Refer to the photo On December 31, 2020, Whitfield Corp. issued $ 400,000 of 10% bonds, due on December 31,2025. Interest is to be paid semi-annually on June 30 and December 31. The bonds were sold ata market value of $432,444 to yield 8% effective annual interest. Whitfield has a calendar yearend.Required:1. Complete the following amortization schedule for the dates indicated. Round all answersto the nearest dollar. Use the effective-interest method.Carrying amountof bondsCash interestInterest expensePremiumpaidAmortizationDec. 31,2020$432,444June 30, 2021Dec. 31, 2021Prepare the journal entry for Whitfield at December 31, 2021, to record the payment of6 months' interest (from June 30 to December 31) and related expense.DebitCreditAssume instead that Whitfield is using the straight line method to amortize the bondpremium. What would be the carrying amount of the bonds at December 31, 2021?

Interest expense = Previous period's Carrying amount of bonds * 8% * 6/12 Premium Amortization…

On December 31, 2020, Whitfield Corp. issued $ 400,000 of 10% bonds, due on December 31, 2025. Interest is to be paid semi-annually on June 30 and December 31. The bonds were sold at a market value of $432,444 to yield 8% effective annual interest. Whitfield has a calendar year end. Required: 1. Complete the following amortization schedule for the dates indicated. Round all answers to the nearest dollar. Use the effective-interest method. Interest expense Carrying amount of bonds Cash interest Premium paid Amortization Dec. 31,2020 $432,444 June 30, 2021 Dec. 31, 2021 Prepare the journal entry for Whitfield at December 31, 2021, to record the payment of 6 months’ interest (from June 30 to December 31) and related expense. Debit Credit Assume instead that Whitfield is using the straight line method to amortize the bond premium. What would be the carrying amount of the bonds at December 31, 2021? i

On December 31, 2020, Whitfield Corp. issued $ 400,000 of 10% bonds, due on December 31, 2025. Interest is to be paid semi-annually on June 30 and December 31. The bonds were sold at a market value of $432,444 to yield 8% effective annual interest. Whitfield has a calendar year end. Required: 1. Complete the following amortization schedule for the dates indicated. Round all answers to the nearest dollar. Use the effective-interest method. Interest expense Carrying amount of bonds Cash interest Premium paid Amortization Dec. 31,2020 $432,444 June 30, 2021 Dec. 31, 2021 Prepare the journal entry for Whitfield at December 31, 2021, to record the payment of 6 months’ interest (from June 30 to December 31) and related expense. Debit Credit Assume instead that Whitfield is using the straight line method to amortize the bond premium. What would be the carrying amount of the bonds at December 31, 2021? i

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 16E

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Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market rate of 4%. The bonds paid interest semi-annually on June 30 and Dec. 31. How much money did the company receive when the bonds were issued? The bonds would be quoted at what rate?
On July 1, 2019, Aldrich Company purchased as an available-for-sale security 200,000 face value, 9% U.S. Treasury notes for 194,000. The notes mature July 1, 2020, and pay interest semiannually on January 1 and July 1. The notes were sold on December 1, 2019, for 199,000. Aldrich normally uses straight-line amortization on all of its notes. In its income statement for the year ended December 31, 2019, what amount should Aldrich report as a gain on the sale of the available-for-sale security? a. 2,500 b. 3,500 c. 5,000 d. 6,000
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?
Short-Term Debt Expected to Be Refinanced On December 31, 2019, Excello Electric Company had 1 million of short-term notes payable due February 7, 2020. Excello expected to refinance these notes on a long-term basis. On January 15, 2020, the company issued bonds with a face value of 900,000 for 882,000. On January 22, 2020, the proceeds from the bond issue plus additional cash held by Excello on December 31, 2019, were used to liquidate the 1 million of short-term notes. The December 31, 2019, balance sheet is issued on February 12, 2020. Required: Prepare a partial balance sheet as of December 31, 2019, showing how the 1 million of short-term notes payable should be disclosed. Include an appropriate footnote for proper disclosure.