Answered: 1. Bonds sold at a discount - Starmount…

1. Bonds sold at a discount - Starmount Inc. sold bonds with a $50,000 face value, 12% interest, and 10-year term at $48,000. What is the total amount of interest expense over the life of the bonds?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 3PB: Starmount Inc. sold bonds with a $50,000 face value, 12% interest, and 10-year term at $48,000. What...

See similar textbooks

Related questions

Q: Beluga Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 10% when the…

A: Bonds are a form of liability or loan taken by the business. Business needs to make regular interest…

Q: TryNErr Corporation issued $1,000,000 of ten-year, 10% bonds payable. The market rate of interest at…

A: A bond refers to the instrument which is issued by the government to borrow money when needed. It is…

Q: Medhurst Corporation issued $90,000 in bonds for $87,000. The bonds had a stated rate of 8% and pay…

A: Bonds are a form of debt or loan taken by the company and interest needs to be paid on bonds on…

Q: Bonds Payable has a balance of $900,000 and Premium on Bonds Payable has a balance of $10,000. If…

A: Redemption of Bonds: The process of repaying the sale amount of bonds to bondholders at the time of…

Q: Irving Inc. sold bonds with a $50,000 face value, 10% interest, and a 10-year term at $52,000. What…

A: Given, Face value = $50,000 Issue price = $52,000 Coupon rate = 10%

Q: On January 1, Parson Freight Company issues 7.0%, 10-year bonds with a par value of $3,500,000. The…

A: Bonds are a form of loan or debt that is being issued by the company, on which regular interest…

Q: A company issued 6%, 15-year bonds with a face amount of $75 million. The market yield for bonds of…

Q: On January 1, 20x1, POTENT POWERFUL Co. issued 12% bonds with face amount of P4,000,000 for…

A: The face value of the bond is 4,000,000. The coupon rate on bond is 12% and the annual coupon rate…

Q: A company issued 7%, 5-year bonds with a par value of $50,000. The market rate when the bonds were…

A: Interest expense for first semiannual interest period = Issue value of bonds x market rate of…

Q: The Kaplan Group sold $200,000 of 10-year bonds for $190,000. The face rate on the bonds was 8% and…

A: Interest paid on December 31 = Face value of bonds x rate of interest x no. of years = $200000 x 8%…

Q: O'Shea Inc. Issued bonds at a face value of $100,000, a rate of 6%, and a 5-year term for $98,000.…

A: Amortization of Bonds discount or premium: The Bonds can be issued at a discount or premium. The…

Q: On 1/3/2013, a company purchased 10 bonds with a nominal value of 5000 dinars per bond and bears an…

A: Here in this case we are required to make entry for the purchase of bond and its interest. when we…

Q: Cullumber Company purchased bonds with a face amount of $725000 between interest payment dates.…

A: Bonds means an instrument issued by company acknowledging the debt due from company to bond holder.…

Q: Splish Brothers Inc. issues $7,600,000 of 5% bonds due in 5 years with interest payable at year-end.…

A: Bonds are issued by large organizations such as corporations, municipal organizations, state or…

Q: White Company issued P2,000,000 face value of 10-year bonds on January 1. The bonds pay interest on…

A: A financial instrument that doesn’t affect the ownership of the common shareholders or management of…

Q: On June 1 of the current year, Cross Corp. issued $300,000 of 8% bonds payable at par with interest…

A: Bonds are the form of loan or debt issued by the company, on which regular interest needs to be paid…

Q: Bonds sold at a premium - Irving Inc. sold bonds with a $50,000, 10% interest, and 10-year term at…

A: Bonds payable are financial instruments. It representing a company’s commitment to pay back a…

Q: On January 1, 20x1, SMUDGE BLUR Co. issued 1,000, P4,000, 12%, 3-year bonds for P4,198,948.…

A: The question is based on the concept of Financial Accounting.

Q: Bonds Payable has a balance of $1,000,000, and Discount on Bonds Payable has a balance of $15,500.…

A: Bonds payable are kind of long term debt generally issued by governments and corporations. The…

Q: A company issued 6%, 10-year bonds with a face amount of $75 million. The market yield for bonds of…

A: Bonds: Bonds are debts instruments issued by corporates. Bonds are issued at par, premium and…

Q: Bonds Payable has a balance of $1,005,000 and Discount on Bonds Payable has a balance of $10,050. If…

A: Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money…

Q: Garcia Company issues 10%, 15-year bonds with a par value of $240,000 and semiannual interest…

A: Cash proceeds from the issuance of bonds = Par value of bonds x Issue price %

Q: A company has bonds outstanding with a parvalue of $100,000. The unamortized premium on these bonds…

A: Unamortized premium on bonds is calculating by deducting the bond's price at actual face value at…

Q: Investco issued $30,000 of 6.25% bonds on January 1 at a discount of $2,107. Interest expense…

A: The book value of the bond is calculated by subtracting the unamortized discount from the face value…

Q: On January 2, Year 1, Kampai Sushi Bar sold $800,000 of bonds for $785,000. The bonds will mature in…

A: Since the bond is sold for lesser amount and the bond will mature in 10 years, each year the amount…

Q: On July 1, 2002, Roger Co. paid P1,198,000 for 10% 20-year bonds with a face amount of P1,000,000.…

Q: On January 1, 20x1, Silent Co. issued 1,000 bonds with face amount of P4,000 each for a total of…

A: Interest expense for 20x1 = ( issue value of bonds - transaction costs )x effective interest rate…

Q: What is the entry to record the first semiannual interest payment, and the amortization of the bond…

A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms.…

Q: Starmount Inc. sold bonds with a $50,000 face value, 12% interest, and 10-year term at $48,000. What…

A: Given, Bond Face Value $ 50,000 Issue Proceeds $ 48,000 Discount on Bonds $ 2,000…

Q: On July 1, 2002, Roger Co. paid P1,198,000 for 10% 20-year bonds with a face amount of P1,000,000.…

A: Interest expense in 2002 = Carrying amount of the note on initial recognition x interest rate x no.…

Q: A company issued 5%, 20-year bonds with a face amount of $80 million. The market yield for bonds of…

A: Calculate the selling price of the bonds as shown below:

Q: A company has bonds outstanding with a par value of $100,000. The unamortized discount on these…

A: A bond is an instrument of raising funds. It has a fixed interest rate which is the paid by the…

Q: Irving Inc. sold bonds with a $50,000, 10% interest, and 10-year term at $52,000. What is the total…

A: Bonds are considered a financial instrument used to raise finance for the organization. It is also…

Q: Newport Industries issued ten-year, $100,000 bonds paying semi-annual interest. When the annual…

A: Bonds are the debt securities which are issued by the organizations whether private or government.…

Q: On January 1, Year 1, Tina Company purchased bonds with face value of P4,000,000 for P4,206,000. The…

A: As per IFRS 9, Financial instruments, if any financial asset is held to collect the contractual cash…

Q: On January 1, 20x1, Yoga Co. issued 1,000, P4,000 face amount bonds for P3,807,852. The bonds mature…

A: Unamortized discount on bonds payable on December 31, 20x1 = (Face value of bonds - issue value of…

Q: Randolph Company issued $1,000,000 of 6.5%, 8-year bonds dated June 1, 20X3, with semiannual…

A: 1. Bond is issued at premium when issue price of bond is higher than par/face value of bond. As per…

Q: A company issues 8%, 20-year bonds with a par value of $500,000. The current market rate for the…

A: In this numerical has covered the concept of Bonds Payable

Q: Accounting Bonds Payable has a balance of $957,000 and Discount on Bonds Payable has a balance of…

A: Where Bonds are issued at a price lower than it's face value, there arises a discount/loss on issue.…

Q: The Square Foot Grill, Inc. issued $230,000 of 10-year, 9 percent bonds on January 1, Year 2, at…

A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Q: Bonds Payable has a balance of $5,000,000, and Discount on Bonds Payable has a balance of $150,000.…

A: Calculate gain or loss on the redemption of the bonds payable.

Q: When the market rate of interest was 11%, Christopher Corporation issued $100,000 of five-year, 12%…

A: The Selling price of the bond will be Present Value of the Interest Amount to be Received for…

Q: A company sold a $1,000,000 issue of bonds with a 15-year life, paying 4% interest per year. The…

A: Bond is a fixed income-based instrument, which contains low amount of risk. Organization issues…

Q: a).Prepare the journal entry to record the sale of these bonds on January 1, 2010.…

A: Face Value of bond = $1,000 Coupon rate = 8% x 6 ÷12 = 4% per period (semiannual) Term = 5 years x 2…

Q: Surmount Inc. Sold bonds with a $50,000 face value, 12% interest and 10-year term at $48,000. What…

A: Bonds: Bonds are debt instruments issued by the borrower company to its lenders. Bonds are issued at…

Q: The Smart Company sold Rs. 500,000 of 8 percent, 20-year bonds on April 1, 2011, at 105. The…

A: Hi student Since there are multiple subparts, we will answer only first three subparts. If you want…

Q: Evie Inc. issued 49 bonds with a $1,400 face value, a five-year life, and a stated annual coupon of…

A: Bonds payable are one of the sources of finance and are shown as liability. If the interest rate is…

Question

1. Bonds sold at a discount - Starmount Inc. sold bonds with a $50,000 face value, 12% interest, and 10-year term at $48,000. What is the total amount of interest expense over the life of the bonds?

2. Bonds sold at a premium - Irving Inc. sold bonds with a $50,000, 10% interest, and 10-year term at $52,000. What is the total amount of interest expense over the life of the bonds?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Starmount Inc. sold bonds with a $50,000 face value, 12% interest, and 10-year term at $48,000. What is the total amount of interest expense over the life of the bonds?
Beluga Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 3% when the market rate was 4%. Interest was paid annually. The bonds were sold at 87.5. What was the sales price of the bonds? Were they issued at a discount, a premium, or at par?
Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the market of interest was 9%. The company uses the effective-interest method of amortization. At the end of the year, the company will record ________. A. a credit to cash for $28,733 B. a debit to interest expense for $31,267 C. a debit to Discount on Bonds Payable for $1,267 D. a debit to Premium on Bonds Payable for $1.267
OShea Inc. issued bonds at a face value of $100,000, a rate of 6%, and a 5-year term for $98,000. From this information, we know that the market rate of interest was ________. A. more than 6% B. less than 6% C. equal to 6% D. cannot be determined from the information given.
Waldron Inc. issued $400,000 bonds with a stated rate of 7% when the market rate was 5%. They are 3-year bonds with interest to be paid annually. Prepare a table to amortize the premium of the bonds. Assume that the bonds were issued for $421,844.
Allante Corporate issued 50 bonds with a face value of $1,000 and a stated rate of 4% and received $45,000. What is the journal entry to record the sale of the bonds?
On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
Eli Inc. issued $100,000 of 8% annual, 5-year bonds for $103,000. What is the total amount of interest expense over the life of the bonds?
Gingko Inc. issued bonds with a face value of $100,000, a rate of 7%, and a 10-yearterm for $103,000. From this information, we know that the market rate of interest was ________. A. more than 7% B. less than 7% C. equal to 7% D. equal to 1.3%
A company issued bonds with a $100,000 face value, a 5-year term, a stated rate of 6%, and a market rate of 7%. Interest is paid annually. What is the amount of interest the bondholders will receive at the end of the year?
Roo Incorporated issued 50 bonds with a face value of $1,000 and a stated rate of 6% when the market rate was 6%. What is the journal entry to record the sale of the bonds?
Naval Inc. issued $200,000 face value bonds at a discount and received $190,000. At the end of 2018, the balance in the Discount on Bonds Payable account is $5,000. This years balance sheet will show a net liability of ________. A. $200,000 B. $180,000 C. $195,000 D. $205,000