On January 1, 2000, Vick Company issued $500,000 of 8%, 15 year bonds, at a price...

On January 1, 2000, Vick Company issued $500,000 of 8%, 15 year bonds, at a price of 94. The bonds pay

semiannual interest on June 30 and December 31 of each year. Vick records the interest payments every six months by amortizing the discount on bonds payable using the straight-line method. On Januray 1, 2005 Vick Company retires 30% of these bonds by buying them on the open market at a price of 97.

How does the market rate compare to the stated rate (market rate higher or lower)?

Journalize the issuance on 1/1/05

Journalize the first interest payment on June 30.

Journalize the retirement on January 1, 2005

Solutions

Expert Solution

Answer is given below with working notes

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

On January 1, 2021, Winter Company issued $500,000, 5-year, 8% bonds at 97. Interest is paid...

On January 1, 2021, Winter Company issued $500,000, 5-year, 8% bonds at 97. Interest is paid semiannually on each June 30 and December 31. The maturity date is December 31, 2025. How much Bond Interest Expense will the company record on each semiannual cash interest payment date?

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%?

On January 1, 2014, Robbins Company issued five-year, $500,000 face value, 8% bonds that paid interest...

On January 1, 2014, Robbins Company issued five-year, $500,000 face value, 8% bonds that paid interest every June 30th and December 31st. The market rate of other similar bonds was 10%. On December 31, 2017, Robbins redeemed the bonds at 102. What was the gain or loss on redemption. Assume that Robbins uses the effective interest method to amortize any premium or discount. (Select the closest answer to the one you calculate): a, $23,619 loss b. $19,300 loss c. $14,765...

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 January 1, 2014, Housen Company issued 10-year bonds of $500,000 at 102. Interest is payable...

On January 1, 2014, Housen Company issued 10-year bonds of $500,000 at 102. Interest is payable on January 1 and July 1 at 10%. April 1, 2015, Housen Company reacquires and retired 50 of its own $1000 bonds at 98 plus accrued interest. The fiscal period for Honsen Company is the calendar year. Prepare entries to record (1) the issuance of the bonds, (2) the interest payments and adjustments relating to the debt in 2014, (3) the reacquistion and retirement...

a) On January 1, XXX1, a company issued $20,000, 10%, 5-year bonds at a price of...

a) On January 1, XXX1, a company issued $20,000, 10%, 5-year bonds at a price of $22,000. The straight-line method is used to amortize any bond discount or premium and interest is paid semiannually on June 30 and December 31. If all interest has been accounted for properly, what is the carrying value of these bonds three years later on January 1, XXX4? b) On January 1, XXX1, a company issued $20,000, 10%, 5-year bonds at a price of $18,000....

Pine Corporation issued $500,000 in ten-year, 8% bonds on September 1, 2019. Interest is to be...

Pine Corporation issued $500,000 in ten-year, 8% bonds on September 1, 2019. Interest is to be paid semi-annually on May 1 and November 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) • March 1, 2020 • September 1, 2020 when the interest was paid and the entire issue was retired early for $575,000 plus...

Mobbe Company issued $500,000, 15-year, 7% bonds at 96. Instructions (a) Prepare the journal entry to...

Mobbe Company issued $500,000, 15-year, 7% bonds at 96. Instructions (a) Prepare the journal entry to record the sale of these bonds on January 1, 2017. (b) Suppose the remaining Discount on Bonds Payable was $12,000 on December 31, 2022. Show the balance sheet presentation on this date. (c) Explain why the bonds sold at a price below the face amount.

The Vaughn Company issued $320,000 of 8% bonds on January 1, 2017. The bonds are due...

The Vaughn Company issued $320,000 of 8% bonds on January 1, 2017. The bonds are due January 1, 2022, with interest payable each July 1 and January 1. The bonds are issued at face value. Prepare Vaughn’s journal entries for (a) the January issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically...

On January 1, Soren Enterprises issued 15-year bonds with a face value of $200,000. The bonds...

On January 1, Soren Enterprises issued 15-year bonds with a face value of $200,000. The bonds carry a contract interest rate of 8 percent, and interest is paid semi-annually. On the issue date, the annual market interest rate for bonds issued by companies with similar riskiness was 10 percent. The issuance price of the bonds was $169,255. Which ONE of the following would be included in the journal entry necessary on the books of the bond issuer to record theSECOND...

Subjects