Problem 5-21 (AICPA Adapted) On January 1, 2020, Nilo Company reported bonds payable of P8,000,000 and related unamortized discount of P430,000. On January 1, 2020, the entity retired P4,000,000 of the outstanding bonds at face amount plus a call premium of P100,000. What amount should be reported in the 2020 income statement as loss on early extinguishment of debt? a. b. 100,000 c. 215,000 d. 315,000
Q: On Janaury 1, 2021, Eastern Corp. received P 1,077,200 for P 1,000,000 face amount 12% bonds. The…
A: Interest expense refers to the cost or expense which is incurred through the entity for the borrowed…
Q: Dumars Corporation reports in the current liability section of its balance sheet at December 31,…
A: a. In GAAP, the long-term obligation is replaced with equity securities, or renewing, extending, or…
Q: OK Company showed the following balances in connection with its noncurrent liabilities on December…
A: Interest expense refers to the cost which is incurred through entity for the funds borrowed and it…
Q: Consider the following independent situations: a. On March 1, 2020, Heide Co. issued at 103 plus…
A: Step 1: a. Compute the net amount of cash received as follows:
Q: A Company received P 5,300,000 for a P 5,000,000 face amount 12% bond, a price that yields 10%. The…
A: Introduction A bond is refered to as fixed income instrument that is issued by company for…
Q: 9. On January 1, 2020, HIBISCUS Company purchased 4,000 of P1,000 face value, 10% bonds of IXORA…
A: Bonds are the debt security which is offered or issued by the corporates or the governments to…
Q: The 8% bonds payable of Bonita Industries had a net carrying amount of $2860000 on December 31,…
A: Computation of the loss on the retirement of the bonds are as follows:
Q: On January 1, 2019, Demeanor Company pure with face amount of P5,000,000 to be held as fir at…
A: The answer has been mentioned below.
Q: Colt Company is indebted to Kent Company under an P8,000,000, 10% 4 – year note dated December 31,…
A: Under debt restructuring the Colt company has actually received benefits 1) interest waive off 2)…
Q: At December 31, 2021 the following balances existed on the books of Bulaga Corporation: Bonds…
A: Bond payable is the liability for the company on which the interest has to be paid by the company.…
Q: The December 31, 2020, statement of financial position of Dodge Corporation includes the following…
A: Calculation of the gain on retirement of the bonds is as follows: Particulars Amount (P)…
Q: BE14.6 (LO 1) On January 1, 2020, JWS Corporation issued $600,000 of 7% bonds, due in 10 years. The…
A: “Hey, since there are multiple questions posted, we will answer first question. If you want any…
Q: On January 1, 2020, Alaska Corporation purchased P1,000,000 10% bonds for P1,051,510 (including…
A: Statement of financial position includes: Assets account Liabilities account Shareholder's account…
Q: On January 1, 2020, Alaska Corporation purchased P1,000,000 10% bonds for P1,051,510 ncluding…
A: Introduction As per IAS if there is any financial asset and it is valued at amortized cost method…
Q: On January 1, 2020, Alaska Corporation purchased P1,000,000 10% bonds for P1,051,510 (including…
A: Fair Price of the bonds on December 31, 2020 = Present value of principal + Present value of…
Q: Part 3: Early Extinguishment of Debt On January 1, 2021, Free Design Industries had $700,000 of 12%…
A: When comparing the values of carrying value of the bond and Bond face value there is interconnection…
Q: On January 1, 2020, Alaska Corporation purchased P1,000,000 10% bonds for P1,051,510 (including…
A: SOLUTION- EXPLANATION- CASH FLOW 9% TABLE VALUE AMOUNT PRESENT VALUE PAR MATURITY VALUE…
Q: An investor company purchased $790,000 of 5% bonds from the investee company on January 1, 2020,…
A: An available for sale securities is a security that do not fall under either the trading securities…
Q: On January 1, 2020, Alaska Corporation purchased P1,000,000 10% bonds for P1,051,510 (including…
A: Fair Price of the bonds on December 31, 2020 = Present value of principal + Present value of…
Q: On January 1, 2020, Davao Company issued 6% bonds with 3. What is the carrying amount of the bonds…
A: Introduction Dear student as per guideline we will solve first three subparts for you please ask…
Q: 6.On January 1, 2019, Cruiser Corporation issued 5,000 of its 5-year, P1,000 face value, 11% bonds…
A: Introduction: In simple terms, bond is a loan taken by the issuer company from the person who…
Q: ABC Company purchased $3500000 of 9%, 5-year bonds from XYZ, Inc. on January 1, 2021, with interest…
A: calculation are as follows
Q: At December 31, 2021 the following balances existed on the books of Bulaga Corporation: Bonds…
A: If the bonds are redeemed at more than the carrying value of the bonds , the bonds are said to be…
Q: On January 1, 2020, Trisha Company received P1,077,200 for 12% bonds with face amount of P1,000,000.…
A: Bond is borrowing security issued by the company to raise funds from the market by making an…
Q: Dixon Corp issued 5,000, 9%, 5-year, P1,000 bonds dated January 1, 2020, at P100 1. Prepare the…
A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in…
Q: On June 1, 2021, VIXEN Company received ₱1,077,200 plus accrued interest for 12% bonds with face…
A: When a bond is issued at a premium, the amount is amortized over the years until maturity. A premium…
Q: On January 1, 2019, Dumaguete Company purchased bonds with face amount of P4,000,000 for P4,206,000.…
A: Initial recognition of bonds = P4, 206,000 Interest will be paid on face value
Q: On January 1, 2021, Aruba Company reported bonds payable of P5,000,000 and a related unamortized…
A: Bond: It is long-term source of finance issued by the firm to raise money. It has a fixed maturity…
Q: If the bonds are classified as FA@FVTOCI, what is the amount to be recognized as fair value…
A: First we will calculate fair value of bond.
Q: On 1/1/2019, Allie Company issued bonds payable of $400,000 at 8%. It was sold at $364,000 with…
A: Bond amortization method is an accounting system to record the bond liabilities. It systematically…
Q: On July 1,2020, Conair Company paid P1,198,000 for 10% bonds with a face mount of PI000000 to beheld…
A: Interest Expense = 1,198,000 x 8% x 612 = 47,920 Interest Payment = 1,000,000 x 10% x 612 = 50,00
Q: E10-11 Riot Company issued $500,000, 15-year, 7% bonds at 96. Instructions (a) Prepare the journal…
A: Amount received on issue of bonds = Face value of bonds x issue price/100 = $500,000 x 96/100 =…
Q: On May 31, 2020, VIOLET Company issued 6% bonds with face amount of ₱4,000,000 for net proceeds of…
A: A bond is an instrument that represents the loan that is made by the investor to the company and…
Q: On May 31, 2020, VIOLET Company issued 6% bonds with face amount of ₱4,000,000 for net proceeds of…
A: Solution: Interest expense for the year ended December 31, 2020 = Proceeds of issue of bonds* Market…
Q: . On January 1, 2020, HIBISCUS Company purchased 4,000 of ₱1,000 face value, 10% bonds of IXORA…
A: Given Data: Face value of bonds = 4,000 bonds at ₱ 1,000 Par value = ₱ 4,000,000 Carrying value of…
Q: Situation 1- an entity issued 6,000,000 of 9% ten years bonds on june 30,2019 for 5,625,000. This…
A: Here in this question, we are required to calculate the carrying value of bond through effective…
Q: 9. On July 1,2020, Lean Compuny Band Company for P4,615000 to yiekd 10% per year to be held as…
A:
Q: On July 1, 2022, bonds of P2,000,000 face amount were Interest on the bonds is payable semiannually…
A: The procedure of entering commercial transactions for the very first time in the books of accounts…
Q: MSG Corporation issued $111,000 of 3-year, 5% bonds outstanding on December 31, 2020 for $114,000.…
A:
Q: 18. On January 1, 2020, Puckett Co. issued $50,000 of 8%, ten-year bonds at 98. Issuance costs…
A: In this question, loss on redemption shall be Loss on bond retainment =Redemption price of bond…
Q: Ellison Corporation issued $300,000, 8%, five-year bonds on January 1, 2019, for$325,591 when the…
A: Given, Carrying Value of bond = $325,591 Interest Rate = 6%
Q: rated issued $0.81 million of 7.5%, 10-year bonds on July 1, 2019, at face value. Interest is…
A: Journal Entries are passed in accordance to IFRS-9 and ASPE -3856.
Q: Kobayashi Corporation reports in the current liability section of its statement of financial…
A: a. In GAAP, the long-term obligation is replaced with equity securities, or renewing, extending, or…
Q: Jona Company received P 5,300,000 for a P 5,000,000 face amount 12% bond, a price that yields 10%.…
A: Calculations of Interest expenses for 2020. Interest expenses = Face Amount *Bond rate…
Q: On January 1, 2020, Trisha Company received P1,077,200 for 12% bonds with face amount of P1,000,000.…
A: AMOUNT RECEIVED 1077200. FACE VALUE 1000000 RATE OF INTEREST 12%
Q: This problem has 4 questions. On December 1, 2018, AAA Corporation issued a five-year,…
A: Given details: Face value of the bonds = P5,000,000 Issue price = P5,386,072 6-months Period = 5…
Q: Dixon Corp issued 5,000, 9%, 5-year, P1,000 bonds dated January 1, 2020, at P100 1. Prepare the…
A: Formula: Interest amount = Bond issued value x Interest rate
Q: On January 1, 2020, Alaska Corporation purchased P1,000,000 10% bonds for P1,051,510 (including…
A: Calculation of the amount to be recognized as fair value adjustment loss in its 2020 profit or…
Q: Included in Vulnerable Corporation's liability account balances at December 31, 2020, were the…
A: Solution: Interest payable at the end of 2020 = (P500,000*8%*3/12) + (P900,000*10%*9/12) +…
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- 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 amortizationTransfer between Categories On December 31, 2018, Leslie Company held an investment in bonds of Kaufmann Company which it categorized as being held to maturity. At that time, the 8%, 100,000 face value bonds had a carrying value of 107,023.56 and were being amortized using the effective interest method based on a market rate of 7%. Interest on these bonds is paid annually each December 31. On December 31, 2019, after recording the interest earned, Leslie decided to reclassify the Kaufmann bonds to its available-for-sale category in anticipation of a major restructuring. At that time, the ending quoted market price for the bonds was 105,000. Required: Prepare the journal entries on December 31, 2019, to record the interest earned and the reclassification.Restructuring (Debtor) Oakwood Corporation is delinquent on a 2,400,000, 10% note to Second National Bank that was due January 1, 2019. At that time, Oakwood owed the principal amount plus 34,031.82 of accrued interest. Oakwood enters into a debt restructuring agreement with the bank on January 2, 2019. Required: Prepare the journal entries for Oakwood to record the debt restructuring agreement and all subsequent interest payments assuming the following independent alternatives: 1. The bank extends the repayment date to December 31, 2022, forgives the accrued interest owed, reduces the principal by 200,000, and reduces the interest rate to 8%. 2. The bank extends the repayment date to December 31, 2022, forgives the accrued interest owed, reduces the principal by 200,000, and reduces the interest rate to 1%. 3. The bank accepts 160,000 shares of Oakwoods 55 par value common stock, which is currently selling for 14.50 per share, in full settlement of the debt. 4. The bank accepts land with a fair value of 2,300,000 in full settlement of the debt. The land is being carried on Oakwoods books at a cost of 2,200,000.
- (Appendix 14.1)Pamlico Company has a 500,000, 15%, 3-year note dated January 1, 2019, payable to Forest National Bank. On December 31, 2020, the bank agreed to settle the note and unpaid interest of 75,000 for 50,000 cash and marketable securities having a current market value of 375,000. Pamlicos acquisition cost of the securities is 385,000. Ignoring income taxes, what amount should Pamlico report as a gain from the debt restructuring on its 2020 income statement? a. 65,000 b. 75,000 c. 140,000 d. 150,000On 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?Refer to the information in RE13-5. Assume that on December 31, 2019, the investment in Smith Corporation bonds has a market value of 12,500. Prepare the year-end journal entry to record the unrealized gain or loss.
- 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. 6,000Disclosure of Debt On May 1, 2019, Ramden Company issues 13% bonds with a face value of 2 million. The bond contract calls for retirement of the bonds in periodic installments of 200,000, starting on May 1, 2020, and continuing on each May 1 thereafter until all bonds are retired. Required: How would the preceding information appear in Ramdens balance sheets on December 31, 2019, and 2020?Refer to the information in RE 13-3. Assume that on December 31, 2019, Wolfpack received interest on the Todd Corporation bonds. Wolfpack uses the straight-line method to amortize premiums and discounts. Prepare the December 31 journal entry to record the receipt of the interest. On July 1, 2019, Wolfpack Corporation purchases securities which it intends to buy and sell frequently. These securities consisted of todd Corporation 10%, 5-year bonds with a face value of 20,000 which were purchased for 18,500. Prepare the july 1 journal entry to record the purchase of these trading securities.
