Question
In: Accounting
Shawn issues $100,000 10 % par value bonds for $96,156. The bonds have a 4 year...
Shawn issues $100,000 10 % par value bonds for $96,156. The bonds
have a 4 year life with semiannual interest payments. Record the
entry on the issue date, the first interest payment, and the entry
to retire the bonds. What will be the total interest payments for
this bond?
Solutions
Expert Solution
| Journal entries | ||||||
| S.no. | Accounts title and explanations | Debit $ | Credit $ | |||
| a. | Cash account | 96156 | ||||
| Discount on bonds payable | 3844 | |||||
| Bonds payable | 100000 | |||||
| (for issuance of bonds) | ||||||
| b. | Interest expense | 5480.5 | ||||
| Cash account (100,000*10%*6/12) | 5,000 | |||||
| Discount on bonds payable (3844/8) | 480.5 | |||||
| (for interst payment made) | ||||||
| c. | Bonds payable | 1,00,000 | ||||
| Cash account | 1,00,000 | |||||
| (for retirement of bonds) | ||||||
| Total Interest payment | ||||||
| 8 payments of 5000 each | 40,000 | |||||
| Maturity amount paid | 1,00,000 | |||||
| Total repayment | 1,40,000 | |||||
| Less: Amount borrowed | 96,156 | |||||
| Total Interest payment | 43,844 |
ekkarill92 answered 2 years agoRelated Solutions
On January 1, 2017, Hawkins Industries issues bonds that have a $100,000 par value, mature in...
On January 1, 2017, Hawkins Industries issues bonds that have a
$100,000 par value, mature in 10 years, and pay 6% interest
semiannually on June 30 and December 31. The bonds were issued at
95.
Prepare the journal entry to record the issuance of the bonds on
January 1, 2017
Prepare the journal entry to record the first interest payment
on June 30, 2017, assuming that the bond discount or premium is
amortized using the straight-line method.
On January 1,...
X Company issued at par 4-year term bonds with a par value of $100,000, dated January...
X Company issued at par 4-year term bonds with a par value of
$100,000, dated January 1, 2020, and bearing interest at an annual
rate of 6 percent payable annually on December 31. At the time of
issue, the market rate for such bonds is 9 percent. X amortizes the
discount or premium using effective interest rate method.
Required:
1- Compute the selling price of bond.
2- Record the journal entry.
3- Prepare schedual of amortization.
4- Record the adjusting...
X Company issued at par 4-year term bonds with a par value of $100,000, dated January...
X Company issued at par 4-year term bonds with a par value of
$100,000, dated January 1, 2020, and bearing interest at an annual
rate of 6 percent payable annually on December 31. At the time of
issue, the market rate for such bonds is 9 percent. X amortizes the
discount or premium using effective interest rate method.
Required:
Compute the selling price of bond.
Record the journal entry.
Prepare schedual of amortization.
Record the adjusting entries for all years....
Tano Company issues bonds with a par value of $100,000 on January 1, 2019. The bonds’...
Tano Company issues bonds with a par value of $100,000 on
January 1, 2019. The bonds’ annual contract rate is 8%, and
interest is paid semiannually on June 30 and December 31. The bonds
mature in three years. The annual market rate at the date of
issuance is 10%, and the bonds are sold for $94,923.
1. What is the amount of the discount on these bonds at
issuance?
2. How much total bond interest expense will be recognized over...
Paulson Company issues 6%, four-year bonds, on December 31, 2017, with a par value of $100,000...
Paulson Company issues
6%, four-year bonds, on December 31, 2017, with a par value of
$100,000 and semiannual interest payments.
Semiannual Period-End
Unamortized Discount
Carrying Value
(0)
12/31/2017
$
6,733
$
93,267
(1)
6/30/2018
5,891
94,109
(2)
12/31/2018
5,049
94,951
Use the above straight-line bond amortization table and prepare
journal entries for the following.
(a) The issuance of bonds on December 31, 2017.
(b) The first interest payment on June 30, 2018.
(c) The second interest payment on December...
ABC Company issues bonds on January 1, Year 1. The bonds have a par value of...
ABC Company issues bonds on January 1, Year 1. The bonds have a
par value of $10,000,000, a coupon rate of 10% with interest paid
semi-annually on every June 30 and December 31 for 10 years, and
the yield on the date of issuance is 8%. Calculate the
following:
a. The issuance price on January 1, Year1.
b. The impact on the income statement in Year 1. (Expense or
revenue and the amount.)
c. The impact on the statement of...
Enviro Company issues 10%, 10-year bonds with a par value of $250,000 and semiannual interest payments....
Enviro Company issues 10%, 10-year bonds with a par value of
$250,000 and semiannual interest payments. On the issue date, the
annual market rate for these bonds is 12%, which implies a selling
price of 88 1/2.
1. Prepare the journal entries for the issuance of the bonds.
Assume the bonds are issued for cash on January 1, 2017.
2. Confirm that the bonds’ selling price is approximately
correct. Use present value Table B.1 and Table B.3 in Appendix B....
ABC Co. issues a 10 Year, 8% Bonds, the face value is 100,000 and market rate...
ABC Co. issues a 10 Year, 8% Bonds, the face value is 100,000
and market rate is 10%, it is compounded semi-annually.
1. Will the bond be issued at a premium or discount? Why?
2. Calculate the Bond Price upon issue.
3. Prepare the Amortization Table using the Effective method
Matthew Company issued 10-year, 7% bonds (paying semiannual interest) with a par value of $100,000. The...
Matthew Company issued 10-year, 7% bonds (paying semiannual
interest) with a par value of $100,000. The market rate of interest
when the bonds were issued was 6%. Compute the price of the bonds
when they were issued. **How do i answer this NOT using a financial
calculator**
a. ABC Co. issues $100,000, 4%, 10 year bonds when the prevailing market rate of interest...
a. ABC Co. issues $100,000, 4%, 10 year bonds when the
prevailing market rate of interest is 5%. The bonds pay interest
annually. Compute the issue price of the bonds.
b. ABC Co. issues $100,000, 4%, 10 year bonds when the
prevailing market rate of interest is 5%. The bonds pay interest
semi-annually. Compute the issue price of the bonds.
c. ABC Co. issues $500,000, 10%, 10 year bonds when the
prevailing market rate of interest is 9%. The bonds...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Why would UnderArmour want to be sure that consumers can clearly see different models ( about...
- Five years ago, Miguel invested a stock with price $35 per share. The stock price at...
- You are touring a distant planet on which the magnitude of the gravitational acceleration is 65%...
- GDP increased from $16.55 trillion to $17.28 trillion. What was the growth rate of GDP? The...
- Forming an Accountable Care Organization in a hospital setting What is an ACO and its reimbursement?...
- Implement a method that meets the following requirements: (a) Has the same requirements as the above...
- The Good’n’Fresh Grocery Store has two checkout lanes and four employees. Employees are equally skilled, and...
ADVERTISEMENT