PLease answer 3. Terry Company is authorized to issue P5,000,000 of 6%, 10- year bonds dated July 1, 2011with interest payments on June 30 and December 31. When bonds are issued on November 1,2011, Terry Company received cash of P5,150,000 (excluding interest).a. What is the discount or premium from the issuance of the bonds payable? Indicate whetherdiscount/premium.b. How much is the total interest expense for the whole life of the bond?

Answered: Image /qna-images/answer/e14632f4-828c-438c-9ed7-064b4e654436.jpg

Answered: a. What is the discount or premium from…

Business

Accounting

a. What is the discount or premium from the issuance of the bonds payable? 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

See similar textbooks

Related questions

Q: Taxation can be used to reduce the welfare loss arising from a negative externality. Select one: O…

A: True

Q: Jul 2 Recommended to the owner, Jen Beck, that she put some of the cash into a Money Market…

A: QuickBooks is an accounting software package which has various tools like accounting, inventory,…

Q: Big Bucks Bank. The reserve ratio is (1) (2) Liabilities and net wort 000$ 22.000 $ 22.000 Checkable…

A: the Maximum Amount of new loans that this bank made is $12000 The money supply has changed by…

Q: Check Register Balance Check Checks issued to or Amount Amount deposits received from 237 Echo…

A: Check register is the document that is the summary of all the financial transactions related to…

Q: In 2015, The Platinum Company issued $700,000 8% bonds with 700 nondetachable warrants for $765,000…

A: When the issuer of the bonds gives the holders of the bonds a right to purchase a specified number…

Q: During 2021, Voight Inc. received the following payments for services: May 1: Received $120,000 in…

A: Unearned revenue is the revenue earned but service is yet to be completed and delivered or rendered.

Q: Assume that a company’s Inventory Turnover is 15. What does that mean? It takes about 15 days for…

A: Answer) The correct Option is: Inventories turn over 15 times per year: It is because turnover…

Q: Compare and contrast profit sharing with gain sharing as employee performance incentives.

A: The term performance incentive refers to performance-based compensation systems in which an employee…

Q: The bank may require other forms of collateral security for bank loans. These may include O 1. a…

A: Collateral Securities Concept for Bank borrowing Banking

Q: 2. Pistons company sells portable DVD players for P28,000 each and offers to each customer a 3-year…

A: Warranty means the undertaking given by the company selling the goods that in case of any defect ,…

Q: Prearcan CVBA's income statement shows the following: Sales Revenue: $9,121,000 Variable Costs:…

A: The difference between the Net sales revenue and total variable costs is called the contribution…

Q: Fill in the blanks: Problem: On December 31, Mr. Adrian sold equipment amounting to P640,000 with a…

A: Invoice price means amount of goods less trade discount. Buyer have to pay invoice price. Sale term…

Q: ed 30 November 2021. most recent income statement and statement of financial positi nparatives for…

A: Cash Flow statement from Indirect Method

Q: During this year, board of directors at Munoz Company authorizes repurchase of 100 shares of the…

A: Treasury stock: Shares which are bought back by the company from the open market but not retired…

Q: a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio.…

A: Solution:- Calculation of Working capital as follows under:- Working capital =Current assets…

Q: Which of the following is not considered part of M2? a. money market mutual fund shares b. large…

A: Ans. M2 consists of M1 + savings deposits+ money market securities + other time deposits.

Q: Smithson Mining operates a silver mine in Nevada. Acquisition, exploration, and development costs…

A: An Asset Retirement Obligation (ARO) is a legal responsibility related with the retirement of a…

Q: Kristen Lu purchased a used automobile for $11,450 at the beginning of last year and incurred the…

A: The variable costs are generally most important for making any decision or choosing an alternative…

Q: 100,000 understated. On

A: A series of high-level reports that describe a company's monetary performance, financial position,…

Q: A machine bought at a price of 5000 pesos. Annual maintenance costs 1500 pesos, and annual income…

A: A graphic representation of each value of money at a time is called a cash flow diagram. Profits…

Q: The following data are the seasonally adjusted percent changes from the preceding month for the…

A: From the sellers perspective PPI means production price Index which includes food and energy prices,…

Q: An engineering firm purchased 12 years ago a heavy planner for P 50,000. As the life of the planner…

A: Introduction Depreciation means decrease in monetary in value of assets over its useful life due to…

Q: Effect of Transactions on Cash Flows State the effect (cash receipt or payment and amount) of each…

A: Cash influx refers to the money that enters a business through sales, investments, or financing. It…

Q: mings of the Grossman Model

A: Michael Grossman proposed the Grossman model of health demand in a book published in 1972. It is a…

Q: The right attaches when the author first makes his work public: using the "C" symbol to claim…

A: Generally, copyright lasts for 70 years after the author’s death.

Q: Bryant Company reports net income of $21,000. For the year, depreciation expense is $8,000 and the…

A: Introduction:- Cash flows are classified into three types as follows under:- Cash flow from…

Q: licia has been working for JMM Corporated for 32 years. Alicia participates in JMM's defined benefit…

A: Compensation: Compensation is the amount obtained by a worker or an employee in respect of the…

Q: me interest i and some number a pinterest periods n, the uniform series capital recovery factor is…

A: Compound interest is used in case of lump-sum money accumulates in the future if interest is charged…

Q: YCO, Inc. budgeted manufacturing overhead of $294,644 at a level of 9,527 fabrication hours. The…

A: Applied manufacturing overhead = Actual fabrication hours x manufacturing overhead rate where,…

Q: ECO, SRL sells two models of their product in Afghanistan, the Type B model and the Type A model.…

A: Formulas: Contribution margin ratio = (Contribution margin / Net sales) x 100 where, Contribution…

Q: c) Your manager recently attended a seminar where one of the speakers asked the following question…

Q: cheir consumption over their lifetime. apede the process of consumption ed by such constraints,…

A: The b is explained as,

Q: 4,800 15 14,801 - 34,000 20 34,001 - 120,000 27 120,001 and ov

A: The company's income statement is prepared for arriving at the profits generated by the company…

Q: Customers' current ac bank.

A: Liabilities are accumulated financial obligations that result from past events that are expected to…

Q: Under PFRS 9, bond investments held for collection of contractual cash flows are measured at

A: As per PFRS - 9, all financial instruments are initially measured at fair value adjusted by the…

Q: Required: a. (1) On September 30, journalize the entry to record the flow of costs into the…

A: Process costs: It is a method of cost accounting, which is used where the production is continuous,…

Q: Shannon Company began operations on January 1, 2020. The financial statement contained the following…

A: Financial statement is the summary showing revenues and expenses, assets and obligations, equities…

Q: On December 31, 2021, Gabriel Inc. has 100,000 common shares and 10,000, $1 no-par value preferred…

A: Earnings per share indicate the profits per share of common stockholders. It can be calculated by…

Q: What amount of income from the government grant is recognized for the current year?

A: Grant is the government aid which is given by the government to the company in order to support and…

Q: Required: Compute the inventory turnover in Year 2. Write answer in whole figure only. 10. Using…

A: Ratio analysis means where different ratio of various years of years companies has been compared and…

Q: Question 1: Service Costing & ABC Part A African Adventure Ltd offers a series of holiday packages…

A: IN THE GIVEN QUESTION WE HAVE TO CALCULATE THE FOLLOWING: PROFITABILITY OF EACH PACKAGE AND PROFIT…

Q: What happens when a qualified exempt importer subsequently sells what was imported to a taxable…

A: when a qualified exempt importer subsequently sells to non exempt person, the purchaser shall be…

Q: 8. Camden Ltd. makes two products, X and Y, each of which passes through two production departments.…

A: Production Overheads: The amount of indirect costs incurred while manufacturing a product are…

Q: Bourne Incorporated reports a cash balance at the end of the month of $2,620. A comparison of the…

A: The bank reconciliation statement is prepared to equate the balances of cash book and passbook with…

Q: During the year December 31, 2018, Samar Company revealed the following events: - A counting error…

A: Retained earning means the amount of profit that has not been distributed to shareholder as divided.…

Q: QUESTION 5 A manufacturing machine has a first cost of $74 thousand with a $25 thousand salvage…

A: Answer) Linear Depreciation is charged under Straight Line Method. Calculation of book value of…

Q: How many of each product should Carla Vista Co. produce and sell to maximize its profit? (Round per…

A: Solution Product Units to be Produced Product A 322 Product B…

Q: Classify the following cash flows as either operating, investing, or financing activities, assuming…

A: A cash flow statement indicates cash inflow and cash outflow information of a particular time…

Q: Frary Corporation is a building contractor. Frary tracks product costs in its job cost system and…

A: Introduction:- Total cost of job consists Direct material and direct labor and Overhead costs.

Q: 10. Marca Leon is pl

A: Assets are resources that are controlled which results from prior transactions that are expected to…

Concept explainers

Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.

Question

PLease answer

3. Terry Company is authorized to issue P5,000,000 of 6%, 10- year bonds dated July 1, 2011
with interest payments on June 30 and December 31. When bonds are issued on November 1,
2011, Terry Company received cash of P5,150,000 (excluding interest).
a. What is the discount or premium from the issuance of the bonds payable? Indicate whether
discount/premium.
b. How much is the total interest expense for the whole life of the bond?

Expert Solution

This question has been solved!

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

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps with 2 images

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

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?
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
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
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
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.
Saverin, Inc. produces and sells outdoor equipment. On July 1, 2016, Saverin, Inc. issued 62,500,000 of 10-year, 9% bonds at a market (effective) interest rate of 8%, receiving cash of 66,747,178. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Instructions 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, 2016, and the amortization of the bond premium, using the interest method. (Round to the nearest dollar.) b. The interest payment on June 30, 2017, and the amortization of the bond premium, using the interest method. (Round to the nearest dollar.) 3. Determine the total interest expense for 2016.
Edward Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $480,000. Interest is payable semiannually. The discount 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 discount
Volunteer 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 annually. The premium is amortized using the straightline method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. June 30, 2019: entry to record payment of interest to bondholders C. June 30, 2019: entry to record amortization of premium D. June 30, 2020: entry to record payment of interest to bondholders E. June 30, 2020: entry to record amortization of premium
Dixon Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $480,000. Interest is payable annually. The discount 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. June 30, 2019: entry to record payment of interest to bondholders C. June 30, 2019: entry to record amortization of discount D. June 30, 2020: entry to record payment of interest to bondholders E. June 30, 2020: entry to record amortization of discount