Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Chapter 7, Problem 35P
Problem 7-35 Straight-line amortization of a bond discount
Pine Land Co. was formed when it acquired cash from the issue of common stock. The company then issued bonds at a premium on January 1, 2018. Interest is payable annually on December 31 of each year, beginning December 31, 2018. On January 2, 2018, Pine Land Co. purchased a piece of land and leased it for an annual rental fee. The rent is received annually on December 31, beginning December 31, 2018. At the end of the eight-year period (December 31, 2025), the land was sold at a gain, and the bonds were paid off. A summary of the transactions for each year follows.
2018
- 1. Acquired cash from the issue of common stock.
- 2. Issued eight-year bonds.
- 3. Purchased land.
- 4. Received land rental income.
- 5. Recognized interest expense including the straight-line amortization of the premium and made the cash payment for interest on December 31.
2019–2024
6. Received land rental income.
7. Recognized interest expense including the straight-line amortization of the premium and made the cash payment for interest on December 31.
2025
8. Sold land at a gain.
9. Retired bonds at face value.
Required
Identify each of these nine transactions as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). Explain how each event affects assets, liabilities, equity, net income, and
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Preparing a Bond Amortization Schedule
answer 7-9 please
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On January 1, 2021, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and
December 31. Portions of the bond amortization schedule appear below:
Cash
Effective
Increase in
Outstanding
Payment
Payment
Interest
Balance
Balance
6,544,432
6,555,654
6,567,437
6,579,809
6,592,799
6,606,439
6,620,761
1
316, 0ее
316,000
316,000
316,000
316, е0е
316,000
327,222
327,783
328,372
328,990
329,640
330,322
11,222
11,783
12,372
12,990
13,640
14,322
3.
4
6
38
316,000
316,000
316,000
384,243
387,655
391,243
68,243
71,655
75,243
7,753,102
7,824,757
7,900,000
39
40
Required:
1. What is the face amount of the bonds?
2. What is the initial selling price of the bonds?
3. What is the term to maturity in years?
4. Interest is determined by what approach?
5. What is the stated annual interest rate?
6. What is the effective annual interest rate?
7. What is the total cash interest paid over the term to maturity?
8. What is the total effective…
Preparing a Bond Amortization Schedule
answer 1-3
Chapter 7 Solutions
Survey Of Accounting
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 - Assume that on October 1, 2018, Big Company...Ch. 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 - Recognizing accrued interest expense Abardeen...Ch. 7 - Prob. 2ECh. 7 - Prob. 3ECh. 7 - Prob. 4ECh. 7 - Prob. 5ECh. 7 - Effect of warranties on income and cash flow To...Ch. 7 - Effect of warranty obligations and payments on...Ch. 7 - Principle due at maturity versus installments...Ch. 7 - Prob. 9ECh. 7 - Amortization of a long-term loan A partial...Ch. 7 - Prob. 11ECh. 7 - Prob. 12ECh. 7 - Prob. 13ECh. 7 - Prob. 14ECh. 7 - Exercise 7-15 Straight-line amortization of a bond...Ch. 7 - Prob. 16ECh. 7 - Prob. 17ECh. 7 - Prob. 18ECh. 7 - Prob. 19ECh. 7 - Prob. 20ECh. 7 - Prob. 21ECh. 7 - Exercise 7-22 Preparing a classified balance sheet...Ch. 7 - Exercise 7-23 Effective interest amortization of a...Ch. 7 - Prob. 24ECh. 7 - Prob. 25ECh. 7 - Prob. 26PCh. 7 - Prob. 27PCh. 7 - Prob. 28PCh. 7 - Problem 7-29 Current liabilities The following...Ch. 7 - Prob. 30PCh. 7 - Prob. 31PCh. 7 - Problem 7-32 Accounting for a line of credit Elite...Ch. 7 - Prob. 33PCh. 7 - Prob. 34PCh. 7 - Problem 7-35 Straight-line amortization of a bond...Ch. 7 - Prob. 36PCh. 7 - Prob. 37PCh. 7 - Prob. 38PCh. 7 - Writing Assignment Definition of elements of...Ch. 7 - Prob. 5ATC
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