Question

In: Accounting

Option #1: Bonds Issued at a Premium Intel Inc. is the pioneer in the manufacture of...

Option #1: Bonds Issued at a Premium Intel Inc. is the pioneer in the manufacture of microprocessor for computers. On 4/1/2016, Intel issued $800,000 of 12% face value bonds for $851,705.70. The bonds are due in 4 years, and pay interest semiannually on September 30 and March 31. Intel sold the bonds to yield 10%. Use the spreadsheet found in the link at the bottom to prepare a bond interest expense and premium amortization schedule using the straight-line method. Use the attached spreadsheet to prepare a bond interest expense and premium amortization schedule using the effective interest method. Prepare any adjusting entries for the end of the fiscal year, December 31, 2016, using the: straight-line method of amortization effective interest method of amortization Assume the company retires the bonds on June 30, 2017, at 103 plus accrued interest. Prepare the journal entries to record the bond retirement using the: straight-line method of amortization effective interest method of amortization

Attatched Table

Date Cash Paid Interest expense Premium Amortization Carrying Amount of Bonds
4/1/2018
4/1/2019
4/1/2020
4/1/2021
4/1/2022
4/1/2023
4/1/2024
4/1/2025
4/1/2026
4/1/2027

Solutions

Expert Solution

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Bonds Issued at a Premium Carlisle Corp. issued the following bonds at a premium: Date of...
Bonds Issued at a Premium Carlisle Corp. issued the following bonds at a premium: Date of issue and sale: April 1, 20-1 Principal amount: $430,000 Sale price of bonds: 104 Denomination of bonds: $1,000 Life of bonds: 20 years Stated rate: 10%, payable semiannually on September 30 and March 31 1. Prepare journal entries for: a. Issuance of the bonds at a premium. b. Interest payment and premium amortization on the bonds on September 30. c. Year-end adjustment on the...
On January 1, 2017 Pioneer Co. issued $550,000 of 5 year 12% bonds for $592,468 yielding...
On January 1, 2017 Pioneer Co. issued $550,000 of 5 year 12% bonds for $592,468 yielding a market rate of 10%. Interest is payable semiannually on June 30 and December 31. a) Confirm the bond issuance price and show your work. b) Why are two different present value tables used to price the bond? c) Is this bond issuing at a discount, premium or par? Explain your answer. d) Create your own amortization table. The table should show the carrying...
cash flow effects of a bond premium on january 1,2015 datalink Inc. issued $100,000,10%, 10nyear bonds...
cash flow effects of a bond premium on january 1,2015 datalink Inc. issued $100,000,10%, 10nyear bonds when the market rate of interest was 8%. interest is payable on june 30 and December 31. The following financail information is available sales $300,000 cost of sales 180,000 Gross Profit 120,000 Interest expense Depreciation expense (14,500) Other Expeses (82000) Dec 31,2015 Jan. 1, 2015 Accounts Receivable 55,000 48,000 Inventory 87,000 93,000 Accounts Payable 60,000 58,000 all purchase of inventory are on account. other...
The put option of Joe Inc. is currently trading at $2.50 while the call option premium...
The put option of Joe Inc. is currently trading at $2.50 while the call option premium is $7.50. Both the put and the call have an exercise price of $25. Joe Inc. stock is currently trading at $32.25 and the risk free rate is 3%. The options will expire in one month. I. An investor applies a protective put strategy by buying the put option of Joe Inc. to protect his holding of the company’s stock. This strategy creates a...
Venezuela Inc. issued $2,000,000 5-year bonds at 9%. These bonds were issued on January 1, 2017...
Venezuela Inc. issued $2,000,000 5-year bonds at 9%. These bonds were issued on January 1, 2017 and pay interest on January 1 and July 1. The YTM of the bond is 11%, i.e. the effective interest rate for the company is 11%. a. Calculate the value of the bonds and prepare the journal entry to record the issuance of the bonds on January 1, 2017. b. Prepare a bond amortization schedule up to and including January 1, 2022. c. Assume...
Venezuela Inc. issued $2,000,000 5-year bonds at 9%. These bonds were issued on January 1, 2017...
Venezuela Inc. issued $2,000,000 5-year bonds at 9%. These bonds were issued on January 1, 2017 and pay interest on January 1 and July 1. The YTM of the bond is 11%, i.e. the effective interest rate for the company is 11%. a. Calculate the value of the bonds and prepare the journal entry to record the issuance of the bonds on January 1, 2017. b. Prepare a bond amortization schedule up to and including January 1, 2022. c. Assume...
Venezuela Inc. issued $2,000,000 5-year bonds at 9%. These bonds were issued on January 1, 2017...
Venezuela Inc. issued $2,000,000 5-year bonds at 9%. These bonds were issued on January 1, 2017 and pay interest on January 1 and July 1. The YTM of the bond is 11%, i.e. the effective interest rate for the company is 11%. a. Calculate the value of the bonds and prepare the journal entry to record the issuance of the bonds on January 1, 2017. b. Prepare a bond amortization schedule up to and including January 1, 2022. c. Assume...
Auerbach Inc. issued 5% bonds on October 1, 2018. The bonds have a maturity date of...
Auerbach Inc. issued 5% bonds on October 1, 2018. The bonds have a maturity date of September 30, 2028 and a face value of $2,000,000. The bonds pay interest each March 31 and September 30, starting on 3/31/19 and finishing at maturity. The effective interest rate established by the market is 6% annually at the date of issue. How much did Auerbach receive from the bond issue on 10/1/2018?
Obsidian Mining, Inc. issued a series of 5.2%, $200,000 bonds on April 1, 2020. The bonds...
Obsidian Mining, Inc. issued a series of 5.2%, $200,000 bonds on April 1, 2020. The bonds will pay interest semi-annually on September 30 and March 31 and mature in 10 years. At the time of issuance, the market rate of interest was 4.8%. Instructions Record the journal entry for the issuance of the bonds on April 1, 2020. Record the journal entry for the first interest payment on September 30, 2020. Record the year-end accrual for interest on December 31,...
1. Grant Inc. issued $400,000 of 6% bonds on June 30, 2016. The bonds mature in...
1. Grant Inc. issued $400,000 of 6% bonds on June 30, 2016. The bonds mature in 10 years. For bonds of similar risk and maturity, the market interest rate is 4%. Interest is paid semiannually on December 31 and June 30. (i.e., the first interest payment will be made on December 31, 2016). For all computations, ignore below decimal point. a) Determine whether the company sold the bond at discount or premium b) Determine the price of the bonds at...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT