On January 1, 2021, Bicol Company issued 5-year bonds with face value of P 10,000,000 at 95. The nominal rate is 10% and the interest is payable annually on December 31. The Bonds mature on January 1, 2026. The entity paid bond issue cost of P 200,000.

On January 1, 2021, Bicol Company issued 5-year bonds with face value of P 10,000,000 at 95. The nominal rate is 10% and the interest is payable annually on December 31. The Bonds mature on January 1, 2026. The entity paid bond issue cost of P 200,000.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 4EA: On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated...

See similar textbooks

Related questions

Q: On March 1, 2022, a company issued a four-year, P3,000,000 face value, 11% term bonds for…

A: Bond is issued by the company for raising finance for the business working. It is considered a…

Q: On January 2, 2021, Santos Company invested in a 4-year, 10% bond with face value of P6,000,000 in…

A: Financial statements refer to the written form of a statement of a company that depicts its…

Q: On August 31, 2021, BEAST Company issued at 104 plus accrued interest, three thousand 10% bonds with…

A: Hi since you have posted a question with multiple subparts we are solving the 1st 3 subparts for…

Q: On January 1, 2019, Black Panther, Inc. issued P4,000,000 of 9% bonds, dated January 1 at 97.…

A: Determine Carrying amount of bonds payable Face value of bonds P4,000,000 Issued at 97% issued…

Q: On January 1, 2020, CAB Co. issued 9% bonds in the amount of P2,500,000, which mature on January 1,…

A: Interest method of amortization: This is a method useful for bonds which are sold at a discount. The…

Q: On March 1, 2022, Erik Company issued 10,000 of its P1,000 face value bonds at 95 plus accrued…

A: A bond is just like the bank loan. A bond holder will get the principal amount at the maturity of…

Q: Marbel Company was authorized to issue 12% bonds payable with face amount of P5,000,000 on April…

A: Bonds are those units that are issued by the companies and securitized as tradeable assets. It is a…

Q: On March 1, 2021, FLAXSEED Inc. issued at 97, including accrued interest, 2,550 of its 10%, ₱1,000…

A: If the interest accrued from the previous due date of interest is included in the quoted price, then…

Q: On August 31, 2021, DASHER Company issued at 104 plus accrued interest, three thousand 10% bonds…

A: The carrying value of a bond is the par value or face value of that bond plus any unamortized…

Q: On January 1, 2020, Latvia Company issued 3-year bonds with face amount of 5,000,000 at 98.…

A: Effective interest method is method used to recognise the interest expense for the year, when…

Q: On January 1, 2020, Latvia Company issued 3-year bonds with face amount of 5,000,000 at 98.…

A: On 01.01.2020, Latvia Company's Issued 3 years bonds with face value = 5000000 Issued price = 98…

Q: On January 2, 2015, Sandhill Corporation issued $1.050,000 of 10% bonds at 97 due December 31, 2024.…

A: Issue Price of face amount of $630000 ($630000 * 97%) $6,11,100 Discount on Bonds Payable ($630000…

Q: On January 1, 2020, Cee Company issued bonds with the face amount of P 10,000,000, 8% serial bonds…

A: Carrying amount of bonds payable on Dec. 31, 2021 will be Carrying value of bonds payable on January…

Q: On January 2, 2015, Banno Corporation issued $ 1,500,000 of 10% bonds at 97 due December 31, 2024.…

A: Face Value of bonds required to redeemed $9,00,000 Discount on bonds Payable ($900000 * 3%)…

Q: On January 1, 2021, Luyang Company issued 3-year bonds with face amount of P5,000,000 at 98.…

A: Bonds payable is a liability account that holds the amount that the issuer owes to bondholders.…

Q: On April 1, 2021, ORANGE Inc. issued at 97 including accrued interest, 2,000 of its 10%,₱1,000…

A: Accrued interest on bonds = face value of bonds x rate of interest x no. of months/12 =…

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, 2021, MACADAMIA Company issued 5 year bonds with face value of ₱5,000,000 at 110. The…

A: Net issue price = (Face value of bonds x issue price/100) - Bonds issue cost = (₱5,000,000 x…

Q: On January 1, 2020, Fergus Corporation issued $800,000, 10%, 5-year bonds. Thebond interest is…

A: The correct option is option “d”.

Q: On January 1, 2021, PRANCER Company was authorized to issue 12% bonds with a face amount of…

A: Since you have posted a question with multiple sub-parts, we will solve the first three subparts for…

Q: On January 1, 2021, LACEA COMPANY issued 7% term bonds with a face amount of P1,000,000 due January…

Q: On January 1, 2020, Wolf Company issued 10% bonds in the face amount of P5,000,000, which mature on…

A: The bonds are issued at premium when market rate is lower than the coupon rate of bonds.

Q: On January 1, 2021, Lh Company was authorized to issue 12% bonds with a face amount of ₱5,000,000.…

Q: On January 1, 2019, Langka Inc. issued 9% bonds in the face amount of P5,000,000 which mature on…

A: The bonds are issued at discount when market rate is higher than the coupon rate of bonds.

Q: On January 1, 2020, CAB Co. issued 9% bonds in the amount of P2,500,000, which mature on January 1,…

A: Interest payment on June 30, 2020 = Face value of bonds x rate of interest x 6/12 =2500000*9%*9/12 =…

Q: On March 1, 2018, Brown-Ferring Corporation issued $100 million of 12% bonds, dated January 1, 2018,…

A: Requirement 1 Determine the amount of accrued interest that was included in the proceeds received…

Q: On January 1, 2021, Solo Inc. issued 1,000 of its 8%, $1,000 bonds at 98. Interest is payable…

A: In this question we have been asked to calculate the carrying value of the bond, for which we have…

Q: On March 1, 2020, WHITE Corporation purchased bonds with face amount of P5,000,000. The entity paid…

A: When the objective of the entity is not to hold the financial asset till the maturity and the…

Q: On January 2, 2015, Banno Corporation issued $1,500,000 of 10% bonds at 97 due December 31, 2024.…

Q: On January 1, 2021, Masbate Company issued 5-year bonds with face amount of P5,000,000 at 110. The…

A: Amortization is the total time taken to repay a mortgage fully. So it denotes the total period of…

Q: On July 1, 2020, Kwek-kwek Company issued 600 of its 10%, P1,000 bonds at 99 plus accrued interest.…

A: The bonds are issued at premium or discount depending on the market rate of interest of bonds.

Q: On January 1, 2020, ABC Company issued its 9%, P2 million bonds, which mature on January 1, 2030.…

A: Date Account Titles & Explanation Debit Credit January 1, 2020 Cash P18,78,000…

Q: On October 1, 2020, Shane Company issued 5,000 12% bonds with face amount of P1,000 per bond at 110.…

A: Note: As per the policy, we are supposed to solve one question at a time. Kindly repost the further…

Q: On March 1, 2020, WHITE Corporation purchased bonds with face amount of P5,000,000. The entity paid…

A: Coupon Interest on the bonds: White Corporation purchased the bonds on 1st March 2020 and held the…

Q: On March 1, 2021, JebaMac Company issued 6% term bonds with a face amount of P1,000,000 due March 1,…

A: Jeba Company has recognized the bond payable as per amortized cost method using the effective…

Q: On January 1, 2020, Marimar Company issued 10,000 of its 12%, P1,000 face value 5-year bonds at 105.…

A: Interest on bond will be charged on the par value of bond, at the rate for which bond issued.…

Q: Spurrier Corp. has 10-year bonds with a face value of $400,000 and a carrying value of $420,345 as…

A: Given information is: Spurrier Corp. has 10-year bonds with a face value of $400,000 and a carrying…

Q: On January 2, 2021, YELLOW Co. issued 9% bonds in the amount of ₱1,000,000 which mature on January…

A: Solution: Bond Issue price = P939,000 Amount of interest expense for the year ended Dec 31, 2021 =…

Q: On January 1,2019, ABC Corporation issued a 5-year, 12%, 1,000 of the P 5,000 face value bonds with…

A: Issue price of the bonds = Present value of principal + Present value of interest payments where,…

Q: January 1, 2021, MACADAMIA Company issued 5 year bonds with face value of ₱5,000,000 at 110. The…

A: Amount received from the bond issuance = (Face value of bonds x issue price/100) - bond issue cost…

Q: On December 31, 2020, Reyes Company issued P2,000,000, 12% serial bonds to be repaid in the amount…

A: Annual interest payment = face value of bonds x rate of interest x no. of months/12 = P2,000,000 x…

Q: On March 1, 2021, JebaMac Company issued 7% term bonds with a face amount of P2,000,000 due March 1,…

A: Computation of issue price of bond and discount on issue of bond

Q: On April 1, 2020, Greg Company issued, at 99. plus accrued interest, 4,000 8% bonds with face amount…

A: Given: No. of 8% bonds issued=4000Face value of bonds =P1000Bonds issued at =99 plus accrued…

Q: On January 1, 2020, Resty Company issued bonds with the face amount of P 10,000,000, 8% serial bonds…

A: Annual interest payment = Face value of bonds x stated rate of interest x no. of months/12 Annual…

Q: On January 01, 2019, SUNOD NA ANG LEASES LTD. issued 3-year bonds with face value of P5,000,000 at…

A: PV of cash flows=Present value of Future payments(Interest+Face value) @ YTM

Q: On January 1, 2020, Edison Co. issued eight-year bonds with a face value of P 2,000,000 and a stated…

A: Solution: Bonds are the debt instruments issued by entity to obtain funding. Bonds are having…

Q: On January 1, 2021, Marena Company issued bonds with a face amount of P3,500,000 for P3,765,300. The…

A: The company can raise the required capital by issuing the shares, debentures, bonds, etc., These are…

Q: On March 1, 2021, RED Corporation issued at 103 plus accrued interest, 1,000 of its 9%,₱1,000 bonds.…

A: Solution: Accrued Interest for 2 months of Jan and Feb = 1000*1000*9%*2/12 = 15,000 Net cash…

Q: On January 1,2020, ABC Corporation issued a 5-year, 10%, 1,000 of the P 5,000 face value bonds with…

A: Annual interest payment = Face value of the bonds x rate of interest x no. of months /12 =…

Question

1. What is the effective interest rate?

2. what is the interest expense on 2022?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

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 January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
On July 1, a company sells 8-year $250,000 bonds with a stated interest rate of 6%. If interest payments are paid annually, each interest payment will be ________. A. $120,000 B. $60,000 C. $7,500 D. $15,000
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 amortization
On 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. 89.05
Naval Inc. issued $200,000 face value bonds at a discount and received $190,000. At the end of 2018, the balance in the Discount on Bonds Payable account is $5,000. This years balance sheet will show a net liability of ________. A. $200,000 B. $180,000 C. $195,000 D. $205,000
Volunteer 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