E9-26A. (Learning Objective 3: Issuing bonds payable [discount]; recording interest payments and the related bond amortization) Target Sports Ltd. is authorized to issue $1,600,000 of 10%, 10-year bonds payable. On December 31, 20X0, when the market interest rate is 12%, the company issues $1,250,000 of the bonds. Target Sports Ltd. amortizes bond discounts by the effective-interest method. The semi-annual interest dates are June 30 and December 31. Requirements 1. Prepare a bond amortization table for the first four semi-annual interest periods. 2. Record issuance of the bonds payable on December 31, 20X0, the first semi-annual interest payment on June 30, 20X1, and the second payment on December 31, 20X1.

E9-26A. (Learning Objective 3: Issuing bonds payable [discount]; recording interest payments and the related bond amortization) Target Sports Ltd. is authorized to issue $1,600,000 of 10%, 10-year bonds payable. On December 31, 20X0, when the market interest rate is 12%, the company issues $1,250,000 of the bonds. Target Sports Ltd. amortizes bond discounts by the effective-interest method. The semi-annual interest dates are June 30 and December 31. Requirements 1. Prepare a bond amortization table for the first four semi-annual interest periods. 2. Record issuance of the bonds payable on December 31, 20X0, the first semi-annual interest payment on June 30, 20X1, and the second payment on December 31, 20X1.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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(Learning Objectives 1, 6: Issue bonds at a discount; amortize using thestraight-line method; report bonds payable and accrued interest payable on the balancesheet) On February 28, 2018, Shark Corp. issued 10%, 10-year bonds payable with a facevalue of $1,500,000. The bonds pay interest on February 28 and August 31. The companyamortizes bond discount using the straight-line method.Requirements1. If the market interest rate is 9% when Shark Corp. issues its bonds, will the bonds bepriced at par, at a premium, or at a discount? Explain.2. If the market interest rate is 11% when Shark Corp. issues its bonds, will the bonds bepriced at par, at a premium, or at a discount? Explain.3. Assume that the issue price of the bonds is 94. Journalize the following bond transactions.a. Issuance of the bonds on February 28, 2018b. Payment of interest and amortization of the bond discount on August 31, 2018c. Accrual of interest and amortization of the bond discount on December 31, 2018…
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