Sunrise Corporation issued$300,000 of 6%,10-year bonds on January 1,2021,for$311,076.This price provided a yield of 8%on the...

Sunrise Corporation issued$300,000 of 6%,10-year bonds on January 1,2021,for$311,076.This price provided a yield of 8%on the bonds.Interest is payable semiannually on June 30 and

December 31.If Sunrise uses the effective-interest method and fiscal year-end is on October 31,the amount of interest expense reported on the income statement for the year ended October 31,

2021 should be:

Solutions

Expert Solution

Calculate interest expense for 2021
Interest expense for June 2021	$12,443	311076*(8%/2)
Coupon amount for June 2021	$9,000	300000*(6%/2)
Premium amortized	$3,443	12443-9000
Bond payable balance, 30th June 2021	$307,633	311076-3443
Interest expense for 4 months (July-Oct)	$8,204	307633(8%)(4/12)
Amount of interest expense	$20,647	(12443+8204)

Thus, amount of interest expense reported in income statement is $20,647

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

Apple Corporation issued $360,000 of 6%,10-year bonds on January 1,2021,for $311,076.

Apple Corporation issued $360,000 of 6%,10-year bonds on January 1,2021,for $311,076. This price provided a yield of 8%on the bonds. Interest is payable semiannually on June 30 and December 31. If Apple uses the effective-interest method and the fiscal year-end is on October 31, the amount of interest expense reported on the income statement for the year ended October 31, 2021 should be:

On January 1,2021, Apple Company issued $840,000 of 8%,10-year bonds for 97.

On January 1,2021, Apple Company issued $840,000 of 8%,10-year bonds for 97. Apple retired all of these bonds on January 1,2022, at 102. If Apple uses the straight-line amortization, how much loss should be recognized on this bond retirement?

Dublin Company sold$1,200,000 of 8%,10-year bonds at 97 on January 1,2021.The bonds were dated January 1,2021...

Dublin Company sold$1,200,000 of 8%,10-year bonds at 97 on January 1,2021.The bonds were dated January 1,2021 and pay interest on June 30 and December 31.If Dublin uses the straight-line amortization,what would the total interest expense recognized for the bond issue over its full term?

Gracie Corporation issued $300,000 5-year, 8% bonds for $325,591 on January 1, 2019 when the market...

Gracie Corporation issued $300,000 5-year, 8% bonds for $325,591 on January 1, 2019 when the market rate is 6%. Interest is paid semiannually every June 30 and December 31. Always assume companies use the effective-interest method. What is the par value of the bonds, also known as the principal or face value? What is the amount of cash Gracie Corporation receives when it issues the bonds? This is also known as the selling price or issue price of the bonds....

On January 1, 2020, Flanagin Corporation issued $5,000,000 face value, 8%, 10-year-bonds at $4,376,892. The price...

On January 1, 2020, Flanagin Corporation issued $5,000,000 face value, 8%, 10-year-bonds at $4,376,892. The price resulted in a 10% effective-interest rate on the bonds. Flanagin uses the effective interest method to amortize bond premium or discount. The bonds pay annual interest on each January 1. Prepare the journal entry to record the following transactions: The issuance of bonds on January 1, 2020. Accrual of interest and amortization of the discount on December 31, 2020. (1.5 marks) The payment of...

Silcon Company issued $500,000 of 6%, 10-year bonds on January 1, 2020 for $431,850 to yield...

Silcon Company issued $500,000 of 6%, 10-year bonds on January 1, 2020 for $431,850 to yield an effective annual rate of 8%. Interest is paid semiannually on January 1 and July 1. Instructions: (a) Prepare the journal entries to record the transactions for 2020 related to this bond issuance assuming the effective interest method of amortization is used. (b) Prepare the journal entries as of January 1, 2021 assuming the interest was paid and then the bond was redeemed at...

On July 1, 2017, Global Satellites Corporation issued $1,800,000 of 10-year, 8% bonds to yield a...

On July 1, 2017, Global Satellites Corporation issued $1,800,000 of 10-year, 8% bonds to yield a market interest rate of 7%. The bonds pay semi-annual interest on July 1 and January 1. Global has a December 31 year end. When the bonds were issued, Global received $1,927,919 Click here to view the factor table. Part 1 Prepare an amortization table through January 1, 2019 (three interest periods) for this bond issue. (Round all amounts to the nearest dollar, e.g. 5,275.)...

on January 1, year 2, London corporation issued a 10 year $500,000, 8%, bonds payable that...

on January 1, year 2, London corporation issued a 10 year $500,000, 8%, bonds payable that pays interest semi-annually on July 1 and January 1. on January 1, year 2, it is determined that the market rate of bond was 10%. what is the amount of cash received from the insurance of the 8% bond at the market rate of 10%?

A company issues $5,000,000, 6%, 10-year bonds to yield 8% on January 1, 2017. Interest is...

A company issues $5,000,000, 6%, 10-year bonds to yield 8% on January 1, 2017. Interest is paid on June 30 and December 31. The proceeds from the bonds are $4,320,500. Using straight-line amortization, what will: a) The carrying value of the bonds be on the December 31, 2018 balance sheet? b) How much interest expense will be recognized in 2018? Using effective interest amortization, what will: c) The carrying value of the bonds be on the December 31, 2017 balance...

The Swifty Company issued $300,000 of 10% bonds on January 1, 2017. The bonds are due...

The Swifty Company issued $300,000 of 10% bonds on January 1, 2017. The bonds are due January 1, 2022, with interest payable each July 1 and January 1. The bonds were issued at 99. Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Swifty Company records straight-line amortization semiannually. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically...

Subjects