Discount-Mart Issues $20 million In bonds on January 1, 2021. The bonds have a seven-year term and pay Interest semlannually on June 30 and December 31 each year. Below Is a partlal bond amortization schedule for the bonds Interest Increase in Carrying Date Cash Paid Expense Carrying Value Value 01/01/2021 06/30/2021 12/31/2021 $18,820,272 $800,000 800, 000 800, 000 800,000 $901,014 906,064 911,368 916,936 $101,014 18,121, 286 106,864 18,227,350 06/30/2022 111,368 116,936 18,338,718 18,455,654 12/31/2022 What is the stated annual rate of Interest on the bonds? (Hint: Be sure to provide the annual rate rather than the stx-month rate) (Do not round your Intermedlate calculations.) Multiple Cholce 8%

Discount-Mart Issues $20 million In bonds on January 1, 2021. The bonds have a seven-year term and pay Interest semlannually on June 30 and December 31 each year. Below Is a partlal bond amortization schedule for the bonds Interest Increase in Carrying Date Cash Paid Expense Carrying Value Value 01/01/2021 06/30/2021 12/31/2021 $18,820,272 $800,000 800, 000 800, 000 800,000 $901,014 906,064 911,368 916,936 $101,014 18,121, 286 106,864 18,227,350 06/30/2022 111,368 116,936 18,338,718 18,455,654 12/31/2022 What is the stated annual rate of Interest on the bonds? (Hint: Be sure to provide the annual rate rather than the stx-month rate) (Do not round your Intermedlate calculations.) Multiple Cholce 8%

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

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

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

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 8RE

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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?
Bats Corporation issued 800,000 of 12% face value bonds for 851,705.70. The bonds were dated and issued on April 1, 2019, are due March 31, 2023, and pay interest semiannually on September 30 and March 31. Bats sold the bonds to yield 10%. Required: 1. Prepare a bond interest expense and premium amortization schedule using the straight-line method. 2. Prepare a bond interest expense and premium amortization schedule using the effective interest method. 3. Prepare any 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. Assume the company retires the bonds on June 30, 2020, at 103 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
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