Question

In: Accounting

Discount Amortization On the first day of the fiscal year, a company issues a $1,400,000, 8%,...

Discount Amortization

On the first day of the fiscal year, a company issues a $1,400,000, 8%, 4-year bond that pays semiannual interest of $56,000 ($1,400,000 × 8% × ½), receiving cash of $1,266,974.

Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

Solutions

Expert Solution

Bond is a fixed income security in which issuer promises to pay a series of interest payment and to repay the principle on maturity to the investor.

In straight line amortization, the premium received or discount given on issue of bond is amortized over the bond period maturity on straight line basis. Formula is (Discount / Premium Amount) divided by bond period.


Related Solutions

Discount Amortization On the first day of the fiscal year, a company issues a $3,000,000, 11%,...
Discount Amortization On the first day of the fiscal year, a company issues a $3,000,000, 11%, five-year bond that pays semiannual interest of $165,000 ($3,000,000 × 11% × ½), receiving cash of $2,889,599. Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Interest Expense Discount on Bonds Payable Cash
Premium Amortization On the first day of the fiscal year, a company issues an $3,800,000, 12%,...
Premium Amortization On the first day of the fiscal year, a company issues an $3,800,000, 12%, 5-year bond that pays semiannual interest of $228,000 ($3,800,000 × 12% × ½), receiving cash of $4,093,425. Journalize the first interest payment and the amortization of the related bond premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Interest Expense Premium on Bonds Payable Cash Redemption of Bonds Payable A $930,000 bond issue on which...
On the first day of the fiscal year, a company issues a $3,200,000, 9%, 10-year bond...
On the first day of the fiscal year, a company issues a $3,200,000, 9%, 10-year bond that pays semiannual interest of $144,000 ($3,200,000 × 9% × ½), receiving cash of $2,649,441. Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.
On the first day of the fiscal year, a company issues a $2,000,000, 9%, 5-year bond...
On the first day of the fiscal year, a company issues a $2,000,000, 9%, 5-year bond that pays semiannual interest of $90,000 ($2,000,000 × 9% × ½), receiving cash of $1,922,782. Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.
On the first day of the fiscal year, a company issues a $338,000, 7%, 10-year bond...
On the first day of the fiscal year, a company issues a $338,000, 7%, 10-year bond that pays semiannual interest of $11,830 ($338,000 x 7% x 1/2), receiving cash of $354,900. Journalize the entry to record the first interest payment and amortization of premium using the straight-line method. If an amount box does not require an entry, leave it blank. Interest Expense _____ _____ Premium on Bonds Payable ______ ______ Cash_____ ______
On the first day of the fiscal year, a company issues a $1,000,000, 10%, 5-year bond...
On the first day of the fiscal year, a company issues a $1,000,000, 10%, 5-year bond that pays semiannual interest of $50,000 ($1,000,000 × 10% × ½), receiving cash of $1,081,109. Journalize the bond issuance. If an amount box does not require an entry, leave it blank.
On the first day of the fiscal year, a company issues a $8,400,000, 12%, 10-year bond...
On the first day of the fiscal year, a company issues a $8,400,000, 12%, 10-year bond that pays semiannual interest of $504,000 ($8,400,000 × 12% × ½), receiving cash of $7,115,493. Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.
Calculato 2. On the first day of the fiscal year, a company issues a $952,000, 6%,...
Calculato 2. On the first day of the fiscal year, a company issues a $952,000, 6%, 10-year bond that pays semiannual interest of $28,560 ($952,000 × 6% × 1/2), receiving cash of $999,600. Required: Journalize the entry to record the first interest payment and amortization of premium using the straight-line method. Refer to the Chart of Accounts for exact wording of account titles. Journalize the entry to record the first interest payment and amortization of premium using the straight-line method...
On January 1, the first day of the fiscal year, a company issues a $1,350,000, 11%,...
On January 1, the first day of the fiscal year, a company issues a $1,350,000, 11%, five-year bond that pays semiannual interest of $74,250 ($1,350,000 x 11% x ½), receiving cash of $1,512,610. Journalize the bond issuance. Refer to the Chart of Accounts for exact wording of account titles. CHART OF ACCOUNTS- General Ledger ASSETS- 110 Cash, 111 Petty Cash, 121 Accounts Receivable, 122 Allowance for Doubtful Accounts, 126 Interest Receivable, 127 Notes Receivable, 131 Merchandise Inventory, 141 Office Supplies,...
Amortize Discount by Interest Method On the first day of its fiscal year, Ebert Company issued...
Amortize Discount by Interest Method On the first day of its fiscal year, Ebert Company issued $50,000,000 of 10-year, 7% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 9%, resulting in Ebert Company receiving cash of $43,495,895. The company uses the interest method. b. Compute the amount of the bond interest expense for the first year. Round amounts to the nearest dollar.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT