Corporate Financial Accounting
15th Edition
ISBN: 9781337398169
Author: Carl Warren, Jeff Jones
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 11, Problem 6DQ
(A)
To determine
Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.
Discount on bonds: It occurs when the bonds are issued at a low price than the face value.
Premium on bonds: It occurs when the bonds are issued at a high price than the face value.
To identify: The issued price of bonds.
(B)
To determine
To identify: The unamortized amount of discount or premium account at the beginning of the period.
(C)
To determine
To identify: The account that was debited to amortize the discount or premium.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
The following data relate to a $2,000,000, 8% bond issued for a selected semiannual interest period:
Bond carrying amount at beginning of period $2,125,000Interest paid during period 160,000 Interest expense allocable to the period 148,750
(a) Were the bonds issued at a discount or at a premium? (b) What is the unamortized amount of the discount or premium account at the beginningof the period? (c) What account was debited to amortize the discount or premium?
[The following information applies to the questions displayed below.]
Hillside issues $4,000,000 of 6%, 15-year bonds dated January 1, 2021, that pay interest semiannually on June 30 and
December 31.
The bonds are issued at a price of $3,456,448.
Required:
1. Prepare the January 1 journal entry to record the bonds' issuance.
2(a) For each semiannual period, complete the table below to calculate the cash payment.
2(b) For each semiannual period, complete the table below to calculate the straight-line discount amortization.
2(c) For each semiannual period, complete the table below to calculate the bond interest expense.
3. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life.
4. Prepare the first two years of a straight-line amortization table.
5. Prepare the journal entries to record the first two interest payments.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2A to 2C
Req 3
Req 4
Req 5
For each…
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1.
2a. Journalize the entry to record the first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the straight-line method.Compute the price of $42,601,480 received for the bonds by using the present value tables
Chapter 11 Solutions
Corporate Financial Accounting
Ch. 11 - Describe the two distinct obligations incurred by...Ch. 11 - Explain the meaning of each of the following terms...Ch. 11 - If you asked your broker to purchase for you a 11%...Ch. 11 - A corporation issues 26,000,000 of 9% bonds to...Ch. 11 - If bonds issued by a corporation are sold at a...Ch. 11 - Prob. 6DQCh. 11 - Bonds Payable has a balance of 5,000,000 and...Ch. 11 - Prob. 8DQCh. 11 - Prob. 9DQCh. 11 - Issuing bonds at face amount On January 1, the...
Ch. 11 - Issuing bonds at a discount On the first day of...Ch. 11 - Prob. 11.3BECh. 11 - Prob. 11.4BECh. 11 - Prob. 11.5BECh. 11 - Prob. 11.6BECh. 11 - Times interest earned Averill Products Inc....Ch. 11 - Prob. 11.1EXCh. 11 - Entries for issuing bonds Thomson Co. produces and...Ch. 11 - Prob. 11.3EXCh. 11 - Prob. 11.4EXCh. 11 - Prob. 11.5EXCh. 11 - Entries for issuing and calling bonds; gain Mia...Ch. 11 - Prob. 11.7EXCh. 11 - Present value of amounts due Assume that you are...Ch. 11 - Prob. 11.9EXCh. 11 - Present value of an annuity On January 1 you win...Ch. 11 - Prob. 11.11EXCh. 11 - Prob. 11.12EXCh. 11 - Present value of bonds payable; premium Moss Co....Ch. 11 - Amortize discount by interest method On the first...Ch. 11 - Prob. 11.15EXCh. 11 - Prob. 11.16EXCh. 11 - Prob. 11.17EXCh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 11.2APRCh. 11 - Entries for bonds payable, including bond...Ch. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 11.5APRCh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Bond premium, entries for bonds payable...Ch. 11 - Entries for bonds payable, including bond...Ch. 11 - Bond discount, entries for bonds payable...Ch. 11 - Bond premium, entries for bonds payable...Ch. 11 - Analyze and compare Amazon.com and Wal-Mart...Ch. 11 - Prob. 11.2MADCh. 11 - Prob. 11.3MADCh. 11 - Analyze and compare Hilton and Marriott Hilton...Ch. 11 - Ethics in Action CLG Capital Inc. is a large...Ch. 11 - Prob. 11.3TIFCh. 11 - Present values Alex Kelton recently won the...
Knowledge Booster
Similar questions
- A $2,600 credit balance in the Premium on Bonds Payable account represents which of the following? Select one: a. An overpayment for a bond purchase b. An underpayment for a bond purchase c. The current amount of amortization expense d. The unamortized amount of premium earned on a bond issuearrow_forwardA company issued $93,000 bonds at 108. If the total interest payments during the term of the bond adds up to $70,000, then the interest expense over the bond's term will be: Type your numeric answer and submit 85560 Correct Answer: v 62560.0arrow_forwardAn $800,000 bond issue on which there is an unamortized premium of $57,000 is redeemed for $785,000. Journalize the redemption of the bonds. Refer to the Chart of Accounts for exact wording of account titles.arrow_forward
- When the interest payment dates of a bond are May 1 and November 1,and a bond issue is sold on June 1, the amount of cash received by theissuer will be: a. increased by accrued interest from June 1 to November 1b. increased by accrued interest from May 1 to June 1c. decreased by accrued interest from June 1 to November 1d. decreased by accrued interest from May 1 to June 1arrow_forwardPresent entries to record the selected transactions described below: Required: a. Issued $2,750,000 of 10-year, 8% bonds at 97.* b. Amortized bond discount for a full year, using the straight-line method.* c. Called bonds at 98. Assume the bonds were carried at $2,692,250 at the time of the redemption.* *Refer to the Chart of Accounts for exact wording of account titles. General Journal a. Issued $2,750,000 of 10-year, 8% bonds at 97 on January 1. Refer to the Chart of Accounts for exact wording of account titles. PAGE 1 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 b. Amortized bond discount for a full year, using the straight-line method, on December 31. Refer to the Chart of Accounts for exact wording of account titles. PAGE 1 JOURNAL…arrow_forwardCampbell, Inc. produces and sells outdoor equipment. On July 1, 20Y1, Campbell issued $40,000,000 of 10-year, 10% bonds at a market (effective) interest rate of 9%, receiving cash of $42,601,480. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds. 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the interest method. b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the interest method. 3. Determine the total interest expense for 20Y1.arrow_forward
- Assume the bonds in were issued for $644,636 and the effective-interest rate is 6%, prepare the company's journal entriesarrow_forwardBond premium, entries for bonds payable transactions Rodgers Gridiron Co. produces and sells football equipment. On July 1, 20Y1, Rodgers issued $75,900,000 of 10- year, 13% bonds at a market (effective) interest rate of 12%, receiving cash of $80,252,470. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: For all journal entries, if an amount box does not require an entry, leave it blank. 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 20Y1 July 1 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. 20Y1 Dec. 31 b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. 20Y2 June 30 3.…arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning