2. On October 1, 2011, Sammy Company issued 8,000,000 of its 10-year 8% term bonds dated October 1, 2011. The bonds were sold to yield 10%. Interest is paid every April 1 and October 1. a. How much was the total proceeds from the issuance of the bonds? b. What is the balance of the bonds payable on October 1, 2020? c. What is the balance of the discount/premium on bond payable on December 31, 2020? Indicate whether discount/premium.

2. On October 1, 2011, Sammy Company issued 8,000,000 of its 10-year 8% term bonds dated October 1, 2011. The bonds were sold to yield 10%. Interest is paid every April 1 and October 1. a. How much was the total proceeds from the issuance of the bonds? b. What is the balance of the bonds payable on October 1, 2020? c. What is the balance of the discount/premium on bond payable on December 31, 2020? Indicate whether discount/premium.

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 7MCQ

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Similar questions

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On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%. The bonds paid interest semi-annually. Assuming the bonds sold at 58.55, what was the selling price of the bonds? Explain why the cash received from selling this bond is different from the $200,000 face value of the bond.
Smashing Cantaloupes Inc. issued 5-year bonds with a par value of $35,000 and an 8% semiannual coupon (payable June 30 and December 31) on January 1, 2018, when the market rate of interest was 10%. Were the bonds issued at a discount or premium? Assuming the bonds sold at 92.288, what was the sales price of the bonds?
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On January 1, a company issued a 5-year $100,000 bond at 6%. Interest payments on the bond of $6,000 are to be made annually. If the company received proceeds of $112,300, how would the bonds issuance be quoted? A. 1.123 B. 112.30 C. 0.890 D. 89.05
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
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Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018, and received $540,000. Interest is payable semi-annually. The premium is amortized using the straight-line method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. Dec. 31, 2018: entry to record payment of interest to bondholders C. Dec. 31, 2018: entry to record amortization of premium