Question
In: Accounting
On January 1 of this year, Victor Corporation sold bonds with a face value of $1,560,000...
On January 1 of this year, Victor Corporation sold bonds with a face value of $1,560,000 and a coupon rate of 10 percent. The bonds mature in four years and pay interest semiannually every June 30 and December 31. Victor uses the straight-line amortization method and also uses a premium account. Assume an annual market rate of interest of 8 percent.
1. Prepare the journal entry to record the issuance of the bonds.
2. Prepare the journal entry to record the interest payment on June 30 of this year.
3. What bonds payable amount will Victor report on its June 30 balance sheet?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
On January 1 of this year, Victor Corporation sold bonds with a face value of $1,560,000...
On January 1 of this year, Victor Corporation sold bonds with a
face value of $1,560,000 and a coupon rate of 10 percent. The bonds
mature in four years and pay interest semiannually every June 30
and December 31. Victor uses the straight-line amortization method
and also uses a premium account. Assume an annual market rate of
interest of 8 percent. (FV of $1, PV of $1, FVA of $1, and PVA of
$1) (Use the appropriate factor(s) from the...
On January 1, Year 1, Victor Company issued bonds with a $650,000 face value, a stated...
On January 1, Year 1, Victor Company issued bonds with a
$650,000 face value, a stated rate of interest of 6%, and a 5-year
term to maturity. The bonds sold at 95. Interest is payable in cash
on December 31 of each year. Victor uses the straight-line method
to amortize bond discounts and premiums. What is the carrying value
of the bond liability at December 31, Year 3?
On January 1, Year 1, Victor Company issued bonds with a $750,000 face value, a stated...
On January 1, Year 1, Victor Company issued bonds with a
$750,000 face value, a stated rate of interest of 5%, and a 5-year
term to maturity. The bonds sold at 96. Interest is payable in cash
on December 31 of each year. Victor uses the straight-line method
to amortize bond discounts and premiums. What is the carrying value
of the bond liability at December 31, Year 3?
On January 1, Year 1, Victor Company issued bonds with a $750,000 face value, a stated...
On January 1, Year 1, Victor Company issued bonds with a
$750,000 face value, a stated rate of interest of 5%, and a 5-year
term to maturity. The bonds sold at 96. Interest is payable in cash
on December 31 of each year. Victor uses the straight-line method
to amortize bond discounts and premiums. What is the amount of
interest expense appearing on the income statement for the year
ending December 31, Year 3?
On January 1, Year 1, Victor Company issued bonds with a $650,000 face value, a stated...
On January 1, Year 1, Victor Company issued bonds with a
$650,000 face value, a stated rate of interest of 6%, and a 5-year
term to maturity. The bonds sold at 95. Interest is payable in cash
on December 31 of each year. Victor uses the straight-line method
to amortize bond discounts and premiums. What is the amount of
interest expense appearing on the income statement for the year
ending December 31, Year 3?
Impact of a Discount Berol Corporation sold 20-year bonds on January 1, 2017. The face value...
Impact of a Discount
Berol Corporation sold 20-year bonds on January 1, 2017. The
face value of the bonds was $100,000, and they carry a 9% stated
rate of interest, which is paid on December 31 of every year. Berol
received $95,350 in return for the issuance of the bonds when the
market rate was 10%. Any premium or discount is amortized using the
effective interest method.
1. How does this entry affect the accounting equation? If a
financial statement...
Richter Corporation sold $1,000,000 face value of bonds at 104 on January 1, 2014. These bonds...
Richter Corporation sold $1,000,000 face value of bonds at 104
on January 1, 2014. These bonds have a 7% stated rate and mature in
4 years. Interest is payable on June 30 and December 31 of each
year.
Prepare the journal entry at issuance on January 1, 2014.
Prepare the journal entry to record the first interest payment
on June 30, 2014.
Calculate the carrying value of the bond on Dec. 31, 2014,
after the first two interest payments.
Prepare...
On January 1, 2017, Swifty Corporation sold 12% bonds with a face value of $2600000. The...
On January 1, 2017, Swifty Corporation sold 12% bonds with a
face value of $2600000. The bonds mature in five years, and
interest is paid semiannually on June 30 and December 31. The bonds
were sold for $2800800 to yield 10%.
Using the effective-interest method of amortization, interest
expense for 2017 is
a
$280030.
b
$312000.
c $260000.
d $279282.
On January 2, 2020, a calendar-year corporation sold 6% bonds with a face value of $3220000....
On January 2, 2020, a calendar-year corporation sold
6% bonds with a face value of $3220000. These bonds mature in five
years, and interest is paid semiannually on June 30 and December
31. The bonds were sold for $2959000 to yield 8%. Using the
effective-interest method of computing interest, how much should be
charged to interest expense in 2020?
a. $237590.
b. $236720.
c. $257600.
d. $193200.
On January 1, Year 1, Hanover Corporation issued bonds with a $56,500 face value
On January 1, Year 1, Hanover Corporation issued bonds with a $56,500 face value, a stated rate of interest of 9%, and a 5-year term to maturity. The bonds were issued at 99. Hanover uses the straight-line method to amortize bond discounts and premiums. Interest is payable in cash on December 31 each year.
The journal entry used to record the issuance of the bond and the receipt of cash would be: (Round your answer to the nearest whole dollar...
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