SURVEY OF ACCOUNTING-ACCESS
4th Edition
ISBN: 9780077631536
Author: Thomas Edmonds
Publisher: McGraw-Hill Education
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Chapter 7, Problem 24Q
15. If Roc Co. issued $100,000 of 5 percent, 10-year bonds at the face amount, what is the effect of the issuance of the bonds on the financial statements? What amount of interest expense will Roc Co. recognize each year?
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16 )
7.
Bower Company sold $100,000 of 20-year bonds for $95,000. The stated rate on the bonds was 7%, and interest is paid annually on December 31. What entry would be made on December 31 when the interest is paid? (Numbers are omitted.)
a.Dr. Interest ExpenseCr. Bonds PayableCr. Cash
b.Dr. Interest ExpenseCr. Cash
c.Dr. Interest ExpenseCr. Discount on Bonds PayableCr. Cash
d.Dr. Interest ExpenseDr. Discount on Bonds PayableCr. Cash
H2.
Chapter 7 Solutions
SURVEY OF ACCOUNTING-ACCESS
Ch. 7 - 1. What type of transaction is a cash payment to...Ch. 7 - Prob. 2QCh. 7 - How does recording accrued interest affect the...Ch. 7 - 4. Who is the maker of a note payable?Ch. 7 - How does the going concern assumption discussed in...Ch. 7 - 6. Why is it necessary to make an adjusting entry...Ch. 7 - Prob. 7QCh. 7 - Prob. 8QCh. 7 - Prob. 9QCh. 7 - Prob. 10Q
Ch. 7 - 11. Are contingent liabilities recorded on a...Ch. 7 - Prob. 12QCh. 7 - Prob. 13QCh. 7 - Prob. 14QCh. 7 - Prob. 15QCh. 7 - Prob. 16QCh. 7 - 1. What is the difference between classification...Ch. 7 - 2. At the beginning of Year 1, B Co. has a note...Ch. 7 - 3. What is the purpose of a line of credit for a...Ch. 7 - 4. What are the primary sources of debt financing...Ch. 7 - 5. What are some advantages of issuing bonds...Ch. 7 - 6. What are some disadvantages of issuing bonds?Ch. 7 - 7. Why can a company usually issue bonds at a...Ch. 7 - 15. If Roc Co. issued 100,000 of 5 percent,...Ch. 7 - 16. What is the mechanism is used to adjust the...Ch. 7 - 17. When the effective interest rate is higher...Ch. 7 - 18. What type of transaction is the issuance of...Ch. 7 - 19. What factors may cause the effective interest...Ch. 7 - 20. If a bond is selling at 97, how much cash will...Ch. 7 - Prob. 30QCh. 7 - 22. Gay Co. has a balance m the Bonds Payable...Ch. 7 - Prob. 32QCh. 7 - Prob. 33QCh. 7 - Prob. 1ECh. 7 - Prob. 2ECh. 7 - Prob. 3ECh. 7 - Prob. 4ECh. 7 - Prob. 5ECh. 7 - Prob. 6ECh. 7 - Prob. 7ECh. 7 - Prob. 8ECh. 7 - Prob. 9ECh. 7 - Prob. 10ECh. 7 - Prob. 11ECh. 7 - Prob. 12ECh. 7 - Prob. 13ECh. 7 - Prob. 14ECh. 7 - Prob. 15ECh. 7 - Prob. 16ECh. 7 - Prob. 17ECh. 7 - Prob. 18ECh. 7 - Prob. 19ECh. 7 - Prob. 20ECh. 7 - Prob. 21ECh. 7 - Prob. 22ECh. 7 - Prob. 23ECh. 7 - Prob. 24ECh. 7 - Prob. 25ECh. 7 - Prob. 26PCh. 7 - Prob. 27PCh. 7 - Prob. 28PCh. 7 - Prob. 29PCh. 7 - Prob. 30PCh. 7 - Prob. 31PCh. 7 - Prob. 32PCh. 7 - Prob. 33PCh. 7 - Prob. 34PCh. 7 - Prob. 35PCh. 7 - Prob. 36PCh. 7 - Prob. 37PCh. 7 - Prob. 38PCh. 7 - Prob. 1ATCCh. 7 - Prob. 4ATCCh. 7 - Prob. 5ATC
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- Irving Inc. sold bonds with a $50,000, 10% interest, and 10-year term at $52,000. What is the total amount of interest expense over the life of the bonds?arrow_forwardWhat gain or loss, if any, would X2 record in this date?arrow_forward1.On January 1, Year 1, Wayne Company issued bonds with a face value of $600,000, a 6% stated rate of interest, and a 10-year term. Interest is payable in cash on December 31 of each year. Wayne uses the straight-line method to amortize bond discounts and premiums. Assuming Wayne issued the bonds for 102.5, what is the amount of interest expense that will be reported on the income statement for the year ending December 31, Year 1? 2. On January 1, Year 1, Wayne Company issued bonds with a face value of $600,000, a 6% stated rate of interest, and a 10-year term. Interest is payable in cash on December 31 of each year. Wayne uses the straight-line method to amortize bond discounts and premiums. 2.Assuming Wayne issued the bonds for 102.5, what is the amount of interest expense that will be reported on the income statement for the year ending December 31, Year 1? 3.Perry Corporation was established on January 1, Year 1 when it issued 20,000 shares of $50 par, 5 percent, cumulative…arrow_forward
- 1. How much is the amortization of discount for 2021? 2. How much is the carrying value of the bonds payable as of December 31, 2021?arrow_forwardIf the company issued RO 100,000 , 5% interest, 10-year bonds at 98 on January 1, 2021, which of the following is the correct accounting entry on the date of issuance? a. the company will record premium on bonds payable, RO 200 b. the company will record discount on bonds payable, RO 2,000 c. the company will record premium on bonds payable, RO 2,000 d. the company will record discount on bonds payable, RO 200arrow_forwardBonds Payable has a balance of $1,000,000 and Discount on Bonds Payable has a balance of $12,500. If the issuing corporation redeems the bonds at 99, what is the amount of gain or loss on redemption?arrow_forward
- Hh1.arrow_forward12. On 1/1/21, AB Company sold $100,000, 10%, 10 year bonds at 96. Complete the entries for the bond issuance and the first year interest accrual (including amortization of the discount). Account Debit Creditarrow_forwardSuppose that Best Buy issued $890000 of 8 %, 5-year bonds at 108. Assuming straight-line amortization and annual interest payments, what is the amount of the amortization at each interest payment date? Ⓒ$71200 $14240 $7120 $56960arrow_forward
- On January 2, Year 1, Kampai Sushi Bar sold $800,000 of bonds for $785,000. The bonds will mature in 10 years and pay interest annually on December 31. The company properly recorded the payment of interest and the amortization of the discount using the effective interest method. What will be the carrying value of the bonds at the end of Year 1? a.$800,000 b.less than $785,000 c.$785,000 d.greater than $785,000, but less than $800,000arrow_forward3. Conor Corporation has $10,500,000 of 5 percent, 10-year bonds dated January 1, with interest payment dates of June 30 and December 31. The company’s fiscal year ends December 31. A. Assume the bonds are issued for $9,720,000 on January 1 to yield an effective interest rate of 6 percent. Prepare journal entries for January 1, June 30, and December 31, assuming that Conor Corporation uses the effective interest method to amortize bond premiums or discounts. B. Calculate the net book value of the bonds after the interest payments have been made on June 30 and December 31.arrow_forwardH1.arrow_forward
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