Question
In: Accounting
31. On January 1, Patterson Inc. issued $4,000,000, 9% bonds for $3,756,000. The market rate...
31. On January 1, Patterson Inc. issued $4,000,000, 9% bonds for $3,756,000. The market rate of interest for these bonds is 10%. Interest is payable annually on December 31. Patterson uses the effective-interest method of amortizing bond discount. At the end of the second year, Patterson should report unamortized bond discount of
a. $118,400.
b. $228,400.
c. $211,240.
d. $204,000.
Solutions
Expert Solution
| Q31 c. $211,240. | ||||||
| Face Value | 4,000,000.00 | |||||
| Issue Price | 3,756,000.00 | |||||
| Bond Discount | 244,000.00 | |||||
| Date | Interest Payment = Stated Value *9% = A | Interest Exp= Prev BV*10% = B | Amortisation of Bond Dis = B-A | DR bal in Bond Dis C | Cr Bal in Bond Payable D | Book Value of Bonds = D-C |
| Jan 01 | 244,000.00 | 4,000,000.00 | 3,756,000.00 | |||
| Year 01 - Dec 31 | 360,000.00 | 375,600.00 | 15,600.00 | 228,400.00 | 4,000,000.00 | 3,771,600.00 |
| Year 02 - Dec 31 | 360,000.00 | 377,160.00 | 17,160.00 | 211,240.00 | 4,000,000.00 | 3,788,760.00 |
ekkarill92 answered 1 year agoRelated Solutions
On January 1, 2015, Patterson Inc. issued $5,000,000, 9% bonds for $4,695,000. The market rate of...
On January 1, 2015, Patterson Inc. issued $5,000,000, 9% bonds
for $4,695,000. The market rate of interest for these bonds on
January 1, 2015 was 10%. Interest is payable annually on December
31.
Please answer the following questions.
(1) Prepare the journal entry on January 1, 2015, based on US
GAAP and IFRS, respectively.
(2) Prepare the discount amortization table only up to December
31, 2016.
(3) Prepare the journal entry on December 31, 2015, based on US
GAAP and...
On January 1st 2001, Patterson Inc. issued bonds with a total face value of $4,000,000 (4...
On January 1st 2001, Patterson Inc. issued bonds with a total
face value of $4,000,000 (4 million), a 9% coupon rate and a life
of 12 years. The market rate of interest for these bonds is 10% per
year on the date of issue. The coupon payment is made annually on
December 31. (a) What is the bond payable balance that Patterson
should report on its balance sheet dated January 1st 2002? (b) What
is the interest expense that Patterson...
On January 1, Manderlee Inc. issued $180,000 of 9% 5-year bonds when the market interest rate...
On January 1, Manderlee Inc. issued $180,000 of 9%
5-year bonds when the market interest rate
was 10%. The bonds pay interest semiannually on June 30th and
December 31. Proceeds
received were $173,050.
These bonds were issued at a DISCOUNT/PREMIUM (circle one) because
the Contract Rate is
EQUAL TO/ GREATER THAN/ LESS THAN (circle one) the Market
Rate
Record the following transactions:
Bond issue on January 1
Paid semiannual interest on June 30
Amortized the bond premium or discount
On January 1, Marigold Corp. issued $5600000, 9% bonds for $5295000. The market rate of interest...
On January 1, Marigold Corp. issued $5600000, 9% bonds for
$5295000. The market rate of interest for these bonds is 10%.
Interest is payable annually on December 31. Marigold uses the
effective-interest method of amortizing bond discount. At the end
of the first year, Marigold should report unamortized bond discount
of
Ally Company issued $4,000,000 of 7%, 12-year bonds on January 1, 2018, for $3,731,582. The market or...
Ally Company issued $4,000,000 of 7%, 12-year bonds on January
1, 2018, for $3,731,582. The market or effective
interest rate is 9%. Interest is paid annually on each January
1st, and the effective-interest method of amortization
is to be used.
Provide the journal entry to record issuance of these long-term
bonds. (You may or may not need all rows of this
textbox).
Provide the end of the year adjusting journal entry (for Dec.
31, 2018) to record accrued Interest Expense for...
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...
Accounting for Bonds Issued at a Discount On January 1, 2017, Edward Elric Ltd. issued $4,000,000,...
Accounting for Bonds Issued at a Discount On January
1, 2017, Edward Elric Ltd. issued $4,000,000, 8%, 10-year bonds at
$3,508,1431. This price resulted in an effective-interest rate of
10% on the bonds. Edward Elric Ltd. uses the effective-interest
method to amortize bond premium or discount. The bonds pay annual
interest on January 1. Required: (Round all computations to the
nearest dollar.) 1. Prepare the journal entry to record the
issuance of the bonds on January 1, 2017. 2. Prepare...
Matt Winne, Inc. issued $700,000 of 9%, five-year bonds payable on January 1, 2018. The market...
Matt Winne, Inc. issued $700,000 of 9%, five-year bonds
payable on January 1, 2018.
The market interest rate at the date of issuance was 6%, and
the bonds pay interest semiannually.
1.
How much cash did the company receive upon issuance of the
bonds payable? (Round to the nearest dollar.)
2.
Prepare an amortization table for the bond using the
effective-interest method, through the first two interest
payments. (Round to the nearest dollar.)
3.
Journalize the issuance of the bonds...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Is the argument valid? Use rules of inference and laws of logic to prove or disprove...
- The student will start their own airline company. The student will then: Determine the vision of...
- What are Foyal's five management functions? Identify which organizational units accomplish these functions in your airport...
- Please use a switch statement to tell the user that his work is great, good, satisfactory,...
- A Japanese restaurant chain in the United States is celebrating its twenty-fifth anniversary next year. The...
- List the 3 quantum numbers required to describe the distribution of electron density in an atom...
- Fuzzy Restaurant is considering the purchase of a $1,500,000 flat top grill. The grill has an...
ADVERTISEMENT