On January 1 of this year, Ikuta Company issued a bond with a face value of...

On January 1 of this year, Ikuta Company issued a bond with a face value of $145,000 and a coupon rate of 7 percent. The bond matures in 3 years and pays interest every December 31. When the bond was issued, the annual market rate of interest was 8 percent. Ikuta uses the effective-interest amortization method. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your final answer to whole dollars.)

Required:

1. Complete a bond amortization schedule for all three years of the bond's life.

2. What amounts will be reported on the income statement and balance sheet at the end of Year 1 and Year 2?

Solutions

Expert Solution

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Power Company issued a $1,000,000, 5%, 5-year bond payable at face value on January 1, 2018.

Journalizing bond transactions Power Company issued a $1,000,000, 5%, 5-year bond payable at face value on January 1, 2018. Interest is paid semiannually on January 1 and July 1. Requirements 1. Journalize the issuance of the bond payable on January 1, 2018. 2. Journalize the payment of semiannual interest on July 1, 2018.

On January 1, Landan, Inc. issued a 20-year semiannual bond with a face value of $915,000...

On January 1, Landan, Inc. issued a 20-year semiannual bond with a face value of $915,000 paying 8%. On the date of issue, the market rate for similar bonds was 8%. Landan would like to know how much this issuance would raise. The following table is a SCRATCH table and will NOT be graded. You may use it, if you wish, to assist you. Provided you answer the other questions correctly, you could leave it blank and still receive full...

on January 1, 2013, Johnson corporation issued a 10 year, 6% bond with a face value...

on January 1, 2013, Johnson corporation issued a 10 year, 6% bond with a face value of $2,175,000. The bonds were sold to yield 5%. Interest is payable semi-annually on January 1 and July 1. Effective ammortization is to be used. What accounts related to this bond would be shown on the 12/31/13 balance sheet? show in the proper sections. Current Liabilities: Long-term Liabilities:

On January 1, Year 1, Hart Company issued bonds with a face value of $128,000, a...

On January 1, Year 1, Hart Company issued bonds with a face value of $128,000, a stated rate of interest of 12 percent, and a five-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 11 percent at the time the bonds were issued. The bonds sold for $132,731. Hart used the effective interest rate method to amortize the bond premium. (Round your intermediate calculations and final answers to...

a. On January 1, Year 1, Jones Company issued bonds with a $160,000 face value, a...

a. On January 1, Year 1, Jones Company issued bonds with a $160,000 face value, a stated rate of interest of 8.5%, and a 5-year term to maturity. The bonds were issued at 97. Interest is payable in cash on December 31st of each year. The company amortizes bond discounts and premiums using the straight-line method. What is the amount of interest expense shown on Jones' income statement for the year ending December 31, Year 1? b. On January 1,...

Jones Company issued bonds with a $120,000 face value on January 1 Year 1

Jones Company issued bonds with a $120,000 face value on January 1 Year 1. The five-year term bonds were issued at 99 and had a 850% stated rate of interest that is payable in cash on December 31st of each year. Jones amortizes the bond discount using the straight-line method. Based on this information The amount of interest expense shown on Jones's December 31, Year 1 income statement would be:

On January 1, 2019, Arc Company issued a $10,000 face value bond that sold for 92. The...

On January 1, 2019, Arc Company issued a $10,000 face value bond that sold for 92. The bond had an eight-year term and with a coupon (stated) rate of 4% annual interest. The company uses the straight-line method of amortization. 1. The carrying value of the bond liability on January 1, 2019, would be... 2. The amount of interest expense reported on the 2019 income statement would be... 3. Interest expense reported on the income statement over the life of the bond would a. increase...

Cease Corporation issued a bond on January 1, 2018 with a face value of $1,000. The...

Cease Corporation issued a bond on January 1, 2018 with a face value of $1,000. The bond's coupon rate is 6 percent and interest is paid annually on December 31. The bond matures in three years. The market interest rate was 8 percent at the time the bond was sold. The amortization schedule of the bond issued is shown below: Cash Interest Payment Interest Expense Amortization Book Value of bonds January 1, 2018 $948 December 31, 2018 $60 $76 $16...

On January 1, Year 1, Victor Company issued bonds with a $650,000 face value, a stated...

On January 1, Year 1, Victor Company issued bonds with a $650,000 face value, a stated rate of interest of 6%, and a 5-year term to maturity. The bonds sold at 95. Interest is payable in cash on December 31 of each year. Victor uses the straight-line method to amortize bond discounts and premiums. What is the carrying value of the bond liability at December 31, Year 3?

On January 1, Year 1, Victor Company issued bonds with a $750,000 face value, a stated...

On January 1, Year 1, Victor Company issued bonds with a $750,000 face value, a stated rate of interest of 5%, and a 5-year term to maturity. The bonds sold at 96. Interest is payable in cash on December 31 of each year. Victor uses the straight-line method to amortize bond discounts and premiums. What is the carrying value of the bond liability at December 31, Year 3?

Subjects