Exercise 8: Complete the following problem. A $20,000, 2 year, 10% (Stated rate) bond is sold...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Exercise 8: Complete the following problem. A $20,000, 2 year, 10% (Stated rate) bond is sold when the Effective (Market) rate is 8%. The bond pays interest semi-annually. Assuming a price of 104 at issuance record the following. 1. Entry required upon issuance of the bond. Cash proceeds: $ = $ 2. Entry on the first interest payment date. Use STRAIGHT-LINE method for amortization. a. Actual Interest payment $ % x 6/12 = $_ b. Amortization of the Premium using the STRAIGHT-LINE method. $_ periods= $ 3. Entry on the second interest payment date. Use STRAIGHT-LINE method for amortization. a. Actual Interest payment b. Amortization of the Premium using the STRAIGHT-LINE method. Cash Premium on Bonds Bonds Payable TĪTT Interest Pymt 1 2 X A 10% X $20K 12 Interest Paid Payable Next, use the t-accounts below the table to repeat the same three steps (from above) but this time use the EFFECTIVE INTEREST RATE METHOD. Round any calculations to the nearest dollar. Cash X B 8% x Col.E 12 Interest Expense Premium on Bonds Payable с (B-A) Premium Amortization Interest Expense Bonds Payable D (D-C) Premium Balance 800 E ($20K + D) Carrying Amount 20,800 Interest Expense Exercise 8: Complete the following problem. A $20,000, 2 year, 10% (Stated rate) bond is sold when the Effective (Market) rate is 8%. The bond pays interest semi-annually. Assuming a price of 104 at issuance record the following. 1. Entry required upon issuance of the bond. Cash proceeds: $ = $ 2. Entry on the first interest payment date. Use STRAIGHT-LINE method for amortization. a. Actual Interest payment $ % x 6/12 = $_ b. Amortization of the Premium using the STRAIGHT-LINE method. $_ periods= $ 3. Entry on the second interest payment date. Use STRAIGHT-LINE method for amortization. a. Actual Interest payment b. Amortization of the Premium using the STRAIGHT-LINE method. Cash Premium on Bonds Bonds Payable TĪTT Interest Pymt 1 2 X A 10% X $20K 12 Interest Paid Payable Next, use the t-accounts below the table to repeat the same three steps (from above) but this time use the EFFECTIVE INTEREST RATE METHOD. Round any calculations to the nearest dollar. Cash X B 8% x Col.E 12 Interest Expense Premium on Bonds Payable с (B-A) Premium Amortization Interest Expense Bonds Payable D (D-C) Premium Balance 800 E ($20K + D) Carrying Amount 20,800 Interest Expense
Expert Answer:
Answer rating: 100% (QA)
1 Journal Entry Account Titles and Explanation Debit Credit Cash 20800 Bonds payable 20000 Premium o... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Posted Date:
Students also viewed these accounting questions
-
43. In the Fletcher cart apparatus problem, a 1.0 kg object resting on a horizontal table is connected by a string to a 0.50 kg hanging object. The system is released from rest. the coefficient of...
-
Bond Issue, Interest Payments, Effective Interest Rate Method, Amortization Table. On January 1, 2015, the Landon Capital Partners, a U. S. GAAP reporter, issued $ 600,000 par value, 6%, six- year...
-
Advantage Counseling Center is a Not-for-Profit Organization, which you have been entrusted to prepare the financial statements for. Given the following list of accounts and their balances, prepare...
-
Define variable. Also discuss variable initialization.
-
In February 2008, Ceramic Crucibles of America was notified by the state of Colorado that the state was investigating the company's Durango facility to determine if there were any violations of...
-
Only a limited amount of high-quality wine-growing land is available. The firms that farm the land are identical. Because the demand curve hits the market supply curve in its upward sloping section,...
-
Based on the design, briefly discuss the data collection procedures to be used. Be sure to include the area rea of focus and targeted sample as part of these procedures. Develop a hypothetical...
-
Yong Companys income statement for the year ended December 31, 2014, and its comparative balance sheets as of December 31, 2014 and 2013, follow. During 2014, the company engaged in these...
-
Discuss the breath of responsibilities required of a radiographer. List the five main areas of responsibility in each specialty of radiologic technology. Discuss advantages to working in each of the...
-
In this mini-case, you will complete the test of details on accounts receivable for the 2019 audit of EarthWear Clothiers, Inc. The principal test of detail involves sending "confirmations" or...
-
A water heating system consists of a heat exchanger made from a 12m long copper pipe. The inside diameter of the copper pipe is d = 50mm and the outside diameter is do = 70mm. Annular aluminium fins...
-
Airline travel is a unique business sector in that the vast majority of the emissions associated with aviation, which are generated through the burning of jet fuel, cannot be reduced through...
-
What experiences could you provide to expose children to artists from diverse cultures? How could you provide experiences for children to be exposed to Aboriginal and/ or Torres Strait Islander...
-
Outsourced systems: (S) LO2) a) Eliminate the need for the employer to have knowledgeable payroll staff' b) Transfer all compliance responsibility from the employer to the service provider c) Reduce...
-
In this assignment I will be using the dataset released by The Department of Transportation. This dataset lists flights that occurred in 2015, along with other information such as delays, flight time...
-
Write the expression as one logarithm. 9 loga x + 43 loga(x-9) 10 loga (5x + 2)
-
Question 2 (Bayesian Network) Consider the alarm network shown in the lecture as following: B P(B) E P(E) Burglary Earthqk +b 0.001 wwwwwwwwwwwww +e 0.002 -b 0.999 -e 0.998 B EA P(A|B,E) +b +e Alarm...
-
(a) How far away can a human eye distinguish two ear headlights 2.0 m apart? Consider only diffraction effects and assume an eye pupil diameter of 5.0 mm and a wavelength of 550 nm. (b) What is the...
-
In the following exercise, you are required to review the Basis for Conclusions (BCs) for the standard(s) that provide the accounting guidance for this topic. Because the BCs is generally not...
-
In January 2015, a customer filed a lawsuit against Fireens Boutique. The customer fell on an icy patch in the stores parking lot and broke an ankle in December. Fireens fiscal year- end is January...
-
On September 1, Year 1, Royal Corp., a newly formed company, had the following stock issued and outstanding: Common stock, no par, $ 1 stated value, 5,000 shares originally issued for $ 15 per share....
-
The direct result of the process of transcription is the synthesis of a. DNA. b. RNA. c. a polypeptide. d. all of the above.
-
Many hotel jobs are inherently dead end; for example, maids, laundry workers, and valets, either have no great aspirations to move up, or are just using these jobs temporarily, for instance, to help...
-
Using what you learned in this chapter of Dessler Human Resource Management, build on the companys new system by recommending two more specific career development activities the hotel should...
Study smarter with the SolutionInn App