Question

In: Accounting

King State Bank purchased $500,000 of ten-year, 7.5% Lucille Corporation bonds on July 1, 2019. Interest...

King State Bank purchased $500,000 of ten-year, 7.5% Lucille Corporation bonds on July 1, 2019.

Interest on the bonds is paid on January 1 and July 1 of each year. The market rate on the bonds was 8%.

The selling prices of the bonds at 12/31/19 and 12/31/20 were 102 and 101 respectively.

Required:

1. Prepare an amortization schedule for the entire life of the bonds using Excel.

Solutions

Expert Solution


Related Solutions

Pine Corporation issued $500,000 in ten-year, 8% bonds on September 1, 2019. Interest is to be...
Pine Corporation issued $500,000 in ten-year, 8% bonds on September 1, 2019. Interest is to be paid semi-annually on May 1 and November 1. The bonds were sold to yield 6% effective annual interest. Pine Corporation has a calendar year-end and follows IFRS. Instructions: Prepare the entries required for these bonds at • December 31, 2019(year end) • March 1, 2020 • September 1, 2020 when the interest was paid and the entire issue was retired early for $575,000 plus...
1. July 1, 2019, Leeward Corporation issued $2,000,000 face value bonds with a contractual interest rate...
1. July 1, 2019, Leeward Corporation issued $2,000,000 face value bonds with a contractual interest rate of 6% and 20-year term. Prepare the following journal entries: Issuance of the bonds at 104 Issuance of the bonds at 100 Issuance of the bonds at 95 Date Account Debit Credit July 1, 2019 Cash 2,080,000 Bonds Payable 2,000,000 Premium on Bonds Payable 80,000 July 1, 2019 Cash 2,000,000 Bonds Payable 2,000,000 July 1, 2019 Cash 1,900,000 Discount on Bonds Payable 100,000 Bonds...
Tudor Company acquired $500,000 of Carr Corporation bonds for $487,706.69 on January 1, 2019. The bonds...
Tudor Company acquired $500,000 of Carr Corporation bonds for $487,706.69 on January 1, 2019. The bonds carry an 11% stated interest rate, pay interest semiannually on January 1 and July 1, were issued to yield 12%, and are due January 1, 2022. Required: 1. Prepare an investment interest income and discount amortization schedule using the: a. straight-line method b. effective interest method 2. Prepare the July 1, 2021, journal entries to record the interest income under both methods. 1a. Prepare...
Shriver Corp. purchased ten $1,000 3​% bonds of Solar Corporation when the market rate of interest...
Shriver Corp. purchased ten $1,000 3​% bonds of Solar Corporation when the market rate of interest was 10​%. Interest is paid​ semiannually, and the bonds will mature in ten years. How much did shriver pay on the bond investment?
Zapzap Corporation issued $4,000,000 in five-year, 4% bonds on August 1, 2019. Interest is to be...
Zapzap Corporation issued $4,000,000 in five-year, 4% bonds on August 1, 2019. Interest is to be paid semi-annually on Feb 1 and August 1. The bonds were sold to yield 6% effective annual interest. Pine Corporation has a calendar year-end and follows IFRS. Instructions: Prepare the entries required for these bonds at • December 31, 2019(year end) • February 1, 2020 • August 1, 2020 when the interest was paid, and the entire issue was retired early for $4,350,000 plus...
Metro Company purchased $100,000, 10%, 5-year bonds on January 1, 20x1, with interest payable on July...
Metro Company purchased $100,000, 10%, 5-year bonds on January 1, 20x1, with interest payable on July 1 and January 1. The bonds sold for $108,111, which results in an effective interest rate of 8%. The market value on December 31, 20x1 was $105,000 and all bonds were sold for $107,500 on January 1, 20x2. Required: Prepare journal entries on January 1, 20x1, July 1, 20x1, December 31, 20x1 and January 1, 20x2 assuming the bond investment is classified as (Trading...
1. On January​ 1, 2019, Always Corporation issues $3,100,000​, 5−​year, 12​% bonds for $3,010,000. Interest is...
1. On January​ 1, 2019, Always Corporation issues $3,100,000​, 5−​year, 12​% bonds for $3,010,000. Interest is paid semiannually on January 1 and July 1. Always Corporation uses the straight−line method of amortization. The​ company's fiscal year ends on December 31. The amount of discount amortized on July​ 1, 2019​ is: 2. Williamson Company declared and distributed a​ 10% stock dividend when it had 900,000 shares of​ $1 par value common stock outstanding. The market price per share of common stock...
Avadi Ltd. purchased $200,000 face value 7% bonds on June 1, 2019. Interest on the bonds...
Avadi Ltd. purchased $200,000 face value 7% bonds on June 1, 2019. Interest on the bonds will be paid semi-annually on May 31st and November 30th. The yield rate at the time of purchase was 5%. The bonds will mature in five years from the date of purchase. Assume Avadi Ltd. prepares financial statements in accordance with IFRS and uses the amortized cost model. Required: 1. Record the entry for the purchase of the bond. 2. Record the entry as...
Mellilo Corporation issued $5,200,000 of 20-year, 9.5 percent bonds on July 1, 2018, at 98. Interest...
Mellilo Corporation issued $5,200,000 of 20-year, 9.5 percent bonds on July 1, 2018, at 98. Interest is due on June 30 and December 31 of each year, and all of the bonds in the issue mature on June 30, 2038. Mellilo's fiscal year ends on December 31. a-c. Record the issuance of the bonds and entries to be passed post the issue. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)...
On January 1, 2012, Corporation A issued $18,000,000 of 10% ten-year bonds at 103. The bonds...
On January 1, 2012, Corporation A issued $18,000,000 of 10% ten-year bonds at 103. The bonds are callable at the option of Corporation A at 105. Corporation A has recorded amortization of the bond premium on the straight line method. On December 31, 2018, when the fair value of the bonds was 96, Corporation A repurchased $4,000,000 if the bonds in the open market at 96. Corporation A has recorded interest and amortization for 2018. What amount of gain/loss(ignoring income...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT