Question
In: Accounting
On January 1, 2018, Entity A issued 8% bonds dated January 1, 2018, with a face...
On January 1, 2018, Entity A issued 8% bonds dated January 1, 2018, with a face amount of $10 million. The bonds mature in 2022 (5 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31.
A. What was the issue price of the bonds?
B. Prepare the journal entry to record the bond issuance.
C. Prepare the journal entry to record interest on June 30, 2018, using the straight-line method.
D. Prepare the journal entry to record interest on December 31, 2018, assuming that Entity A had used the effective interest method from the inception. Prepare an amortization schedule.
E. Prepare a partial balance sheet showing the bonds at December 31, assuming that Entity A had used the effective interest method from the inception.
F. Why might a company utilize the straight-line method to amortize premium or discount? When is it permissible to do so?
Solutions
ekkarill92 answered 2 years agoRelated Solutions
On January 1, 2018, Entity A issued 8% bonds dated January 1, 2018, with a face...
On January 1, 2018, Entity A issued 8% bonds dated January 1,
2018, with a face amount of $10 million. The bonds mature in 2022
(5 years). For bonds of similar risk and maturity, the market yield
is 10%. Interest is paid semiannually on June 30 and December 31.
A. Prepare a partial balance sheet showing the bonds at December
31, assuming that Entity A had used the effective interest method
from the inception. B. Why might a company utilize...
On January 1, 2018, Bishop Company issued 8% bonds dated January 1, 2018, with a face...
On January 1, 2018, Bishop Company issued 8% bonds dated January
1, 2018, with a face amount of $20.2 million. The bonds mature in
2027 (10 years). For bonds of similar risk and maturity, the market
yield is 10%. Interest is paid semiannually on June 30 and December
31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD
of $1) (Use appropriate factor(s) from the tables provided.
Round your intermediate calculations to...
On January 1, 2018, Bishop Company issued 8% bonds dated January 1, 2018, with a face...
On January 1, 2018, Bishop Company issued 8% bonds dated January
1, 2018, with a face amount of $20.1 million. The bonds mature in
2027 (10 years). For bonds of similar risk and maturity, the market
yield is 10%. Interest is paid semiannually on June 30 and December
31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD
of $1) (Use appropriate factor(s) from the tables provided.
Round your intermediate calculations to...
On January 1, 2018, Bishop Company issued 10% bonds dated January 1, 2018, with a face...
On January 1, 2018, Bishop Company issued 10% bonds dated
January 1, 2018, with a face amount of $37 million. The bonds
mature in 2027 (10 years). For bonds of similar risk and maturity,
the market yield is 12%. Interest is paid semiannually on June 30
and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of
$1 and PVAD of $1) (Use appropriate factor(s) from the
tables provided.)
Required:
Determine the price of...
On January 1, 2018, Bishop Company issued 10% bonds dated January 1, 2018, with a face...
On January 1, 2018, Bishop Company issued 10% bonds dated
January 1, 2018, with a face amount of $20 million. The bonds
mature in 2027 (10 years). For bonds of similar risk and maturity,
the market yield is 12%. Interest is paid semiannually on June 30
and December 31.
Required:
1. Determine the price of the bonds at January 1, 2018.
2. Prepare the journal entry to record the bond issuance by
Bishop on January 1, 2018.
3. Prepare the...
On January 1, 2018, King Co. issued 10% bonds dated January 1, 2018, with a face...
On January 1, 2018, King Co. issued 10% bonds dated January 1,
2018, with a face amount of $19.2 million. The bonds mature in 2027
(10 years). For bonds of similar risk and maturity, the market
yield is 12%. Interest is paid semiannually on June 30 and December
31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD
of $1) (Use appropriate factor(s) from the tables provided. Round
your intermediate calculations to...
On January 1, 2018, Bishop Company issued 10% bonds dated January 1, 2018, with a face...
On January 1, 2018, Bishop Company issued 10% bonds dated
January 1, 2018, with a face amount of $19.6 million. The bonds
mature in 2027 (10 years). For bonds of similar risk and maturity,
the market yield is 12%. Interest is paid semiannually on June 30
and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of
$1 and PVAD of $1) (Use appropriate factor(s) from the tables
provided. Round your intermediate calculations to...
On January 1, 2018, Mania Enterprises issued 12% bonds dated January 1, 2018, with a face...
On January 1, 2018, Mania Enterprises issued 12% bonds dated
January 1, 2018, with a face amount of $20.1 million. The bonds
mature in 2027 (10 years). For bonds of similar risk and maturity,
the market yield is 10%. Interest is paid semiannually on June 30
and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of
$1 and PVAD of $1)
Required:
1. Determine the price of the bonds at January 1,
2018....
On January 1, 2017, Albany Company issued 8% bonds dated January 1, 2017, with a face...
On January 1, 2017, Albany Company issued 8% bonds dated January
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January 1, 2027 (10 years). For bonds of similar risk and maturity,
the market yield is 10%. Interest is paid semiannually on June 30
and December 31.
Required:
Determine the price of the bonds at January 1, 2017. You must
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Prepare the journal entry to record...
On February 1, 2018, Cromley Motor Products issued 8% bonds, dated February 1, with a face...
On February 1, 2018, Cromley Motor Products issued 8% bonds,
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similar risk and maturity was 10%. Interest is paid semiannually on
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bonds as a long-term investment. The fiscal years of both firms end
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