ASsignmentiMain.do?invoker=&takeAssignmentSessionLocator%3D&inprogress%-falserkeBookCalculatorPrint ItemCompute Bond Proceeds, Amortizing Premium by Interest Method, and Interest ExpenseWare Co. produces and sells motorcycle parts. On the first day of its fiscal year, Ware Co. issued $90,000,000 of five-year, 12% bonds at a market (effective)interest rate of 10%, with interest payable semiannually. Compute the following:a. The amount of cash proceeds from the sale of the bonds. Use the tables of present values in Exhibit 8 and Exhibit 10. Round to the nearest dollar.b. The amount of premium to be amortized for the first semiannual interest payment period, using the interest method. Round to the nearest dollar.C. The amount of premium to be amortized for the second semiannual interest payment period, using the interest method. Round to the nearest dollar.d. The amount of the bond interest expense for the first year. Round to the nearest dollar.SHEET.A...SHEETKSHEET.A...KSHEET.A...KSHEET.A...Check My Work 3 more Check My Work uses remaining.PreviousNext>tems11:2%24%24

a. Particulars Amount PV Factor Present value of Bonds Principal amount (PVIF factor 5% at 10…

Answered: ASsignmentiMain.do?invoker=&…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter10: Long-term Liabilities

Section: Chapter Questions

Problem 10.3AP

See similar textbooks

Similar questions

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.
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%.
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
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
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
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
Oak Branch Inc. issued $700,000 of 5%, 10-year bonds when the market rate was 4%. They received $757,243. Interest was paid semi-annually. Prepare an amortization table for the first three years of the bonds.
ABC Co. is contemplating on investing on 12%, 3-year p1,000,000 bonds. Pricipal is due at maturity date but interest is due annually at each year-end. Market rate on January 1, 20x1 is 10%. Information regarding the fair values follows: December 31, 20x2 is 104, December 31, 20x3 is 105 Please provide entries on reclassification date under the following scenarios changes in business model in 20x2 a. Amortised cost to FVPL b. PVPL to Amortised cost c. Amortised cost to FVOCI-mandatory Requirement: Prepare jounal entries
Pruitt Corporation issued 3,000, 8%, 5-year, $1,000 bonds dated January 1, 2010, at 100 (i.e. at 100% of face or par value). (Note: 3,000 bonds have been issued each having a face value of $1,000. So basically, the total liability of $3,000,000 will be created i.e. 3000 x 1000 = 3,000,000. Similarly, interest payment will also be on total amount) a).Prepare the journal entry to record the sale of these bonds on January 1, 2010. b).Prepare the journal entry to record the first interest payment on July 1, 2010 (interest payable semiannually), assuming no previous accrual of interest. Prepare the adjusting journal entry on December 31, 2010, to record interest expense.

Recommended textbooks for you

Financial Accounting: The Impact on Decision Make…

Accounting

ISBN:

9781305654174

Author:

Gary A. Porter, Curtis L. Norton

Publisher:

Cengage Learning

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

Cornerstones of Financial Accounting

Accounting

ISBN:

9781337690881

Author:

Jay Rich, Jeff Jones

Publisher:

Cengage Learning

Financial Accounting: The Impact on Decision Make…

Accounting

ISBN:

9781305654174

Author:

Gary A. Porter, Curtis L. Norton

Publisher:

Cengage Learning

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

Cornerstones of Financial Accounting

Accounting

ISBN:

9781337690881

Author:

Jay Rich, Jeff Jones

Publisher:

Cengage Learning

Principles of Accounting Volume 1

Accounting

ISBN:

9781947172685

Author:

OpenStax

Publisher:

OpenStax College

Financial Accounting Intro Concepts Meth/Uses

Finance

ISBN:

9781285595047

Author:

Weil

Publisher:

Cengage

SEE MORE TEXTBOOKS