GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
17th Edition
ISBN: 9781260218831
Author: Libby
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 10, Problem 10.5AP
1.
To determine
Prepare
2.
To determine
Prepare journal entry to record payment of interest on June 30.
To determine
Prepare journal entry to record payment of interest on December 31.
3.
To determine
Show the presentation of bonds payable that would be reported on December 31
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On January 2, current year, Kalahari Limited issued $1,000,000, 10-year bonds for $1,150,000. The bonds pay interest on June 30 and December 31. The stated rate is 10% and the market rate is 8%. The company plans to use the effective interest method of amortizing bond discounts and premiums. The semiannual cash payment on the bonds is
Tarheel Inc., a calendar year-end company, issued bonds on 1/1/X1. It uses the effective interest method to amortize bond discounts
and premiums.
The following facts are known about these bonds:
Issue Date: 1/1/X1
Face Value: $200,000
Issue Price: $217,965
Face Rate: 6% compounded semi-annually (in other words, 3% every six months)
Market (Effective) Rate: 4% compounded semi-annually (in other words, 2% every six months)
Term: 5 years
Semi-Annual Interest Payment Dates: June 30 and Dec 31
First interest payment will occur on: June 30, 20X1
Note: Round all calculations to the nearest whole dollar.
Required: Using the above information, prepare the journal entries to record: (1) the issuance of the bonds and (2) the first cash
interest payment on 6/30/X1. Remember to round all amounts to the nearest whole dollar. Decimals or cents should not be shown in
the numerical response portion of your journal entry.
Date
Account Name
Debit
Credit
1/1/X1
6/30/X1
On January 1, 2018, Technicians Credit Union (TCU) issued 5%, 20-year bonds payable with face value of $100,000. These bonds pay interest on June 30 and December 31. The issue price of the bonds is 106. Journalize the following bond transactions:
a (Click the icon to view the bond transactions.)
(Assume bonds payable are amortized using the straight-line amortization method. Record debits first, then credits. Select explanations on the last line of the journal entry. Round your answers to the nearest whole dollar.)
- X
a.
More Info
a. Issuance of the bonds on January 1, 2018.
b. Payment of interest and amortization on June 30, 2018.
c. Payment of interest and amortization on December 31, 2018.
d. Retirement of the bond at maturity on December 31, 2037, assuming the last
interest payment has already been recorded.
Print
Done
Chapter 10 Solutions
GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
Ch. 10 - From the perspective of the issuer, what are some...Ch. 10 - What are the primary characteristics of a bond?...Ch. 10 - Prob. 3QCh. 10 - Differentiate between a bond indenture and a bond...Ch. 10 - Prob. 5QCh. 10 - Prob. 6QCh. 10 - Prob. 7QCh. 10 - Prob. 8QCh. 10 - What is the book value of a bond?Ch. 10 - Prob. 10Q
Ch. 10 - Prob. 11QCh. 10 - Prob. 12QCh. 10 - Prob. 1MCQCh. 10 - Prob. 2MCQCh. 10 - Prob. 3MCQCh. 10 - Prob. 4MCQCh. 10 - Prob. 5MCQCh. 10 - Prob. 6MCQCh. 10 - Prob. 7MCQCh. 10 - Prob. 8MCQCh. 10 - Prob. 9MCQCh. 10 - Prob. 10MCQCh. 10 - Prob. 10.1MECh. 10 - Computing the Price of a Bond Issued at Par LO10-2...Ch. 10 - Understanding Financial Ratios 0-3, 10-6 The...Ch. 10 - Computing the Times Interest Earned Ratio LO10-3...Ch. 10 - Computing the Price of a Bond Issued at a Discount...Ch. 10 - Recording the Issuance and Interest Payments of a...Ch. 10 - Prob. 10.7MECh. 10 - Prob. 10.8MECh. 10 - Prob. 10.9MECh. 10 - Prob. 10.10MECh. 10 - Prob. 10.11MECh. 10 - Prob. 10.12MECh. 10 - Prob. 10.13MECh. 10 - Prob. 10.14MECh. 10 - Prob. 10.1ECh. 10 - Prob. 10.2ECh. 10 - Prob. 10.3ECh. 10 - Computing Issue Prices of Bonds Sold at Par, at a...Ch. 10 - Prob. 10.5ECh. 10 - Prob. 10.6ECh. 10 - Prob. 10.7ECh. 10 - Prob. 10.8ECh. 10 - (Chapter Supplement) Recording and Reporting a...Ch. 10 - Prob. 10.10ECh. 10 - Prob. 10.11ECh. 10 - Explaining Why Debt Is Issued at a Price Other...Ch. 10 - Prob. 10.13ECh. 10 - Prob. 10.14ECh. 10 - Prob. 10.15ECh. 10 - Prob. 10.16ECh. 10 - Prob. 10.17ECh. 10 - Prob. 10.18ECh. 10 - Prob. 10.19ECh. 10 - Prob. 10.20ECh. 10 - Prob. 10.21ECh. 10 - Prob. 10.22ECh. 10 - Prob. 10.23ECh. 10 - Prob. 10.24ECh. 10 - Prob. 10.1PCh. 10 - Prob. 10.2PCh. 10 - Comparing Bonds Issued at Par, at a Discount, and...Ch. 10 - Prob. 10.4PCh. 10 - Prob. 10.5PCh. 10 - Recording and Reporting Bonds Issued at a Discount...Ch. 10 - Recording and Reporting a Bond Issued at a...Ch. 10 - Prob. 10.8PCh. 10 - Prob. 10.9PCh. 10 - Prob. 10.10PCh. 10 - Prob. 10.11PCh. 10 - Prob. 10.12PCh. 10 - Prob. 10.13PCh. 10 - Prob. 10.14PCh. 10 - Prob. 10.15PCh. 10 - Prob. 10.16PCh. 10 - Prob. 10.1APCh. 10 - Prob. 10.2APCh. 10 - Prob. 10.3APCh. 10 - Prob. 10.4APCh. 10 - Prob. 10.5APCh. 10 - Prob. 10.6APCh. 10 - Recording and Reporting a Bond Issued at a Premium...Ch. 10 - Prob. 10.8APCh. 10 - Prob. 10.1CONCh. 10 - Prob. 10.1CPCh. 10 - Prob. 10.2CPCh. 10 - Prob. 10.3CPCh. 10 - Prob. 10.4CPCh. 10 - Prob. 10.5CPCh. 10 - Evaluating an Ethical Dilemma LO 10-1 Assume that...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Effective Interest Method E9A. On March 1, 20XX, Minnow Corporation issued $600,000 of 10 percent, five year bonds. The semiannual interest payment dates are February 28 and August 31. Because the market rate for similar investments was 11 percent, the bonds had to be issued at a discount. The discount on the issuance of the bonds was $24,335. The company's fiscal year ends February 28. Prepare the journal entries to record the bond issue on March 1, 20XX, the payment of interest, and the amortization of the discount on August 31, 20XX and on February 28, 20XX. Use the effective interest method. (Round to the nearest dollar.)arrow_forwardPlease find 1) Interest expense 2) cash paid 3) bonds payable Required information P10-6 (Algo) Recording and Reporting Bonds Issued at a Discount LO10-4 [The following information applies to the questions displayed below.] PowerTap Utilities is planning to issue bonds with a face value of $2,100,000 and a coupon rate of 9 percent. The bonds mature in 10 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. PowerTap uses the effective-interest amortization method. Assume an annual market rate of interest of 10 percent. (FV of $1, PV of $1. FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.) P10-6 Part 1 Required: 1. What was the issue price on January 1 of this year? (Round your final answers to nearest whole dollar amount.) Issue price $ 2,100,000arrow_forwardOn January 2, current year, Kalahari Limited issued $1,000,000, 10-year bonds for $1,150,000. The bonds pay interest on June 30 and December 31. The stated rate is 10% and the market rate is 8%. The company plans to use the effective interest method of amortizing bond discounts and premiums. What is the carrying value of the bonds at the end of ten years before the final maturity payment is made? a. $850,000 b. $1,000,000 c. $1,200,000 d. $1,150,000arrow_forward
- On January 1, 20x1, Fleetwood Inc. issued bonds with a face amount of $25 million and a stated interest rate of 8%. The bonds mature in 10 years and pay interest semiannually on June 30 and December 31 of each year. The market rate of interest on January 1, 20x1, for bonds of this type was 6%. Fleetwood closes its books on December 31. Required: 1. At what price were the bonds issued? 2. Using the effective interest method, prepare an amortization schedule showing interest amortization, and bond carrying value for each of the first four semiannual interest expense payment periods. 3. Prepare journal entries to record the first four semiannual interest payments. 4. How would the bonds be shown on Fleetwood's December 31, 20x1, balance sheet and its December 31, 20x2, balance sheet?arrow_forwardOn January 1, Zonoz, Inc. issued a 10-year semiannual bond with a face value of $590,000 that pays 2.5% interest. On the date of issue, the market for similar bonds was 6,0%. How much was Zonoz able to raise from issuing this bond? For numerical entries, please 1. do NOT enter commas 2. do NOT enter the dollar symbol: $ 3. DO enter the percent symbol when it is needed: % 4. enter dollar amounts to the nearest cent, for example: 12345,67 Cash Flow Diagram r=0 N Please complete the TVM Framework table to compute the amount that Zonoz was able to raise by issuing this bond. Time Value of Money (TVM) Framework C PMT FV PV CPT type n 1 What Excel function and arguments to that function would you use to compute this value? -function( rate, nper. pmt. [FV], [type]) IMarrow_forwardThe Smart Company sold Rs. 500,000 of 8 percent, 20-year bonds on April 1, 2011, at 105. The semiannual interest payment dates are March 31 and September 30. The market interest rate is 7.5 percent. The company's fiscal year ends September 30. Use the effective interest method to calculate the amortization. With regard to the bond issue on April 1, 2011: How much cash is received? How much is Bonds Payable? What is the difference between a and b called and how much is it? With regard to the bond interest payment on September 30, 2011: How much cash is paid in interest? How much is the amortization? How much is interest expense? With regard to the bond interest payment on March 31, 2012: How much cash is paid in interest? How much is the amortization? How much is interest expense?arrow_forward
- Cramer Corp. issued $20,000,000 of 5-year, 9% bonds at a market (effective) interest rate of 10%, receiving cash of $19,227.757. Interest on the bonds is payable semiannually. What is the entry to record the first semiannual interest payment, and the amortization of the bond discount, using the interest method?arrow_forwardPharoah Inc. issues $4,500,000, 5-year, 14% bonds at 104, with interest payable annually on January 1. The straight-line method is used to amortize bond premium. what is the account title or explanation? what is debit or credited ?arrow_forward4) Dolby, Inc. issued a $5,000 face value, 10%, five-year bond at 96. What will be the journal entries at the maturity of the bond? The bonds have semiannual interest, and the company uses the straight-line method of discount amortization.arrow_forward
- On January 1, Nic Inc. issued $100,000 of ten-year, 10% bonds that pay interest semiannually on June 30 and 31st. The bonds are sold to yield 8%. A. Using the information provided in this problem, as well as your time value of money tables to calculate the issue price of the bond. B. Was the bond issued at a premium or a discount, explain your answer.arrow_forwardOn June 1, 2006, Janson Bottle Company sold $400,000 in long-term bonds for $351,040. The bonds will mature in 10 years and have a stated interest rate of 8% and a yield rate of 10%. The bonds pay interest annually on May 31 of each year. The bonds are to be accounted for under the effective-interest method. (a.) Construct a bond amortization table for this problem to indicate the amount of interest expense and discount amortization at each May 31. Make sure all columns and rows are properly labeled. (Round to the nearest dollar.) (b) Assuming that interest and discount amortization are recorded each May 31, prepare the adjusting entry to be made on December 31, 2008. (Round to the nearest dollar.)arrow_forwardOn January 2, Year 1, Kampai Sushi Bar sold $800,000 of bonds for $785,000. The bonds will mature in 10 years and pay interest annually on December 31. The company properly recorded the payment of interest and the amortization of the discount using the effective interest method. What will be the carrying value of the bonds at the end of Year 1? a.$800,000 b.less than $785,000 c.$785,000 d.greater than $785,000, but less than $800,000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Financial Accounting - Long-term Liabilities - Bonds; Author: Finance & Accounting Videos by Prof Coram;https://www.youtube.com/watch?v=_1fwsJIGMos;License: Standard Youtube License