Issuing Bonds at a Premium
Q: Define Bond Premium
A: Bond premium: It is the amount because of which the purchase price of bond is more than the par…
Q: The Discount on Bonds Payable account is: Multiple Choice O O O O O An expense. A liability. A…
A: An expense account is not carried forward and closed in the income statement. But Discount on Bonds…
Q: How to record bonds selling at discount, premium, and at par. Why are bonds recorded at discount,…
A: Bonds are debts instruments issued by corporates. Bonds are issued at par, premium and discount.…
Q: Explain Recording Bonds at Issuance.
A: Bond at issuance is recorded at: Par Premium Discount
Q: Explain bonds issue between interest dates with examples.
A: Bonds are typically issued at interest dates in order to smoothen the flow of interest and…
Q: Under what conditions of bond issuance does a discounton bonds payable arise? Under what conditions…
A:
Q: ._______ The deposits are used for redeeming a bond issue.
A: Following is the answer to the question.
Q: Premium on Bonds Payable is a(n) a. valuation account b. contra account c. accumulation account d.…
A: Premium on bonds payable : Premium on bonds payable arises when bonds payable are issued for an…
Q: When the bond interest rate > the market rate, the bonds are issued at a discount. Select one: O…
A: Bond issued has fixed percentage of interest rate which is payable by bond issuer to bond holder.…
Q: Bond issue costs
A: Bond issuance costs are costs associated with the issue of bonds.
Q: The amortization on a bond premium:
A: The amortization on a bond premium: (d) Is calculated by multiplying the bond’s carrying value by…
Q: The Discount on Bonds Payable accounta. is an expense account.b. is a contra account to Bonds…
A: Bonds: Bonds are debt instruments issued by the borrower company to its lenders. Bonds are issued at…
Q: Which of the following has the highest interest rate? Select one: O a. Corporate Bond b. Government…
A: Note: Since you have asked multiple questions, we will solve the first question for you. If you want…
Q: Explain Bonds Issued Between Interest Dates.
A: Bond: It can be defined as the instrument that carries a fixed rate of income and represents the…
Q: Explain what a corporate bond is b. Outline the characteristics of the bond market d. Explain the…
A: A company can raise capital and secure financing through different mediums of debt and equity.…
Q: Which features make a bonds interest increase at issuance?
A: Bonds - Bonds are the money borrowed for a fixed duration for fixed rate of interest.
Q: Define Convertible Bonds.
A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…
Q: what is the principal amount repaid at the maturity of a bond is called?
A: Bond is a debt instrument which is issued by corporates or governments to raise funds for any…
Q: How to calculate interest on bonds and how to journalize the interest.
A: Interest on bonds is computed on the basis of the rate mentioned on the bond on the face value of…
Q: What is a discount bond? A premium bond?
A: Bond: Bond is a kind of debt instrument typically issued by corporations, government organizations…
Q: 2. Calculate the premium or discount. 3. Construct the appropriate bond schedule, including the…
A: Solution is given below.
Q: a. Explain what a corporate bond is b. Outline three characteristics of the bond market d. Explain…
A: Bonds are the liability of the company which they have to pay after the expiry of the bond’s…
Q: With respect to bonds, when interest rates increase typically...
A: Bonds are inversely related to the interest rate. Since bond price is calculated based on interest.…
Q: how to differentiate between: premium bonds discounted bonds bonds at par?
A: Premium Bonds: A premium bond is a bond that trades in the secondary market at a price higher than…
Q: The amount loaned when a bond is issued is a. the principal. b. the dividend. c. its maturity.…
A: The amount loaned when a bond is issued is the principal.
Q: credit to Premium on Bonds Payable?
A: Premium on Bonds Payable is the amount at which it is issued in excess of par value. Premium on…
Q: 6) The investment in bonds will be initially recorded at what amount?
A: Investment in bonds are classified as Financial assets. financial assets are initially recorded at…
Q: The carrying value on bonds equals Bonds Payablea. minus Premium on Bonds Payable.b. plus Discount…
A: Answer: d. minus Discount on Bonds Payable.
Q: Identify the following as either an advantage (A) or a disadvantage (D) of bond financing for a…
A: Definition: Bonds are a kind of interest-bearing notes payable, usually issued by companies,…
Q: Define a floating-rate bond and give examples
A: Floating-rate bond is a bond pays a variable interest rate. The interest rate is depends on a…
Q: a) What are the important bond features. Describe each feature what they indicate. What are Discount…
A: Hi student Since there are multiple questions, we will answer only first question.
Q: Select one: a. Bonds issued at a premium are redeemed for the amount of cash originally received b.…
A: Solution Concept The bond is issued at discount when -the coupon rate is less than…
Q: Define Treasury bond (T-bond)
A: The treasury bonds along with the treasury notes & treasury bills are considered to be risk free…
Q: Describe the nature of bonds and indicate the accounting for bond issuances.
A: Capital market: A capital market is a place where the shares and bonds are traded. This helps a…
Q: Calculate the accrued interest (in $) and the total proceeds (in $) of the bond sale. (Round
A: Bond is an instrument that carries fixed coupon payment with them. These are issued to those…
Q: What are the reasons that some bonds are issued at adiscount and others are issued at a premium?
A: The term premium and discount, which are used in context of bones, they usually tells that how the…
Q: The bond interest expense for a period is more than interest paid when bonds are sold at O A. A…
A: "Since you have asked multiple questions, we will solve first question for you. Of you want any…
Q: Determine the selling price of the bonds
A: The selling price of the bonds is the present value of the cash payments to be made during the life…
Q: Discount on Bonds Payable account
A: Discount on Bonds Payable account is deducted from outstanding liability of Bonds Payable in order…
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- On October 1 a company sells a 3-year, $2,500,000 bond with an 8% stated interest rate. Interest is paid quarterly and the bond is sold at 89.35. On October 1 the company would collect ________. A. $200,000 B. $558,438 C. $2,233,750 D. $6,701,250On 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. 89.05On April 1 a company sells a 5-year, $60,000 bond with a 7% stated interest rate. The market interest on that day was also 7%. If interest is paid quarterly, the company makes interest payments of ________. A. $1,050 B. $3,150 C. $4,200 D. $5,250
- 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 premiumBats 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 amortizationVolunteer 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
- 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.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 discountDixon 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