Question

On January 1, 2016, Emily Tax Services issued $200,000, 9%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued when the market rate was 8%. Required:

5.Find the selling price of the Bonds

6.Prepare an amortization schedule that determines interest at the effective interest rate.

7.Prepare an amortization schedule by the straight-line method.

8.Prepare the journal entries to record interest expense on June 30, 2018, by each of the two approaches.

Please provide details formula.

Answer 1

5.)		Amount $	Excel formula
	Present value of Maturity	146,138	=PV(4%,8,0,-200000,0)
	Add: Present value of Interest Payment	60,595	=PV(4%,8,-200000*4.5%,0,0)
	Selling price of Bonds	206,733

6.)	Date	Cash Interest	Interest Expense	Amortization of	Bond	Carrying
		@4.5% of 200,000	@4% of Carrying value	Premium	Premium	Value
		A	B	(A-B )
	January 1,2016				6,733	206,733
	June 30,2016	9,000	8,269	731	6,002	206,002
	December 31,2016	9,000	8,240	760	5,242	205,242
	June 30,2017	9,000	8,210	790	4,452	204,452
	December 31,2017	9,000	8,178	822	3,630	203,630
	June 30,2018	9,000	8,145	855	2,775	202,775
	December 31,2018	9,000	8,111	889	1,886	201,886
	June 30,2019	9,000	8,075	925	962	200,962
	December 31,2019	9,000	8,038	962	0	200,000
7.)	Date	Cash Interest	Amortization of	Interest Expense	Bond	Carrying
		@4.5% of 200,000	Premium (6,733 /8 )	(A-B )	Premium	Value
		A	B
	January 1,2016				6,733	206,733
	June 30,2016	9,000	842	8,158	5,891	205,891
	December 31,2016	9,000	842	8,158	5,050	205,050
	June 30,2017	9,000	842	8,158	4,208	204,208
	December 31,2017	9,000	842	8,158	3,367	203,367
	June 30,2018	9,000	842	8,158	2,525	202,525
	December 31,2018	9,000	842	8,158	1,683	201,683
	June 30,2019	9,000	842	8,158	842	200,842
	December 31,2019	9,000	842	8,158	-	200,000
8.)	Effective Interest rate
	Date	Account Titles	Debit $	Credit $
	June 30,2016	Interest Expense	8,269
		Bond Premium	731
		Cash		9,000
	Straight line method
	Date	Account Titles	Debit $	Credit $
	June 30,2016	Interest Expense	8,158
		Bond Premium	842
ekkarill92 Next > < Previous Related Solutions On January 1, 2016, Lamb Services issued $200,000, 9%, four-year bonds. Interest is paid semiannually on... On January 1, 2016, Lamb Services issued $200,000, 9%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $193,537 when the market rate was 10%. Required: 1. Prepare an amortization schedule that determines interest at the effective interest rate. 2. Prepare an amortization schedule by the straight-line method. 3. Prepare the journal entries to record interest expense on June 30, 2018, by each of the two approaches. On January 1, 2014, Apple Smith Co. issued $200,000, 9%, four-year bonds. Interest is paid semiannually... On January 1, 2014, Apple Smith Co. issued $200,000, 9%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $187,330.87 to yield an annual return of 11%. Required: 1. Prepare an amortization schedule that determines interest at the effective interest rate for each period. 2. Prepare an amortization schedule by the straight-line method for each of the eight interest payment periods. 3. Prepare the journal entries to record interest expense on June... On January 1, 2020, The Justice League issued $100,000, 9%, four-year bonds.  Interest is paid semiannually on... On January 1, 2020, The Justice League issued $100,000, 9%, four-year bonds.  Interest is paid semiannually on June 30 and December 31.  The bonds were issued at $96,768 to yield an annual return of 10%. Required: Show how Justice League calculated the $96,768 bond price (round each to the whole dollar). Prepare an amortization schedule for the dates indicated using the effective interest rate method. Date Cash Payment Interest Expense Amortization Carry Value 1/1/2020 6/30/2020 12/31/2020 6/30/2021 Prepare the journal entries to... On January 1, 2021, Bradley Recreational Products issued $150,000, 9%, four-year bonds. Interest is paid semiannually... On January 1, 2021, Bradley Recreational Products issued $150,000, 9%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $136,028 to yield an annual return of 12%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare an amortization schedule that determines interest at the effective interest rate. 2. Prepare an amortization schedule... On January 1, 2018, Bradley Recreational Products issued $125,000, 10%, four-year bonds. Interest is paid semiannually... On January 1, 2018, Bradley Recreational Products issued $125,000, 10%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $ 117,237 to yield an annual return of 12%. ( use FV of 1$, PV of 1$ etc…..) Required: 1. Prepare an amortization schedule that determines interest at the effective interest rate. (Enter your answers in whole dollars.) Payment Number Cash Payment Effective Interes t Increase in Balance Carrying Value 1 2 3... On January 1, 2018, Bradley Recreational Products issued $125,000, 10%, four-year bonds. Interest is paid semiannually... On January 1, 2018, Bradley Recreational Products issued $125,000, 10%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $117,237 to yield an annual return of 12%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare an amortization schedule that determines interest at the effective interest rate. 2. Prepare an amortization schedule... On January 1, 2018, Bradley Recreational Products issued $150,000, 12%, four-year bonds. Interest is paid semiannually... On January 1, 2018, Bradley Recreational Products issued $150,000, 12%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $141,044 to yield an annual return of 14%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare an amortization schedule that determines interest at the effective interest rate. 2. Prepare an amortization schedule... Taylor Company issued $100,000 of 13% bonds on January 1, 2016. The bonds pay interest semiannually... Taylor Company issued $100,000 of 13% bonds on January 1, 2016. The bonds pay interest semiannually on June 30 and December 31 and are due December 31, 2018. Required: 1. Assume the company sells the bonds for $102,458.71 to yield 12%. Prepare the journal entries to record the sale of the bonds and each 2016 semiannual interest payment and premium amortization, using the effective interest method. 2. Assume the company sells the bonds for $97,616.71 to yield 14%. Prepare the... Harrison Company issued $600,000 of 10%, 20-year bonds on January 1, 2020. Interest is paid semiannually... Harrison Company issued $600,000 of 10%, 20-year bonds on January 1, 2020. Interest is paid semiannually on July 1 and December 31 each year. Harrison Company uses the straight-line method of amortization for bond premium or discount. B. Assume the bonds are issued at 100. Provide the journal entries for the issuance of the bonds and the first two interest payments. (3 points) On January 1, 2016, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June... On January 1, 2016, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below:    Payment Cash Payment Effective Interest Increase in Balance Outstanding Balance 6,047,387    1           292,000      302,369      10,369       6,057,756    2           292,000      302,888      10,888       6,068,644    3           292,000      303,432      11,432       6,080,076    4           292,000      304,004      12,004       6,092,080... ADVERTISEMENT Subjects Accounting Advanced Math Anatomy and Physiology Biology Chemistry Civil Engineering Computer Science Economics Electrical Engineering Finance History Math Mechanical Engineering Operations Management Physics Psychology Statistics and Probability Nursing Other ADVERTISEMENT Latest Questions Consider the following linear programming problem: Maximize 10X + 8Y Subject to: 40X + 24Y <=... Gladstone Company tracks the number of units purchased and sold throughout each accounting period but applies... Think about a company you have worked for, either currently or in the past. Reflect upon... 1) X Bank has $1 million in new funds that must be allocated to mortgage (home)... Needs to be done in PYTHON A. Create a Dollar currency class with two integer attributes... Cash Budget The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget... Consider the case of Falcon Freight Inc. (FF): Five years of realized returns for FF are... ADVERTISEMENT About @ 2020 WizEdu