Question
In: Accounting
On January 1, 2024, Fabrikam Labs issued 1,000 bonds, each with a face value of $1,000,...
On January 1, 2024, Fabrikam Labs issued 1,000 bonds, each with a face value of $1,000, for 102.7323. The stated interest is 3.8%, and the market rate at the time the bonds were issued was 3.2%. The bonds are due on January 1, 2029 (5 year term) with interest payments due annually every January 1st. The company received cash from the sale of the bonds. Using the effective-interest method calculate and record the December 31, 2025 journal entry for the bond interest expense including premium/discount amortization, and the payable.
Solutions
Expert Solution
| Date | Account Title and Explanation | Debit | Credit |
| December 31.2025 | Bond interest expense | $ 32,710.31 | |
| Premium on bonds payable | $ 5,289.69 | ||
| Interest payable | $ 38,000.00 | ||
| (Interest on bond paid and Discount amortized) |
Alternate solution with zero decimal place in answers
| (Issue of bonds ) | |||
| Date | Account Title and Explanation | Debit | Credit |
| December 31. 2025 | Bond interest expense | $ 32,710 | |
| Premium on bonds payable | $ 5,290 | ||
| Interest payable | $ 38,000 | ||
| (Interest on bond paid and Discount amortized) |
Working
| Amortization table | |||||
| Period | Cash payment | Interest expense | Premium on Bonds payable | Carrying Value of Bond | |
| Issued | $ (27,323.00) | $ 10,27,323.00 | |||
| Year 2024 | $ 38,000.00 | $ 32,874.34 | $ (5,125.66) | $ 10,22,197.34 | |
| year 2025 | $ 38,000.00 | $ 32,710.31 | $ (5,289.69) | $ 10,16,907.65 | |
ekkarill92 answered 1 year agoRelated Solutions
Ajax Corporation issued 1,500 bonds each with face value of $1,000 on January 1, 2025. The...
Ajax Corporation issued 1,500 bonds each with face value of
$1,000 on January 1, 2025. The bonds have semi-annual interest
payments at 4% per annum due on December 31st and June
30th. The bonds mature on December 31, 2029 and were
issued to yield 5% per annum. What amount would Ajax record for
interest expense when making the first interest payment on June 30,
2025?
Question 7 options:
$69,208
$30,000
$31,347
$35,859
On January 1, 2017, Surreal Manufacturing issued 660 bonds, each with a face value of $1,000,...
On January 1, 2017, Surreal Manufacturing issued 660 bonds, each
with a face value of $1,000, a stated interest rate of 3.70 percent
paid annually on December 31, and a maturity date of December 31,
2019. On the issue date, the market interest rate was 4.00 percent,
so the total proceeds from the bond issue were $654,508. Surreal
uses the effective-interest bond amortization method.
Required:
1. Prepare a bond amortization schedule. (Round
your final answers to the nearest whole dollar.)...
On January 1, 2015, Surreal Manufacturing issued 550 bonds, each with a face value of $1,000,...
On January 1, 2015, Surreal Manufacturing issued 550 bonds, each
with a face value of $1,000, a stated interest rate of 3 percent
paid annually on December 31, and a maturity date of December 31,
2017. On the issue date, the market interest rate was 4 percent, so
the total proceeds from the bond issue were $534,739. Surreal uses
the effective-interest bond amortization method and adjusts for any
rounding errors when recording interest in the final year.
Required:
Prepare a...
On January 1, 2017, Surreal Manufacturing issued 680 bonds, each with a face value of $1,000,...
On January 1, 2017, Surreal Manufacturing issued 680 bonds, each
with a face value of $1,000, a stated interest rate of 3.50 percent
paid annually on December 31, and a maturity date of December 31,
2019. On the issue date, the market interest rate was 4.00 percent,
so the total proceeds from the bond issue were $670,567. Surreal
uses the effective-interest bond amortization method. Required: 1.
Prepare a bond amortization schedule. (Round your final answers to
the nearest whole dollar.)...
On January 1, 2018, Surreal Manufacturing issued 670 bonds, each with a face value of $1,000,...
On January 1, 2018, Surreal Manufacturing issued 670 bonds, each
with a face value of $1,000, a stated interest rate of 3 percent
paid annually on December 31, and a maturity date of December 31,
2020. On the issue date, the market interest rate was 4 percent, so
the total proceeds from the bond issue were $651,410. Surreal uses
the effective-interest bond amortization method and adjusts for any
rounding errors when recording interest in the final year.
Required:
1. Prepare...
On January 1, 2018, Surreal Manufacturing issued 530 bonds, each with a face value of $1,000,...
On January 1, 2018, Surreal Manufacturing issued 530 bonds, each
with a face value of $1,000, a stated interest rate of 3 percent
paid annually on December 31, and a maturity date of December 31,
2020. On the issue date, the market interest rate was 4 percent, so
the total proceeds from the bond issue were $515,294. Surreal uses
the simplified effective-interest bond amortization method and
adjusts for any rounding errors when recording interest in the
final year.
Required:
1....
On January 1, 2018, Loop Raceway issued 580 bonds, each with a face value of $1,000,...
On January 1, 2018, Loop Raceway issued 580 bonds, each with a
face value of $1,000, a stated interest rate of 5 percent paid
annually on December 31, and a maturity date of December 31, 2020.
On the issue date, the market interest rate was 6 percent, so the
total proceeds from the bond issue were $564,485. Loop uses the
straight-line bond amortization method and adjusts for any rounding
errors when recording interest in the final year.
Required:
1. Prepare...
On January 1, 2018, Loop Raceway issued 580 bonds, each with a face value of $1,000,...
On January 1, 2018, Loop Raceway issued 580 bonds, each with a
face value of $1,000, a stated interest rate of 5 percent paid
annually on December 31, and a maturity date of December 31, 2020.
On the issue date, the market interest rate was 6 percent, so the
total proceeds from the bond issue were $564,485. Loop uses the
straight-line bond amortization method and adjusts for any rounding
errors when recording interest in the final year. Required: 1.
Prepare...
On January 1, 2018, Loop Raceway issued 530 bonds, each with a face value of $1,000,...
On January 1, 2018,
Loop Raceway issued 530 bonds, each with a face value of $1,000, a
stated interest rate of 7 percent paid annually on December 31, and
a maturity date of December 31, 2020. On the issue date, the market
interest rate was 8 percent, so the total proceeds from the bond
issue were $516,324. Loop uses the straight-line bond amortization
method and adjusts for any rounding errors when recording interest
in the final year.
Required:
1.
Prepare...
On January 1, 2018, Surreal Manufacturing issued 600 bonds, each with a face value of $1,000,...
On January 1, 2018, Surreal Manufacturing issued 600 bonds, each
with a face value of $1,000, a stated interest rate of 3 percent
paid annually on December 31, and a maturity date of December 31,
2020. On the issue date, the market interest rate was 4 percent, so
the total proceeds from the bond issue were $583,352. Surreal uses
the simplified effective-interest bond amortization method and
adjusts for any rounding errors when recording interest in the
final year.
Required:
1....
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Is there a difference between the sex and gender of a child? If so, what determines...
- The following data were obtained for the adsorption of n-butane on a porous solid (catalyst). Adsorbed...
- Look through your local (Piscataway, New Jersey 08854) newspaper or any direct mail marketing pieces you...
- During the period, the mixing department completed 500 units and transferred then out to the baking...
- You have nitrogen at a temperature of 145 K and a volume of 0.061629 m3 /...
- Absorption costing (also called the full cost method) treats all costs of production as product costs,...
- CULTURES IN HIERARCHY AND CULTURES ALONGSIDE Asante (2003b) claims that difference alone does not create a...
ADVERTISEMENT