paid Year 1 Year 2arrow_forwardPeriod Cash Paid Interest Expense Interest in Carrying Value Carrying Value Issue Date $85,940 1 $4,100 $ 3,438 $662 85,278 2 4,100 3,411 689 84,589 1. & 2. Record the bond issue assuming the face value of bonds payable is $79,000 and first interest payment. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) Record the bond issue. Event General Journal Debit Credit 1 Record the first interest payment. Event General Journal Debit Credit 2arrow_forward
- 12 - CODE AND NAME OF THE ACCOUNT WILL BE DEBT 102 02 BANK CURRENCY DTH 62.000121 02 SHARES OF FX RECEIVABLES 62.000What transaction does the above record belong to?A) Acceptance of the policy by the bankB) Endorsement of the policyC) Returning the policy to the bankD) Payment of the policy by the bankE) Collection of the policy by the bankarrow_forwardd Question 7 Using the stylized balance sheet below, please 1) finish the balance sheet, and 2) use that information to answer the following question, entering your answer in the place provided. Avg. Interest Amount Avg. Interest Amount Demand Vault Cash $1,262 $1,408 Deposits US Treas. Savings 5.51% 2,372 3.46% 9,071 Securities Deposits Consumer/Bus. 5.76% 12,678 CD's 2.34% ???? Loans Mortgage 6.08% 7,692 Borrowings 5.12% 1,600 Loans Property Equipment Total Assets 986 Equity Total Liab.& ???? Equity 3,433 ???? What is the net interest margin the this bank? (Please enter the answer without the % sign-so - so for instance is the answer is 5.67%, then enter just 5.67) 1.565 er 3.13 margin of error +/- 0.05arrow_forwardmarch eacg Letter to the correct number answer to the left: 1. Interest 2. Monetary asset 3. Compound interest 4. Simple interest 5. Annuity 6. Present value of a single amount 7. Annuity due 8. Future value of a single amount 9. Ordinary annuity 10. Effective rate or yield 11. Nonmonetary asset 12. Time value of money 13. Monetary liability 1. ______ 2. ______ 3. ______ 4. ______ 5. ______ 6. ______ 7. ______ 8. ______ 9. ______ 10. ______ 11. ______ 12. ______ 13. ______ a. First cash flow occurs one period after agreement begins b. The rate at which money will actually grow during a year c. First cash flow occurs on the first day of the agreement d. The amount of money that a dollar will grow to e. Amount of money paid/received in excess of amount borrowed/lent f. Obligation to pay a sum of cash, the amount of which…arrow_forward
- do not copy paste pleasearrow_forwardConsider the relative liquidity of the following assets: Assets 1. A bond issued by a publicly traded company 2. The funds in a money market account 3. A $20 bill 4. Your truck Select the assets in order o Most Liquid Second-Most Liquid Third-Most Liquid Least Liquid Bond 520.00 bill Truck Funds held in a money market account quid.arrow_forward26arrow_forward
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