SweetFish Corp. issued bonds with a par value of $875,000 and a five-year life on May...

SweetFish Corp. issued bonds with a par value of $875,000 and a five-year life on May 1, 2020. The contract interest rate is 7.00%. The bonds pay interest on October 31 and April 30. They were issued at a price of $839,515 when the market interest rate was 8.00%. SweetFish Corp.’s year-end is December 31.

a. Prepare an amortization table for these bonds that covers their entire life. Use the effective interest method of allocating interest. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar. Enter all the amounts as positive values.)

b. Prepare the journal entries that the issuer would make to record the entries on October 31, 2020; December 31, 2020; and April 30, 2021. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.)

Solutions

Expert Solution

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Calculations Marketing Inc. issued 7.0% bonds with a par value of $370,000 and a five-year life...

Calculations Marketing Inc. issued 7.0% bonds with a par value of $370,000 and a five-year life on January 1, 2017, for $385,781. The bonds pay interest on June 30 and December 31. The market interest rate was 6% on the original issue date. (Use TABLE 14A.1 and TABLE 14A.2.) Required: 1. Calculate the total bond interest expense over the life of the bonds. 2. Prepare an amortization table using the effective interest method. Period Ending Cash Interest Paid Period Interest...

West Gate Motor Homes Inc. Issued bonds with a par value of $680,000 and a five-year...

West Gate Motor Homes Inc. Issued bonds with a par value of $680,000 and a five-year life on January 1, 2019. The bonds pay interest on June 30 and December 31. The contract interest rate is 8%. The market interest rate was 9% on the original issue date. Required 1. Calculate the issue price and the total bond interest expense over the life of the bonds. 2. Prepare an amortization table using the effective interest method similar to Exhibit 14.10...

On January 1, 2018, Carvel Corp. issued five-year bonds with a face value of $620,000 and...

On January 1, 2018, Carvel Corp. issued five-year bonds with a face value of $620,000 and a coupon interest rate of 6%, with interest payable semi-annually. Assume that the company has a December 31 year end and records adjusting entries annually. Record the journal entries relating to the bonds on January 1, July 1, and December 31, assuming that when the bonds were sold, the market interest rate was 7%.

On January 1, 2018, the company had issued $1,200,000 par value, 7%, five-year bonds at a...

On January 1, 2018, the company had issued $1,200,000 par value, 7%, five-year bonds at a price of $1,251,176. Interest was payable semiannually on June 30 and December 31. The market rate of interest was 6% on the date the bond were issued. On March 1, 2019, the company extinguished 40% of the bonds outstanding by issuing 15,000 of its common shares. It also paid in cash all interest due up to March 1, 2019 on these bonds. The market...

Company issued 10-year, 11 percent coupon bond with a par value of $1,000. The bonds may...

Company issued 10-year, 11 percent coupon bond with a par value of $1,000. The bonds may be called in 5 years at a call price of $1,150. The bond currently sells for $1,350. You are required to answer the following questions: a) What is the bond's yield to maturity? b) What is the bond's current yield? c) What is the bond's capital gain or loss yield? d) What is the bond's yield to call? e) If you bought this bond...

On July 1, 2020, Davis Corp. issued 10-year, 800 Bonds, Par Value $1,000 each, Bonds carry...

On July 1, 2020, Davis Corp. issued 10-year, 800 Bonds, Par Value $1,000 each, Bonds carry 10% coupon rate, with interest payable semi-annually on January 1 and July 1. The bonds were issued for $ 908,722. On January 2, 2022, Davis offered to buy back the bonds at 103. Forty percent (40%) of the bondholders accepted the offer. Davis uses the effective-interest method of amortizing premium or discount. Instructions a) Prepare the journal entry to record the bond issuance. b) Prepare...

On May 1, 2017, Heron Corp issued $600,000, 9%, 5 year bonds at face value. The...

On May 1, 2017, Heron Corp issued $600,000, 9%, 5 year bonds at face value. The bonds were dated May 1, 2017, and pay interest annually on May 1. Financial statements are prepared annually on December 31. (a) Prepare the journal entry to record the issuance of the bonds. (b) Prepare the adjusting entry to record the accrual of interest on December 31, 2017. (c) Show the balance sheet presentation on December 31, 2017. (d) Prepare the journal entry to...

January 1, 2020, Farhaan Corp. issued bonds with a par value of $ 1,000,000 at 98...

January 1, 2020, Farhaan Corp. issued bonds with a par value of $ 1,000,000 at 98 (which is net of issue costs), due in 15 years. Six years after the issue date, the entire issue is called at 102 and cancelled. Instructions Prepare the journal entry to reflect the reacquisition of the bond assuming the straight-line amortization method.

On January 1, 2018, ABC Inc. had issued $1,200,000 par value, 7%, five-year bonds at a...

On January 1, 2018, ABC Inc. had issued $1,200,000 par value, 7%, five-year bonds at a price of $1,251,176. Interest was payable semiannually on June 30 and December 31. The market rate of interest was 6% on the date the bond were issued. On March 1, 2019, ABC Inc. extinguished 40% of the bonds outstanding by issuing 15,000 of its common shares. It also paid in cash all interest due up to March 1, 2019 on these bonds. The market...

On December 1, 2020, Progressive Corp. issued $5,000,000 (par value), 12%, 5-year convertible bonds for $5,026,000...

On December 1, 2020, Progressive Corp. issued $5,000,000 (par value), 12%, 5-year convertible bonds for $5,026,000 plus accrued interest. The bonds were dated April 1, 2020 with interest payable April 1 and October 1. If the bonds had NOT been convertible, they would have sold for $5,006,000. The bond premium/discount is amortized each interest period on a straight-line basis. Progressive does NOT value the equity component at zero. Progressive’s fiscal year end is September 30. On October 1, 2021, half...

Subjects