Don't provide answer in image format Problem 10-3A Straight-Line: Amortization of bondpremium LO P3 Ellis Company issues 8.0%, five-yearbonds dated January 1, 2019, with a $600,000 par value.The bonds pay interest on June 30 and December 31and are issued at a price of $651,181. The annual marketrate is 6% on the issue date. Required: 1. Complete thebelow table to calculate the total bond interest expenseover the bonds' life. 2. Prepare a straight-lineamortization table for the bonds' life. 3. Prepare thejournal entries to record the first two interest payments.

Bonds payable is defined as a type of long-term debt that a company or organization issues in order…

Answered: Problem 10-3A Straight-Line:…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 96PSA

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Wilbury Corporation issued 1 million of 13.5% bonds for 985,071.68. The bonds are dated and issued October 1, 2019, are due September 30, 2020, and pay interest semiannually on March 31 and September 30. Assume an effective yield rate of 14%. Required: 1. Prepare a bond interest expense and discount amortization schedule using the straight-line method. 2. Prepare a bond interest expense and discount amortization schedule using the effective interest method. 3. Prepare adjusting entries for the end of the fiscal year December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. If income before interest and income taxes of 30% in 2020 is 500,000, compute net income under each alternative. 5. Assume the company retired the bonds on June 30, 2020, at 98 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight line method of amortization b. effective interest method of amortization 6. Compute the companys times interest earned (pretax operating income divided by interest expense) for 2020 under each alternative.
Brief Exercise (Appendix 9A) Bond Issue Price On January 1, 2020, Ruby Inc. issued 3,000 $1,000 par value bonds with a staled rate of6% and a 10-year maturity. Interest is payable semiannually on June 30 and December 31. Required: What is the issue price if the bonds are sold to yield 8%? {Note: Round to nearest dollar.)
Cornerstone Exercise (Appendix 9A) Bond Issue Price On January 1, 2021, Callahan Auto issued $900,000 of 9%, 10-year bonds. Interest is payable semiannually on June 30 and December 31. Required: What is the issue price if the bonds are sold to yield 8%? (Note: Round to the nearest dollar.)
Cornerstone Exercise Debt Issued at a Premium (Straight Line) Refer to the information for Ironman Steel above. Required: Prepare the amortization table for Ironman Steels bonds(Note: Round to the nearest dollar.) Use the following information for Cornerstone Exercises 9-31 and 9-32: Sicily Corporation issued $300,000 in 5% bonds (payable on December 31, 2029) on January 1, 2020, for $257,363. Interest is paid on June 30 and December 31. The market rate of interest is 7%.
Brief ExerciseBonds Issued at a Premium (Effective Interest) Refer to the information above for Haley Industries. Required: Prepare the journal entry for December 31, 2022 and 2023. Use the following information for Brief Exercises 9-55 and 9-58: Haley Industries issued $120,000 of 11% , 7-year bonds on January 1, 2020, with $5,842 pre- mium. Interest is paid annually on December 31. The market rate of interest is 10%.
On October 1 a company sells a 3-year, $2,500,000 bond with an 8% stated interest rate. Interest is paid quarterly and the bond is sold at 89.35. On October 1 the company would collect ________. A. $200,000 B. $558,438 C. $2,233,750 D. $6,701,250
Exercise Interest Payments and Interest Expense for Bonds (Straight Line) On January 1, 2020, Perry Manufacturing issued bonds with a total face amount of $3,000,000 and a stated rate of 9%. Required: Calculate the interest expense for 2020 if the bonds were sold at par. Calculate the interest expense for 2020 if the bonds were sold at a premium and the straight- line premium amortization for 2020 is $12,000. 3. Calculate the interest expense for 2020 if the bonds were sold at a discount and the straight- line discount amortization for 2020 is $33,000.

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