PA10-4 Comparing Bonds Issued at Par, Discount, and Premium [LO10-3] Net Work Corporation, whose annual accounting period ends on December 31, issued the following bonds: Date of bonds: January 1, 2020 Maturity amount and date: $270,000 due in 10 years (December 31, 2029) Interest: 10 percent per year payable each December 31 Date issued: January 1, 2020 Required: 1. Provide the following amounts to be reported on the January 1, 2020, financial statements immediately after the bonds were issued: (Amounts to be deducted should be indicated with minus sign.) Case B (issued at 100) (issued at 98) (issued at 105) Case A Case C a Bonds payable b Unamortized premium (or discount) c. Carrying value 2. This part of the question is not part of your Connect assignment.

PA10-4 Comparing Bonds Issued at Par, Discount, and Premium [LO10-3] Net Work Corporation, whose annual accounting period ends on December 31, issued the following bonds: Date of bonds: January 1, 2020 Maturity amount and date: $270,000 due in 10 years (December 31, 2029) Interest: 10 percent per year payable each December 31 Date issued: January 1, 2020 Required: 1. Provide the following amounts to be reported on the January 1, 2020, financial statements immediately after the bonds were issued: (Amounts to be deducted should be indicated with minus sign.) Case B (issued at 100) (issued at 98) (issued at 105) Case A Case C a Bonds payable b Unamortized premium (or discount) c. Carrying value 2. This part of the question is not part of your Connect assignment.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 74E

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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.
E10-11 (Algo) (Supplement 10A) Recording the Effects of a Premium Bond Issue and First Interest Period (Straight-Line Amortization) [LO 10-S1] Part 4 Grocery Corporation received $330,653 for 9.50 percent bonds issued on January 1, 2021, at a market interest rate of 6.50 percent. The bonds had a total face value of $272,000, stated that interest would be paid each December 31, and stated that they mature in 10 years. Assume Grocery Corporation uses the straight-line method to amortize the bond premium. Required: 1. & 2. Prepare the required journal entries to record the bond issuance and the first interest payment on December 31. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Round your answers to the nearest whole dollar.)
E14.4 (LO 1) Celine Dion Company issued $600,000 of 10%, 20-year bonds on January 1, 2020, at 102. Interest is payable semiannually on July 1 and January 1. Dion Company uses the straight-line method of amortization for bond premium or discount.Instructions Prepare the journal entries to record the following. a. The issuance of the bonds. b. The payment of interest and the related amortization on July 1, 2020. c. The accrual of interest and the related amortization on December 31, 2020.
BE11.1 (LO 2) Meera Ltd. issued 4,000, 8%, 5-year, £1,000 bonds dated January 1, 2020, at 100. Interest is paid each January 1. Prepare the journal entry to record the sale of these bonds on January 1, 2020. Prepare the adjusting journal entry on December 31, 2020, to record interest expense. Prepare the journal entry on January 1, 2021, to record interest paid.
E13.8 (LO 2) (Refinancing of Short-Term Debt) On December 31, 2020, McDaniel Company had $1,200,000 of short-term debt in the form of notes payable due February 2, 2021. On January 21, 2021, the company issued 25,000 shares of its common stock for $38 per share, receiving $950,000 proceeds after brokerage fees and other costs of issuance. On February 2, 2021, the proceeds from the stock sale, supplemented by an additional $250,000 cash, are used to liquidate the $1,200,000 debt. The December 31, 2020, balance sheet is issued on February 23, 2021.InstructionsShow how the $1,200,000 of short-term debt should be presented on the December 31, 2020, balance sheet, including note disclosure.
35 On January 1, 2020, Alaska Corporation purchased P1,000,000 10% bonds for P1,051,510 (including broker’s commission of P20,000). Interest is payable annually every December 31. The bonds mature on December 31, 2022. The prevailing market rate for the bonds is 9% at December 31, 2020. If the bonds are classified as FA@FVTPL, the amount to be recognized as fair value adjustment loss in its 2020 profit or loss is
BE14.6 (LO 1) On January 1, 2020, JWS Corporation issued $600,000 of 7% bonds, due in 10 years. The bonds were issued for $559,224, and pay interest each July 1 and January 1. JWS uses the effective-interest method. Prepare the company's journal entries for (a) the January 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. Assume an effective-interest rate of 8%. BE14.7 (LO 1) Assume the bonds in BE14.6 were issued for $644,636 and the effective-interest rate is 6%. Prepare the company's journal entries for (a) the January 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry.
E17.3 (LO 1) (Entries for Held-to-Maturity Securities) On January 1, 2020, Hi and Lois Company purchased 12% bonds having a maturity value of $300,000 for $322,744.44. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Hi and Lois Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Instructions a. Prepare the journal entry at the date of the bond purchase. b. Prepare a bond amortization schedule. c. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020. d. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2021. E17.4 (LO 1) (Entries for Available-for-Sale Securities) Assume the same information as in E17.3 except that the securities are classified as available-for-sale. The fair value of the…
18 A company issues P5,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2022. Interest is paid on June 30 and December 31. The proceeds from the bonds are P4,901,036. Using effective-interest amortization, what will the carrying value of the bonds be on the December 31, 2022 statement of financial position? 4,903,160.00 4903160 4,903,160 4903160
On January 1, 2021, Jackie Company issued 10,000 P5,000 10% four-year bonds at an effective interest rate of 12%. The interest is payable every July 1 and December 31. On June 30, 2023, 6,000 of the bonds were retired at 98. ( Use 4 decimal for PV) 1 How much is the net effect of the bonds on the 2023 Statement of Comprehensive Income? [Indicate whether it is a gain or loss] 2 How much is the interest expense for 2024?
H7. Bramble Corp has issued three different bonds during 2022. Interest is payable annually on each of these bonds. 1. On January 1, 2022, 1400 7% 5 year $1000 bonds dated January 1, 2022 were issued at face value. 2. On July 1, $794,000 8% 5 year bonds dated July 1, 2022 were issued at 101. 3. On September 1, $360,000 6% 5 year bonds dated September 1, 2022 were issued at 97. Prepare the journal entry to record each bond transaction at the date if issuance Please show all step by step calculation
PB5. LO 13.3Dixon 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. July 1, 2018: entry to record issuing the bonds June 30, 2019: entry to record payment of interest to bondholders June 30, 2019: entry to record amortization of discount June 30, 2020: entry to record payment of interest to bondholders June 30, 2020: entry to record amortization of discount