On April 1, 2020, Lucky Corp. purchased P1,000,000 face amount 12% bonds at 94. Bonds pay interest semiannually April 1 and October 1 and mature on April 1, 2024. On December 31, 2020, the entry to record bond amortization will include a debit to:
Q: On January 1, 2019, PPP Company purchased as a long-term investment P5,000,000 face amount of SSS…
A: A bond is a debt security that is issued by large business entities and governments to borrow funds.…
Q: On January 1, 2021, Demeanor Company purchased bonds with face amount of P5,000,000 to be held as…
A: Bond is an investment security which provides a fixed interest income to the bondholders. The…
Q: On January 1, 2021, Peru Company purchased P5,000,000 face amount, 17% bonds. The bonds were…
A: Interest income recorded for the year is based on the carrying value of bonds at the beginning of…
Q: On April 1, 2019, Padayon Co. acquired a 5-year bond with a face value of P1,200,000 and stated…
A: Under ACM bo d should be measured at fairvalue after adjusting transaction costs
Q: On January 1, 2019, company acquired 2,000,000 face amound bonds dated January 1, 2022. The bonds…
A: Introduction' Bond is a investment securities that is issued by company where investors lends money…
Q: On July 1, 2020, West Company purchased for cash, three $10,000 bonds of North Corporation to yield…
A: Available for Sale (AFS): When investments are made in securities with an intention to make profit…
Q: On July 1, 2020, West Company purchased for cash, three $10,000 bonds of North Corporation at a…
A: Bonds Payable = $10,000 * 3 bonds = $30,000 The calculation for Issue Price of bonds: The present…
Q: On July 1, 2020, West Company purchased for cash, three $10,000 bonds of North Corporation to yield…
A: Face value of bond $30,000.00 Coupon rate 6% Effective interest rate 10.00% Years to maturity…
Q: On April 1, 2020, Boston Company issued at 99 plus accrued interest 2,000 of 8% P1,000 face value…
A: A bond is said to be issued at discount when its price is less than its face value. On the other…
Q: On October 1, 2021, Complex Company purchased a 12% P3,000,000 face amount-bond issue for P2,700,000…
A: A bond is a fixed interest bearing debt instrument issued by a company to finance its operation.…
Q: On January 1, 2020, SMB Company acquired the entire issue of Beerman’s P6,000,000 12% serial bonds.…
A:
Q: On January 1, 2019, Demeanor Company pure with face amount of P5,000,000 to be held as fir at…
A: The answer has been mentioned below.
Q: On January 1, 2020, Alaska Corporation purchased P1,000,000 10% bonds for P1,051,510 (including…
A: Statement of financial position includes: Assets account Liabilities account Shareholder's account…
Q: On January 1, 2020, Alaska Corporation purchased P1,000,000 10% bonds for P1,051,510 ncluding…
A: Introduction As per IAS if there is any financial asset and it is valued at amortized cost method…
Q: On January 1, 2020, Kelly Company issued bonds with the face amount of P 5,000,000, 8% serial bonds…
A: The calculation of interest expense has been made as follows: Interest expense for the year=Bond…
Q: On January 1, 2020, Metlock Company acquires $110,000 of Spiderman Products, Inc., 9% bonds at a…
A: The question is based on the concept of Financial Accounting.
Q: On March 1, 2026, ABC purchased a 12% P3M face amount of bond, issue for P2,700,000 excluding…
A: Hello. Since your question has multiple sub-parts, we will solve the first three sub-parts for you.…
Q: On January 1, 2020, Alaska Corporation purchased P1,000,000 10% bonds for P1,051,510 (including…
A: SOLUTION- EXPLANATION- CASH FLOW 9% TABLE VALUE AMOUNT PRESENT VALUE PAR MATURITY VALUE…
Q: On January 1, 2019, DB Company purchase 9% bonds in the face amount of P6,000,000. The bonds mature…
A: Unrealized gain on investments: A prospective profit that exists on paper as a consequence of…
Q: On January 1, 2021, Mirakulo Company acquired P4,000,000 of 12% face amount bonds for P3,767,000 to…
A: Carrying amount of the bond = Present value of principal + Present value of interest payments where,…
Q: On December 31, 2020, ABC Co. had outstanding 12%, P5,000,000 face value bonds maturing on December…
A: Bond conversion: The process of in which the changing of a bond takes into shares is said to bond…
Q: On July 1, 2020, West Company purchased for cash, four $10,000 bonds of North Corporation at a…
A: Step 1 Bond is the long term sources of finance or investment having predetermined redemption value…
Q: On January 1, 2019, PPP Company purchased as a long-term investment P5,000,000 face amount of SSS…
A: The interest method is an accounting technique that helps to amortize discounts or premiums on bond…
Q: On July 1, 2020, West Company purchased for cash, twelve $10,000 bonds of North Corporation at a…
A: Journal Entry: Journal entry has two effects for every transaction. The journal entry is passed…
Q: On July 1, 2020, West Company purchased for cash, four $10,000 bonds of North Corporation at a…
A: Hey, since there are multiple sub-parts questions posted, we will answer the first three sub-parts…
Q: On June 30, 2021, Arlington Company issued $2,100,000 of 10-year, 3% bonds, dated June 30, for…
A: The bonds are the financial instruments that are used to raise money from the market.
Q: "Oh January 1, 2019, TYP Company purchased P1,200,000, 14% bonds of PSY Company for P1,352,143, a…
A: Answer : Option d - Answer not given
Q: On July 1, 2020, West Company purchased for cash, four $10,000 bonds of North Corporation at a…
A: Bond can be referred to as an instrument which is used by different companies for raising funds from…
Q: On July 1, 2020, West Company purchased for cash, ten $10,000 bonds of North Corporation to yield…
A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…
Q: On June 1, 2019, Vape Inc. issued P12,000,000 of 10% bonds to yield 12% effective rate. Interest is…
A: The carrying value of a bond is the the net amount between the bond's face value plus any…
Q: On May 1, 2018, ABC Corporation purchased $1,500,000 of 12% bonds, interest payable on January 1 and…
A: Following are the Journal entries which are required to be pass in relation to sale:
Q: On January 1, 2020, Alaska Corporation purchased P1,000,000 10% bonds for P1,051,510 (including…
A: Interest paid=Value of bonds×10%=P 1,000,000×10%=P 100,000
Q: On July 1, 2020, Morales Corp acquired P4,000,000 face value of X Corporation bonds with a nominal…
A: Held to Maturity securities are the securities held by the entry with the intention to retain it…
Q: n March 1, 2026, ABC purchased a 12% P3M face amount of bond, issue for P2,700,000 excluding accrued…
A: Answer: Bonds are the debt instruments issued by the company to the general public to raise funds…
Q: a. Prepare a bond amortization schedule for 2020 and 2021 using the effective interest method.…
A: “Since you have posted a question with multiple subparts, we will be solving the first three…
Q: On March 1, 2026, ABC purchased a 12% P3M face amount of bond, issue for P2,700,000 excluding…
A: Hello. Since your question has multiple sub-parts, we will solve the first three sub-parts for you.…
Q: On January 1, 2026, ABC purchased 9% bonds with a face amount of P4M to yield 10%. The bonds are…
A: Interest method refers to the effective interest amortisation method that amortizes the discount on…
Q: On July 1, 2020, West Company purchased for cash, four $10,000 bonds of North Corporation at a…
A: Hello. Since your question has multiple sub-parts, we will solve the first three sub-parts for you.…
Q: n Feb. 1, 2021, ABC purchased P2,000,000 face value bonds at 97 plus accrued interest. It was…
A: Step 1 We determine the Closing Balance Investment in Bonds on 31 Dec 2021 by Journal entries.
Q: What is the interest income for 2020? a. P280,000 b. P400,000 c.P248,080 d. P354,400 53. What is…
A: “Since you have posted a question with many sub-parts, we will solve three sub-parts for you. To get…
Q: On May 1, 2018, ABC Corporation purchased $1,500,000 of 12% bonds, interest payable on January 1 and…
A: A bond is an instrument of raising funds. It has a fixed interest rate which is the paid by the…
Q: On 1 January 2020, Maple Ltd. purchased $500,000 of Pine Ltd. 7% bonds. The bonds pay semi-annual…
A: A. Given Bond Value = $500000, Coupon Rate =7% p.a. , Yield Rate =…
Q: On January 1, 2021, Flour D Company acquired for P1,200,000 the entireP1,000,000 12% bond issue of…
A: Bond Valuation For the case of investment of Bond which can be determined whether the bond is issued…
Q: On July 1, 2020, West Company purchased for cash, ten $10,000 bonds of North Corporation at a market…
A: Step 1 Journal is the part of book keeping.
Q: On July 1, 2026, ABC purchased 5,000 of the P1,000 face amount, 8% bonds to yield 10% per annum. The…
A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…
Q: Cash Interest Receivable Investment in TS Fair Value Adjustment--TS Investment in AFS Securities…
A: Bonds: It is also known as a fixed-income security, is a debt instrument created for the purpose of…
Q: On January 1, 2020, Metlock Company acquires $110,000 of Spiderman Products, Inc., 9% bonds at a…
A: Discount = Face value of bonds - Amount received = $110000-99611 = $10389 Cash received= Face value…
Q: On January 1, 2020, Pronghorn Company acquires $270,000 of Spiderman Products, Inc., 9% bonds at a…
A:
Q: On June 1, 2019, YODA CORP. acquired a 5-year, 10%, P1,00 value bonds at 92. The company paid…
A: Interest revenue refers to the earnings which the entity makes from the investments or on the debts…
On April 1, 2020, Lucky Corp. purchased P1,000,000 face amount 12% bonds at 94. Bonds pay interest semiannually April 1 and October 1 and mature on April 1, 2024.
On December 31, 2020, the entry to record bond amortization will include a debit to:
Step by step
Solved in 2 steps
- 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 amortizationWilbury 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.On January 1, 2019, Brewster Company issued 2,000 of its 5-year, 1,000 face value, 11% bonds dated January 1 at an effective annual interest rate (yield) of 9%. Brewster uses the effective interest method of amortization. On December 31, 2023, Brewster extinguished the 2,000 bonds early through acquisition in the open market for 1,980,000. On July 1, 2022, Brewster issued 5,000 of its 6-year, 1,000 face value, 10% convertible bonds dated July 1 at an effective annual interest rate (yield) of 12%. The bonds are convertible at the option of the investor into Brewsters common stock at a ratio of 10 shares of common stock for each bond. Brewster uses the effective interest method of amortization. On July 1, 2023, an investor in Brewsters convertible bonds tendered 1,500 bonds for conversion into 15,000 shares of Brewsters common stock, which had a market value of 105 per share at the date of the conversion. Required: 1. Using the information about Brewster, answer the following questions: a. Were the 11% bonds issued at par, at a discount, or at a premium? Why? b. Is the amount of interest expense for the 11% bonds using the effective interest method of amortization higher in the first or second year of the life of the bond issue? Why? 2. Using the information about Brewster, explain the following: a. How is a gain or loss on early extinguishment of debt determined? Does the early extinguishment of the 11% bonds result in a gain or loss? Why? b. How does Brewster report the early extinguishment of the 11% bonds on the 2023 income statement? 3. Based on the information provided about Brewster, answer the following questions: a. Does recording the conversion of the 10% convertible bonds into common stock under the book value method affect net income? What is the rationale for the book value method? b. Does recording the conversion of the 10% convertible bonds into common stock under the market value method affect net income? What is the rationale for the market value method?
- Held-to-Maturity Securities and Amortization of a Discount On January 1, 2019, Kelly Corporation acquired bonds with a face value of 500,000 for 483,841.79, a price that yields a 10% effective annual interest rate. The bonds carry a 9% stated rate of interest, pay interest semiannually on June 30 and December 31, are due December 31, 2022, and are being held to maturity Required: Prepare journal entries to record the purchase of the bonds and the first two interest receipts using the: 1. straight-line method of amortization 2. 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 premiumRefer to the information in RE13-5. Assume that on June 30, Aggie received interest on the Smith Corporation bonds. Prepare the June 30 journal entries to record the receipt of the interest. On April 30, 2019, Aggie Corporation purchased Smith Corporation 10%, 5-years bonds with a face value of 12,000 at par plus four months of accrued interest. Prepare the April 30 journal entry to record the purchase of these available-for-sale securities.
- 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 premiumEdward 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