1. On January 1, 2020, Travis Corporation issued $800,000, 6%, 5-year bonds for $735,110. The bonds...

1. On January 1, 2020, Travis Corporation issued $800,000, 6%, 5-year bonds for $735,110. The bonds were sold to yield an effective-interest rate of 8%. Interest is paid semiannually on July 1 and January 1. The company uses the effective-interest method of amortization. Instructions: Prepare the journal entries that Travis Corporation would make on January 1, June 30, December 31, 2020, January 1, 2021 and at maturity, related to the bond issue

Solutions

Expert Solution

Face value of bond = $800,000

Price paid for Bond = $735,110

Discount on Bond = $64,890

Coupon Amount = $800000*6%*6/12 = $24,000

Periodic Rate = 8%*6/12 = 4% per period

No. of periods = 5 years * 12/6 months = 10 periods

***********************************************************************************************************************************

Please like if you got your query solved, reach back to us via comment if any query to understand. All the Best!

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

On January 1, 2016, Knorr Corporation issued $800,000 of 6%, 5-year bonds dated January 1, 2016....

On January 1, 2016, Knorr Corporation issued $800,000 of 6%, 5-year bonds dated January 1, 2016. The bonds pay interest annually on December 31. The bonds were issued to yield 7%. Bond issue costs associated with the bonds totaled $18,848.31. Required: Prepare the journal entries to record the following: January 1, 2016, Sold the bonds at an effective rate of 7% December 31, 2016, First interest payment using the effective interest method December 31, 2016, Amortization of bond issue costs...

On January 1, 2016, Knorr Corporation issued $800,000 of 6%, 5-year bonds dated January 1, 2016....

On January 1, 2016, Knorr Corporation issued $800,000 of 6%, 5-year bonds dated January 1, 2016. The bonds pay interest annually on December 31. The bonds were issued to yield 7%. Bond issue costs associated with the bonds totaled $18,848.31. Required: Prepare the journal entries to record the following: January 1, 2016 Sold the bonds at an effective rate of 7% December 31, 2016 First interest payment using the effective interest method December 31, 2016 Amortization of bond issue costs...

Question 3 On January 1, 2020, Gus Corporation issued $4,000,000, 6%, 5-year bonds dated January 1,...

Question 3 On January 1, 2020, Gus Corporation issued $4,000,000, 6%, 5-year bonds dated January 1, 2020, at 98. The bonds pay semi-annual interest on January 1 and July 1. The company uses the straight-line method of amortization and has a calendar year end. Required Prepare all the journal entries that Gus Corporation would make related to this bond issue through January 1, 2021. Be sure to indicate the date on which the entries would be made.

I.On January 1, 2019, MUVE INC. issued $800,000, 6%, 5-year bonds for $735,110. The bonds were...

I.On January 1, 2019, MUVE INC. issued $800,000, 6%, 5-year bonds for $735,110. The bonds were sold to yield an effective-interest rate of 8%. Interest is paid annually on January 1. The company uses the effective-interest method of amortization. Instructions: (a)Prepare a bond discount amortization schedule which shows the amortization of discount for the first two interest payment dates. (Round to the nearest dollar). MAUVE INC. Bond Discount Amortization Effective-Interest Method—Annual Interest Payments 6% Bonds Issued at 8% Annual InterestInterest...

On January 1, 2016, Knorr Corporation issued $1,400,000 of 6%, 5-year bonds dated January 1, 2016....

On January 1, 2016, Knorr Corporation issued $1,400,000 of 6%, 5-year bonds dated January 1, 2016. The bonds pay interest annually on December 31. The bonds were issued to yield 7%. Bond issue costs associated with the bonds totaled $27,560.53. Required: Prepare the journal entries to record the following: January 1, 2016 Sold the bonds at an effective rate of 7% December 31, 2016 First interest payment using the effective interest method December 31, 2016 Amortization of bond issue costs...

On January 1, 2020, Perfection Company issued $400,000 of 10%, 6-year bonds dated January 1, 2020,...

On January 1, 2020, Perfection Company issued $400,000 of 10%, 6-year bonds dated January 1, 2020, with interest payments every June 30 and December 31. The bonds were issued at $382,762 when the market rate was 11%. Perfection Company amortizes any premium or discount using the EFFECTIVE-INTEREST-RATE method. Round all numbers to the nearest whole number. 1-Using proper formatting (eliminating the date), prepare the journal entry on January 1, 2020 to record the issuance of the bonds. 2-Using proper formatting...

On January 1, 2020, Pharoah Company issued $305,500, 6%, 5-year bonds at face value. Interest is...

On January 1, 2020, Pharoah Company issued $305,500, 6%, 5-year bonds at face value. Interest is payable annually on January 1. Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1, 2020 SHOW LIST OF ACCOUNTS LINK TO TEXT Prepare the journal entry to record the accrual of interest on December 31, 2020. (Credit account titles...

Sanders Co. issued $800,000 of 6% bonds on January 1, 2021, due on January 1, 2026,...

Sanders Co. issued $800,000 of 6% bonds on January 1, 2021, due on January 1, 2026, with interest payable each January 1 and July 1. The bonds were sold to yield 10%. If the discount were amortized by the effective-interest method, what amount of interest expense would Sanders report in 2021 related to the bond?

Gupta Corporation issued four-year, 12% bonds with a total face value of $800,000 on January 1,...

Gupta Corporation issued four-year, 12% bonds with a total face value of $800,000 on January 1, 2018. Interest is paid semi-annually on June 30 and December 31. The market rate of interest on this date was 8%. Gupta uses the effective interest rate method. Required: Using Excel, determine the proceeds of the bond sale on 1/1/18. Using the present value of a dollar table (found in Appendix E of your text), what factor would you use to calculate the present...

38) Trent Corp. issued $800,000 of 8%, 5-year bonds at 102 on January 1, 2017. The...

38) Trent Corp. issued $800,000 of 8%, 5-year bonds at 102 on January 1, 2017. The straight-line method of amortization is used and the bonds pay interest annually on January 1. The amount of bond interest expense that Trent should report on its December 31, 2017, income statement is Select one: a. $60,800. b. $67,200. c. $65,280. d. $64,000.

Subjects