Markel Inc. has bonds outstanding during a year in which the general (risk-free) rate of interest has not changed. Markel elected the fair value option for the bonds upon issuance. What will the company report for the bonds in its income statement for the year?
Q: to the text On July 1, 2020, Kabir Company, a private company, decided to buy $283,000, 3% 13-year…
A: The bonds are the financial instruments used to raise money from the market or for other investment…
Q: On 1/1/2021, EV Car Corporation issued 16%, $200,000,000 face value bonds for $274,773,262, when the…
A: Bond is an effective method of raising finance which can be issued at par (same as bond par value),…
Q: On January 1, 2021, Essence Communications issued $800,000 of its 10-year, 8% bonds for $700,302.…
A: Given information is: On January 1, 2021, Essence Communications issued $800,000 of its 10-year, 8%…
Q: Ira is an investor who purchased $10,000 of the bonds. He promptly brought an action against Baker…
A:
Q: On April 30, Kate Company issued 7,000 of 15% ₱1,000 bonds at 95. The bonds have a five-year term…
A: Bond Issued = 7,000 Bond issue cost = ₱125,000 Face Value = ₱1,000 Coupon rate = 15% Time period = 5…
Q: On July 1, Year 1, ABC Corp purchased 6.00% bonds having a maturity value of $100,000 for $105,079.…
A: Correct option is a. $142 Unrealized gain or loss recorded under OCI under December 31 year 1 is…
Q: An entity had investments in marketable debt securities costing 650,000 that were classified as…
A: When an asset is reclassified from available for sales to amortization cost on the date of…
Q: On June 1, 2021, NEX Company received ₱1,077,200 plus accrued interest for 12% bonds with face…
A: "Since you have asked multiple question we will solve the first three sub part question for you. If…
Q: Problem 3: On June 1, 2021, VIXEN Company received ₱1,077,200 plus accrued interest for 12% bonds…
A: When a bond is issued at a premium, the amount is amortized over the years until maturity. A premium…
Q: On January 1, 2018, Doty Co. redeemed its 15-year bonds of $7,000,000 par value for 102. They were…
A: Redmeption price = Bond Value * 102/100 Cash redeemed = 92/100 * bond Value
Q: Sandhill Company purchased $3400000 of 8%, 5-year bonds from Blue, Inc. on January 1, 2021, with…
A: Given, Sales price of bond is $3,490,000 Carrying value of bond is $3,497,440 The computation is…
Q: On June 1, 2021, VIXEN Company received ₱1,077,200 plus accrued interest for 12% bonds with face…
A: Bonds Payable It is the amount owed to bond holders by the issuer and is a liability account
Q: On its December 31, 2020 balance sheet, Coronado Industries reported bonds payable of $6100000. The…
A: Meaning of call Premium: Call premium is the dollar amount over the par value of callable debt…
Q: On June 1, 2021, VIXEN Company received P1,077,200 plus accrued interest for 12% bonds with face…
A: "Since you have asked multiple question we will solve the first three sub part question for you. If…
Q: On January 1, 2011, Fox Corp. issued 1,000 of its 10%, $1,000 bonds for $1,040,000. These bonds were…
A: Calculate the book value of bonds at the time of extinguishment.
Q: At the beginning of the current year, two bond issues (Simmons Industries 7%, 20-year bonds and…
A: Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money…
Q: Oriole Corporation has municipal bonds classified as a held-to-maturity at December 31, 2020. These…
A: Formula: Loss on impairment = PAR value - Fair value
Q: SEED Company
A: At The Chia Co we tend to area unit captivated with positive plant primarily based nutrition. Our…
Q: Yale Co. purchased a bond on October 4 of the current year for $45,000 and classified it as…
A: Available-for-sale investments: Available-for-sale investments are the investments in debt or equity…
Q: Holiday Company issued its 9%, 25-year mortgage bonds in the principal amount of $3,000,000 on…
A: a. Prepare journal entries to record the issuance of the 11% bonds and the redemption of the 9%…
Q: Blossom Company purchased $1300000 of 8%, 5-year bonds from Carlin, Inc. on January 1, 2021, with…
A: When the sale price of bonds is greater than the book value of the bonds, then it would result in…
Q: Oriole Corporation has municipal bonds classified as a held-to-maturity at December 31, 2020. These…
A:
Q: Vaughn Corporation has municipal bonds classified as a held-to-maturity at December 31, 2020. These…
A: Impairment: This exists when the Fair value or the FV of an asset is below or lower than the…
Q: On June 1, 2021, VIXEN Company received P1,077,200 plus accrued interest for 122 bands with face…
A: Accrued Interest is a type of interest which is calculated on the last day of Accounting Period. A…
Q: On July 31, 2018, Snowday Corporation issued $100,000, 5%, 20-year bonds for $88,443 when the market…
A: Bonds payable are one of the sources of finance and are shown as liability. If the interest rate is…
Q: Yale Co. purchased a bond on October 4 of the current year for $45,000 and classified it as…
A: A security which has been classified as a Available for sale is to be reported at fair value at the…
Q: Hagar Corporation has municipal bonds classified as a held-to-maturity at December 31, 2020. These…
A: a. Prepare the journal entry to recognize the impairment. Date Account titles and Explanation…
Q: On June 1, 2021, VIXEN Company received P1,077,200 plus accrued interest for 12% bonds with face…
A: Once a bond is issued at a premium, the amount will be amortized over the years through to its…
Q: Blossom Company purchased $1180000 of 8%, 5-year bonds from Carlin, Inc. on January 1, 2021, with…
A: Bonds refers to the units of corporate debts which are issued by companies and also securitized…
Q: On June 1, 2021, VIXEN Company received ₱1,077,200 plus accrued interest for 12% bonds with face…
A: A bond is a financial instrument that allows an issuer to raise funds by putting the issuer in the…
Q: esto Corporation has authorized to issue$4,500,000 of its 9%, 5-year bonds On January 1, 2019, when…
A: 1) Journal Entry to record issue of Bonds. Date Particulars Debit Credit Jan 1 - 2019 Cash…
Q: Wildhorse Company purchased $1290000 of 8%, 5-year bonds from Blossom, Inc. on January 1, 2021, with…
A: Workings: Using the effective interest method:
Q: Pharoah Company purchased $3200000 of 9%, 5-year bonds from Wildhorse, Inc. on January 1, 2021, with…
A: The question is based on the concept of Financial Accounting.
Q: On April 30, CHIA-SEED Company issued 7,000 of 15% ₱1,000 bonds at 95. The bonds have a five-year…
A: Given information, face value of bond(F) = 1,000 Net issue(NI) = 1,000 * 95/100-125,000/7,000 =…
Q: Sandhill Company purchased, on January 1, 2020, as an available-for-sale security, $69,000 of the…
A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms.…
Q: On January 1, 2021, Rapid Airlines issued $200 million of its 8% bonds for $184 million. The bonds…
A: Required: 1. Prepare the journal entry to record interest on June 30, 2021 (the first interest…
Q: CHIA-SEED Company
A: At The Chia Co we tend to area unit captivated with positive plant primarily based nutrition. Our…
Q: RCM Corporation, a calendar-year firm, is authorized to issue $200,000 of 10 percent, 20-year bonds…
A: Solution... Issue price = $200,000 RATE OF INTEREST = 10% Interest expenses accrued on April 1 =…
Q: On January 1, 2021, RUDOLPH Company received ₱107,720 for a ₱100,000 face amount, 12% bond, a price…
A: Semiannual interest payment = face value of bonds x rate of interest x 6/12 = 100000*12%*6/12 =…
Q: On January 1, 2021, Essence Communications issued $700,000 of its 10-year, 10% bonds for $619,711.…
A: Amount are rounded of therefore value are approximate.
Q: Keith Coalburner has written a letter of complaint regarding his recent purchase of municipal bonds…
A: A complaint letter is defined as the letter, which is written when an individual are not satisfied…
Q: Bloom Corporation purchased $1,850,000 of Taylor Company 5% bonds, at their face amount, with the…
A: Loss on bonds arrives when the redemption value or in this case market value is less than the…
Q: On April 30, one year before maturity, Middleton Company retired $200,000 of its 9% bonds payable at…
A: Introduction: The issuer acknowledges a loss on retirement if the price paid to retire a bond…
Q: On March 31, 2021, Ashley, Inc.'s bondholders exchanged their convertible bonds for common stock.…
A: "Stockholder's equity is increased"
Q: Jona Company received P 5,300,000 for a P 5,000,000 face amount 12% bond, a price that yields 10%.…
A: Calculations of Interest expenses for 2020. Interest expenses = Face Amount *Bond rate…
Q: On January 1, 2020, Trisha Company received P1,077,200 for 12% bonds with face amount of P1,000,000.…
A: AMOUNT RECEIVED 1077200. FACE VALUE 1000000 RATE OF INTEREST 12%
Q: On May 31, 2020, VIOLET Company issued 6% bonds with face amount of ₱4,000,000 for net proceeds of…
A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…
Q: On June 1, 2021, VIXEN Company received ₱1,077,200 plus accrued interest for 12% bonds with face…
A: Interest on bond will be provided at face value at the rate for which bond is issued . Accrued…
Q: Crawford Inc. has bonds outstanding during a year in which the general (risk-free) rate of interest…
A: Interest expense and an unrealized gain. Explanation: As the bonds are outstanding, interest would…
Q: Crane Company purchased $1190000 of 8%, 5-year bonds from Carlin, Inc. on January 1, 2021, with…
A: Sale value of bonds $12,25,900 Carrying value of bonds $12,30,500 Loss on sale of bonds…
Markel Inc. has bonds outstanding during a year in which the general (risk-free) rate of interest has not changed. Markel elected the fair value option for the bonds upon issuance. What will the company report for the bonds in its income statement for the year?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Victoria Company has investments in marketable securities classified as trading and available-for-sale. At the beginning of the year, the aggregate market value of each portfolio exceeded its amortized cost. During the year, Victoria sold some securities from each portfolio. At the end of the year, the aggregate amortized cost of each portfolio exceeded its market value. Victoria also has investments in bonds classified as held-to-maturity, all of which were purchased for face value. During the year, some of these bonds held by Victoria were called prior to their maturity by the bond issuer. Three months before the end of the year, additional similar bonds were purchased for face value plus 2 months accrued interest. Required: 1. Explain how Victoria accounts for: a. sale of securities from each portfolio b. each equity securities portfolio at year-end 2. Explain how Victoria accounts for the disposition prior to their maturity of the long-term bonds called by their issuer. 3. Explain how Victoria reports the purchase of the additional similar bonds at the date of the acquisition.On September 30, Franz Corporation notices a decline in value of its investment in held-to-maturity bonds. On that date, the carrying value of the bonds is 38,500 and the fair value is 22,980. Franz evaluation of this investment reveals that expected credit losses are 10,000. Prepare the journal entry to record the impairment.Crawford Inc. has bonds outstanding during a year in which the general (risk-free) rate of interest has risen. Crawford elected the fair value option for the bonds upon issuance. What will the company report for the bonds in its income statement for the year?
- On January 1 of the current year, Andy Co. paid $575,000 to purchase two-year, 8%, $625,000 face value bonds that were issued by another publicly traded corporation. Andy Co. plans to sell the bonds before the first quarter of the following year. The fair value of the bonds at the end of the current year was $660,000. At what amount should Andy Co. report the bonds in its balance sheet at the end of the current year?At the beginning of the current year, two bond issues (Simmons Industries 7%, 20-year bonds and Hunter Corporation 8%, 10-year bonds) were outstanding. During the year, the Simmons Industries bonds were redeemed and a significant loss on the redemption of bonds was reported as cost of merchandise sold on the income statement. At the end of the year, the Hunter Corporation bonds were reported as a noncurrent liability. The maturity date on the Hunter Corporation bonds was early in the following year.Identify the flaws in the reporting practices related to the two bond issues.On June 1, 2021, VIXEN Company received P1,077,200 plus accrued interest for 12% bonds with face amount of P1,000,000. The bonds were sold to yield 10%. Interest is payable semiannually every July 1 and December 31. The entity elected the fair value option for measuring financial liabilities. On December 31, 2020, the fair value of the bonds is at 108. The change in fair value of the bonds is attributable to market factors. Requirements: 16. How much is the interest expense for the year ended December 31, 2021? 17. How much is the gain or loss from change in fair value of the bonds for 2021? (In the google form, if loss, put a negative sign before the numerical figure.) 18. What is the carrying amount of the bonds payable on December 31, 2021?
- On January 1, 2021, Essence Communications issued $800,000 of its 10-year, 8% bonds for $700,302. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. Essence Communications records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2021, the market interest rate for bonds of similar risk and maturity was 9%. The bonds are not traded on an active exchange. The decrease in the market interest rate was due to a 1% decrease in general (riskfree) interest rates.Required:1. Using the information provided, estimate the fair value of the bonds at December 31, 2021.2. Prepare the journal entry to record interest on June 30, 2021 (the first interest payment).3. Prepare the journal entry to record interest on December 31, 2021 (the second interest payment).4. Prepare the journal entry to adjust the bonds to their fair value for presentation in the December 31, 2021,balance sheet.On January 1, Year 1, Gibson Corporation purchased bonds issued by Williamson Company. These bonds were classified as held-to-maturity securities. The face value of these bonds is $100,000, pay 8% interest and were purchased to yield 6%. The bonds mature in 10 years and pay interest on an annual basis. If Gibson Corporation paid $114,720 for these bonds, how much interest revenue should it report on the bonds at December 31, Year 1? Assume that Gibson used the effective interest method. Group of answer choices $6000 $6883 $9178 $8000On June 1, 2021, VIXEN Company received ₱1,077,200 plus accrued interest for 12% bonds with face amount of ₱1,000,000. The bonds were sold to yield 10%. Interest is payable semiannually every July 1 and December 31. The entity elected the fair value option for measuring financial liabilities. On December 31, 2020, the fair value of the bonds is at 108. The change in fair value of the bonds is attributable to market factors. 1. How much cash was received upon the sale of the bonds?2. How much is the interest expense for the year ended December 31, 2021?
- On June 1, 2021, VIXEN Company received ₱1,077,200 plus accrued interest for 12% bonds with face amount of ₱1,000,000. The bonds were sold to yield 10%. Interest is payable semiannually every July 1 and December 31. The entity elected the fair value option for measuring financial liabilities. On December 31, 2020, the fair value of the bonds is at 108. The change in fair value of the bonds is attributable to market factors. 1. How much is the gain or loss from change in fair value of the bonds for 2021? 2. What is the carrying amount of the bonds payable on December 31, 2021?Holiday Company issued its 9%, 25-year mortgage bonds in the principal amount of $3,000,000 on January 2, 2006, at a discount of $150,000, which it proceeded to amortize by charges to expense over the life of the issue on a straight-line basis. The indenture securing the issue provided that the bonds could be called for redemption in total but not in part at any time before maturity at 104% of the principal amount, but it did not provide for any sinking fund. On December 18, 2020, the company issued its 11%, 20-year debenture bonds in the principal amount of $4,000,000 at 102, and the proceeds were used to redeem the 9%, 25-year mortgage bonds on January 2, 2021. The indenture securing the new issue did not provide for any sinking fund or for redemption before maturity. Instructions a. Prepare journal entries to record the issuance of the 11% bonds and the redemption of the 9% bonds. b. Indicate the income statement treatment of the gain or loss from redemption and the note…On January 1, 2020 a company purchases bonds as an investment. The company does not have the intent or ability to hold the bonds to maturity and is not in the business of trading investment securities. The bonds have a face value of $150,000, a stated rate of 8.0% and were purchased for $145,000. Interest is payable semiannually on June 30 and December 31 and the bonds mature on December 31, 2024. The company uses the straight line method to amortize any related premium or discount. On December 31, 2020 the bonds have a fair value of $148,000. The bonds are sold on July 1, 2021 for $149,000 (the interest payment received on June 30, 2021 was properly recorded). Required: Provide the journal entries for: acquisition, the first interest payment, the year-end adjustment at 12/31/20, and for the sale on 7/1/21.