Calculations Marketing Inc. issued 9.5% bonds with a par value of $470,000 and a five-year life...
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Calculations Marketing Inc. issued 9.5% bonds with a par value of $470,000 and a five-year life on January 1, 2020, for $498,591. The bonds pay interest on June 30 and December 31. The market interest rate was 8% on the original issue date. Required: 1. Calculate the total bond interest expense over the life of the bonds. Answer is complete and correct. Total interest expense $194,659 2. Prepare an amortization table using the effective interest method. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) Answer is complete and correct. Period Ending Cash Interest Period Premium Interest Amort. Unamortized premium Carrying Value Paid Expense Jan. $ 0 $ 0 $ 0 $ 28,591 $498,591 1/20 June 22,325 19,944 2,381 26,210 496,210 30/20 Dec. 22,325 19,848 2,477 23,733 493,733 31/20 June 22,325 19,749 2,576 21,157 491,157 30/21 Dec. 22,325 19,646 2,679 18,479 488,479 31/21 June 22,325 19,539 2,786 15,693 485,693 30/22 Dec. 22,325 19,428 2,897 12,796 482,796 31/22 June 22.325 19.312 3.013 9.782479.782 3. Show the journal entries that Calculations Marketing Inc. would make to record the first two interest payments assuming a December 31 year-end. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) Answer is not complete. No 1 Date General Journal Debit Credit June 30, 202 Bond interest expense Premium on bonds payable 2 December 31 Bond interest expense Premium on bonds payable 4. Use the original market interest rate to calculate the present value of the remaining cash flows for these bonds as of December 31, 2022. Compare your answer with the amount shown on the amortization table as the balance for that date. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) Answer is complete but not entirely Present value of the remaining cash flows $487,596 Calculations Marketing Inc. issued 9.5% bonds with a par value of $470,000 and a five-year life on January 1, 2020, for $498,591. The bonds pay interest on June 30 and December 31. The market interest rate was 8% on the original issue date. Required: 1. Calculate the total bond interest expense over the life of the bonds. Answer is complete and correct. Total interest expense $194,659 2. Prepare an amortization table using the effective interest method. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) Answer is complete and correct. Period Ending Cash Interest Period Premium Interest Amort. Unamortized premium Carrying Value Paid Expense Jan. $ 0 $ 0 $ 0 $ 28,591 $498,591 1/20 June 22,325 19,944 2,381 26,210 496,210 30/20 Dec. 22,325 19,848 2,477 23,733 493,733 31/20 June 22,325 19,749 2,576 21,157 491,157 30/21 Dec. 22,325 19,646 2,679 18,479 488,479 31/21 June 22,325 19,539 2,786 15,693 485,693 30/22 Dec. 22,325 19,428 2,897 12,796 482,796 31/22 June 22.325 19.312 3.013 9.782479.782 3. Show the journal entries that Calculations Marketing Inc. would make to record the first two interest payments assuming a December 31 year-end. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) Answer is not complete. No 1 Date General Journal Debit Credit June 30, 202 Bond interest expense Premium on bonds payable 2 December 31 Bond interest expense Premium on bonds payable 4. Use the original market interest rate to calculate the present value of the remaining cash flows for these bonds as of December 31, 2022. Compare your answer with the amount shown on the amortization table as the balance for that date. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) Answer is complete but not entirely Present value of the remaining cash flows $487,596
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Related Book For
Fundamental Accounting Principles Volume 2
ISBN: 9781260881332
17th Canadian Edition
Authors: Kermit D. Larson, Heidi Dieckmann, John Harris
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