On January 1, 2020, Teal Company sold 11% bonds having a maturity value of $500.000 for $ 518.953, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2020. and matureJanuary 1. 2025, with interest payable December 31 of each year. Teal Company allocates interest and unamortized discount or premium on the effective-interest basis.
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A: The bonds payable are issued at discount when market rate is higher than the coupon rate of bonds…
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A: The question is based on the concept of Financial Accounting.
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A: Journal is the book of original entry in which all the transactions of the business are recorded…
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A: 12% bonds[Financial Asset @FVTPL]…
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A: Bond purchased: In order to obtain money from investors who are prepared to lend them money for a…
Q: effective-interest basis. Prepare the journal entry to record the interest payment and the…
A: Given that: On January 1, 2020, Swifty Company sold 11% bonds having a maturity value of $700,000…
Q: On May 31, 2020, VIOLET Company issued 6% bonds with face amount of ₱4,000,000 for net proceeds of…
A: Interest payment on December 31, 2020 = Face value of bonds x rate of interest x no. of months/12 =…
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A: The financial instruments can be recorded at fair or amortized value depending upon the accounting…
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A: Bond is a debt instrument for company through which company borrows money from investors for a fixed…
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A: Bond amortization schedule is as under:
Q: On January 1, 2020, Splish Company purchased 12% bonds, having a maturity value of $450,000.00, for…
A: A bondholder refers to an individual who is an investor or the owner of debt securities which are…
Q: pare a schedule of interest expense and bond amortization for 2020–2022.
A: Amortization of bonds refers to the process in which the carrying value of the bond is adjusted with…
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…
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A: Bonds- Bonds are those monetary securities that are issued by banks, governments, companies so as to…
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A: Solution A Bond represents a loan to company or government in return of this company pay a fixed…
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A: Journal entry is the process of recording business transactions for the first time in the accounting…
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A: The bonds can be purchased by company as investment, on premium or discount depending on the market…
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A:
Q: On May 31, 2020, BLUE Company issued 6% bonds with face amount of ₱4,000,000 for net proceeds of…
A: INTEREST EXPENSE IS THE COST INCURRED BY AN ENTITY FOR THE BORROWED FUNDS .
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A: Period Interest Payment Interest Expense Discount Amortization Bond Amortized Cost May 31, 2020…
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A: P 120,000 Explanation:
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A: “Hey, since there are multiple sub-parts posted, we will answer first three sub-parts. If you want…
Q: On January 1, 2020, Teal Company purchased 9% bonds having a maturity value of $370,000, for…
A: Interest receivable = face value of investment x interest rate = 370,000 x 9% = $33300
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A: The question is based on the concept of Financial Accounting.
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A: The debt investment can be defined as the money lent by the investor to firms expecting that the…
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A: The carrying value is calculated by deducting the amortized expense from the original cost of an…
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A: a. Prepare the journal entry at the date of the bond purchase. b. Prepare the journal entries to…
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A: Given information is: Spurrier Corp. has 10-year bonds with a face value of $400,000 and a carrying…
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A: Date of Purchase of Bonds= 01-01-2018 Maturity Value= P800000 Purchase price= P860652 Transaction…
Q: the bondholders with a 6% yield. They are dated January 1, 2020, and mature January 1, 2025, with…
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Q: On January 1. 2020, Swifty Company sold 12% bonds having a maturity vallue of $450.000 for $484,117,…
A: Solution: When stated interest rate is higher than market interest rate than bonds are issued at…
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A: Issue price of the bonds = Present value of principal + Present value of interest payments where,…
Q: On January 1, 2020, Coronado Company purchased 13% bonds, having a maturity value of $279,000 for…
A: SOLUTION - A journal entry records a business transaction in the accounting system for an…
Q: On January 1, 2020, Hummer Company purchased 5% bonds, havinga maturity value of $500,000, for…
A: a. Journal entry at the date of the bond purchase:
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A: Introduction: Journal: Recording of a business transactions in a chronological order. First step in…
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A: Total discount on bonds issue = face value of bonds - issue value of bonds = P9,000,000 - P8,451,000…
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A: Solution:- Preparation of journal entry as follows under:- Working notes:- Interest Revenue for 2020…
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A:
Q: On January 1, 2020, Hi and Lois Company purchased 12% bonds, having a maturity value of $300,000 for…
A: Step 1 Journal is the part of book keeping.
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A: Lets understand the basics. When debt investment purchased and designated at FVTPL then interest…
Q: On January 1, 2020, Teal Company purchased 9% bonds having a maturity value of $370,000, for…
A: Increase in assets should be debited and decrease in assets should be credited.
Q: On January 1, 2020, Hummer Company purchased 7% bonds, having a maturity value of $500,000, for…
A: 7% bond purchased, maturity value - $500,000, price - $570,000 Yield on the bond- 5% Purchased on –…
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A: a. Prepare the journal entry at the date of the bond issuance.
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- Brief ExerciseBonds Issued at a Premium (Effective Interest) Refer to the information above for Haley Industries. Required: Prepare the journal entry for December 31, 2022 and 2023. Use the following information for Brief Exercises 9-55 and 9-58: Haley Industries issued $120,000 of 11% , 7-year bonds on January 1, 2020, with $5,842 pre- mium. Interest is paid annually on December 31. The market rate of interest is 10%.Brief Exercise (Appendix 9A) Bond Issue Price On January 1, 2020, Ruby Inc. issued 3,000 $1,000 par value bonds with a staled rate of6% and a 10-year maturity. Interest is payable semiannually on June 30 and December 31. Required: What is the issue price if the bonds are sold to yield 8%? {Note: Round to nearest dollar.)Exercise Bonds with Annual Interest Payments Kiwi Corporation issued at par $350,000, 9% bonds on January 1, 2020. Interest is paid annually on December 31. The principal and the final interest payment are due on December 31, 2021. Required: Prepare the entry to recognize the issuance of the bonds. Prepare the journal entry for December 31, 2020. Prepare the journal entry to record repayment of the principal on December 31, 2021. CONCEPTUAL CONNECTIONHow would the interest expense for 2020 change if the bonds had been issued at a 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.Investment Premium Amortization Schedule On January 1, 2019, Lynch Company acquired 13% bonds with a face value of 50,000. The bonds pay interest on June 30 and December 31 and mature on December 31, 2021. Lynch paid 51,229.35, a price that yields a 12% effective annual interest rate. Required: 1. Record the purchase of the bonds. 2. Prepare an investment interest income and premium amortization schedule using the effective interest method. 3. Record the receipts of interest on June 30, 2019, and December 31, 2021.Brief Exercise Debt Issued at Par On January 1, 2020, Desmond & Co. issued 5,000 bonds with a SI,000 par value at 100. The bonds have an 8% stated rate, pay interest on June 30 and December 31, and mature on December 31 2020. Required: Prepare the journal entries to record the interest payment on June 30, 2020.
- Exercise Issuance and Interest Amortization for Zero Coupon Note (Straight Line) Kerwin Company borrowed $10,000 on a 2-year, zero coupon note. The note was issued on January 1, 2020. The face amount of the note, $12,544, is to be paid at maturity on December 31, 2021. Required: Assuming straight line amortization, calculate the interest expense for 2020 and 2021. Prepare the entries to recognize the borrowing, the first years interest expense, and the second years interest expense plus redemption of the note at maturity.Trading Securities Pear Investments began operations in 2020 and invests in securities classified as trading securities. During 2020, it entered into the following trading security transactions: Purchased 20,000 shares of ABC common stock at $38 per share Purchased 32,000 shares of XYZ common stock at $17 per share At December 31, 2020, ABC common stock was trading at $39.50 per share and XYZ common stock was trading at $16.50 per share. Required: 1. Prepare the necessary adjusting entry to value the trading securities at fair market value. 2. CONCEPTUAL CONNECTION What is the income statement effect of this adjusting entry?Investment Discount Amortization Schedule On January 1, 2019, Rodgers Company purchased 200,000 face value, 10%, 3-year bonds for 190,165.35, a price that yields a 12% effective annual interest rate. The bonds pay interest semiannually on June 30 and December 31. Required: 1. Record the purchase of the bonds. 2. Prepare an investment interest income and discount amortization schedule using the effective interest method. 3. Record the receipts of interest on June 30, 2019, and June 30, 2021.
- Exercise Interest Payments and Interest Expense for Bonds (Straight Line) On January 1, 2020, Perry Manufacturing issued bonds with a total face amount of $3,000,000 and a stated rate of 9%. Required: Calculate the interest expense for 2020 if the bonds were sold at par. Calculate the interest expense for 2020 if the bonds were sold at a premium and the straight- line premium amortization for 2020 is $12,000. 3. Calculate the interest expense for 2020 if the bonds were sold at a discount and the straight- line discount amortization for 2020 is $33,000.Cornerstone Exercise Debt Issued at a Premium (Straight Line) Refer to the information for Ironman Steel above. Required: Prepare the amortization table for Ironman Steels bonds(Note: Round to the nearest dollar.) Use the following information for Cornerstone Exercises 9-31 and 9-32: Sicily Corporation issued $300,000 in 5% bonds (payable on December 31, 2029) on January 1, 2020, for $257,363. Interest is paid on June 30 and December 31. The market rate of interest is 7%.