Can you please help me understand how to do the calculations for parts 6,7,and 8 of this question? I have already confirmed my answers to parts 1-5 being correct, but I can't seem to figure out the last three parts. Are there any specific formulas I should use? On January 1, 2021, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 andDecember 31. Portions of the bond amortization schedule appear below:CashEffectiveIncrease inOutstandingPaymentPaymentInterestBalanceBalance320,000320,000320,000320,0006,627,2736,638,6376,650,5696,663,0976,676,2526,690,0656,704,568331,364331,932111,364211,932332,528333,155333,813334,50312,5284320,000320,00013,15513,81314,5036.320,000320,000320,000389,107392,562396,19169,10772,56276,191387,851,2477,923,8098,000,0003940Required:1. What is the face amount of the bonds?2. What is the initial selling price of the bonds?3. What is the term to maturity in years?4. Interest is determined by what approach?5. What is the stated annual interest rate?6. What is the effective annual interest rate?7. What is the total cash interest paid over the term to maturity?8. What is the total effective interest expense recorded over the term to maturity?

6. Effective annual interest rate = Effective interest for any period/opening outstanding balance…

Answered: On January 1, 2021, Tennessee Harvester…

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

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 1RE

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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.
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

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