Distributors sells snack and candy to local stores. On March 1, 2010, Borges issued $4,000,000 of...

Distributors sells snack and candy to local stores. On March 1, 2010, Borges issued $4,000,000 of 5-year, 13% bonds at an effective interest rate of 11%. Interest is payable semiannually on March 1 and September 1. Journalize the entries to record the following:

Sale of bonds on March 1, 2010. Use the tables on present values in Appendix A of your textbook to determine the present value of the bond issue. Round to nearest dollar.

______________________________________________________

_______________________________________________________

________________________________________________________

First interest payment on September 1, 2010, and amortization of bond premium for six months, using the straight-line method. Round to the nearest dollar.

_____________________________________________________

______________________________________________________

_______________________________________________________

Expert Solution

The Issue price of the Bond

· The Price of the Bond is the Present Value of the Coupon Payments plus the Present Value of the Face Value/Par Value.

· The Price of the Bond is normally calculated either by using EXCEL Functions or by using Financial Calculator.

· Here, the calculation of the Bond Price using financial calculator is as follows

Variable	Financial Calculator Key	Figure
Par Value/Face Value of the Bond [$4,000,000]	FV	4,000,000
Coupon Amount [$4,000,000 x 13% x ½]	PMT	260,000
Market Interest Rate or Yield to maturity on the Bond [11.00% x ½]	1/Y	5.50
Maturity Period/Time to Maturity [5 Years x 2]	N	10
Bond Price/Current market price of the Bond	PV	?

Price of the Bond (PV) = $4,301,505

Date	Particulars	Debit	Credit
March 1	Cash	4301505
	To premium on bond payable		301505
	To bond payable		4000000

Sep 1	Interest expense (260000-30151)	229849
	Premium on bond payable (301505/10)	30151
	To cash (400000013%1/2)		260000

ekkarill92 answered 3 years ago

Accounting for Bonds Issued at a Discount On January 1, 2017, Edward Elric Ltd. issued $4,000,000,...

Accounting for Bonds Issued at a Discount On January 1, 2017, Edward Elric Ltd. issued $4,000,000, 8%, 10-year bonds at $3,508,1431. This price resulted in an effective-interest rate of 10% on the bonds. Edward Elric Ltd. uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest on January 1. Required: (Round all computations to the nearest dollar.) 1. Prepare the journal entry to record the issuance of the bonds on January 1, 2017. 2. Prepare...

Consider the following database schema: Frequents(kid, store) Sells(store, candy) Likes(kid, candy) Stores(store, city, phone) Kids(kid, city,...

Consider the following database schema: Frequents(kid, store) Sells(store, candy) Likes(kid, candy) Stores(store, city, phone) Kids(kid, city, age) Write relational algebra expression(s) to: a) Find the stores in ’Warrensburg’, for each display only the store name and phone number. b) Find the stores in ’Warrensburg’, which sells ’Hersheys’ or ’Mars’. Your expression must use set union. c) Repeat the above without using set union. d) Find the kids who are 10 years or older and like ’M&Ms’. e) Find the kids...

CASE 1: BANKRUTCY On March 1, 2017, Vinson Stores, Inc. a owner of women’s clothing stores,...

CASE 1: BANKRUTCY On March 1, 2017, Vinson Stores, Inc. a owner of women’s clothing stores, was petitioned into involuntary bankruptcy by several creditors under the provisions of Chapter 7 of the Federal Bankruptcy Code. Assets of the Corporation at that date were as follows: Cash and cash equivalents $100,000 Accounts Receivable 80,000 Inventories 140,000 Computer equipment 55,000 Store equipment 105,000 Land and Buildings 250,000 Liabilities: IRS 2011 Income taxes 15,000 Tom Davis (Manager)...

Chloe’s Cafe bakes croissants that it sells to local restaurants and grocery stores. The average costs...

Chloe’s Cafe bakes croissants that it sells to local restaurants and grocery stores. The average costs to bake the croissants are $0.30 for 3,100 and $0.25 for 6,200. Required: If the total cost function for croissants is linear, what will be the average cost to bake 5,400? (Do not round intermediate calculations. Round your final answer to 4 decimal places.) Average Cost =

On March 1, 2022, Stratford Lighting issued 14% bonds, dated March 1, with a principal amount...

On March 1, 2022, Stratford Lighting issued 14% bonds, dated March 1, with a principal amount of $300,000. The bonds sold for $294,000 and mature on February 28, 2042 (20 years). Interest is paid semiannually on August 31 and February 28. The market yield for bonds of similar risk and maturity was 14.3%. Required: 1. to 4. Prepare the journal entry to record the issuance of the bonds by Stratford Lighting on March 1, 2022, interest on August 31, 2022,...

Zapzap Corporation issued $4,000,000 in five-year, 4% bonds on August 1, 2019. Interest is to be...

Zapzap Corporation issued $4,000,000 in five-year, 4% bonds on August 1, 2019. Interest is to be paid semi-annually on Feb 1 and August 1. The bonds were sold to yield 6% effective annual interest. Pine Corporation has a calendar year-end and follows IFRS. Instructions: Prepare the entries required for these bonds at • December 31, 2019(year end) • February 1, 2020 • August 1, 2020 when the interest was paid, and the entire issue was retired early for $4,350,000 plus...

31. On January 1, Patterson Inc. issued $4,000,000, 9% bonds for $3,756,000. The market rate...

31. On January 1, Patterson Inc. issued $4,000,000, 9% bonds for $3,756,000. The market rate of interest for these bonds is 10%. Interest is payable annually on December 31. Patterson uses the effective-interest method of amortizing bond discount. At the end of the second year, Patterson should report unamortized bond discount of a. $118,400. b. $228,400. c. $211,240. d. $204,000.

Ally Company issued $4,000,000 of 7%, 12-year bonds on January 1, 2018, for $3,731,582. The market or...

Ally Company issued $4,000,000 of 7%, 12-year bonds on January 1, 2018, for $3,731,582. The market or effective interest rate is 9%. Interest is paid annually on each January 1st, and the effective-interest method of amortization is to be used. Provide the journal entry to record issuance of these long-term bonds. (You may or may not need all rows of this textbox). Provide the end of the year adjusting journal entry (for Dec. 31, 2018) to record accrued Interest Expense for...

Joplin Corporation produces syrups that it sells to candy makers. On November 1, it had no...

Joplin Corporation produces syrups that it sells to candy makers. On November 1, it had no work-in-process inventory. It started production of 44,900 gallons of syrup in November and completed production of 43,000 gallons. The costs of the resources used by Joplin in November consist of the following: Materials $ 78,490 Conversion costs (labor and overhead) 54,500 Required: The production supervisor estimates that the ending work-in-process is 70 percent complete on November 30. Compute the cost of syrup completed and...

2. On March 1, 2010, Jacoby Ltd., a Canadian company, entered into a contract to buy...

2. On March 1, 2010, Jacoby Ltd., a Canadian company, entered into a contract to buy supplies from Hornblower Co., a foreign company, for FC400,000. The contract requires Hornblower to deliver the supplies to Jacoby on July 15, 2010. Payment is required to be made in full upon delivery. On March 1, 2010, Jacoby entered into a forward contract with the bank to purchase FC400,000 on July 15, 2010. As promised, Hornblower delivered the goods on July 15th and payment...

Question