Journal entry to record the issuance of the bonds on January 1.

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Answer 1

Question

Chapter 10, Problem 16E

1.

To determine

To prepare: Journal entry to record the issuance of the bonds on January 1.

2.

To determine

To prepare: Journal entry to record first interest payment on December 31.

3.

To determine

To prepare: A bond discount amortization schedule for the bonds.

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The notes to the Thorson Ltd.financial statements reported the following data on December 31, Year 1 (end of the fiscal year): Thorson amortizes bond discounts using the effective-interest method and pays all interestamounts at December 31. Requirements1. Assume the market interest rate is 6% on January 1 of year 1, the date the bonds are issued.a. Using the PV function in Excel, what is the issue price of the bonds?b. What is the maturity value of the bonds?c. What is Thorson’s annual cash interest payment on the bonds?d. What is the carrying amount of the bonds at December 31, year 1?2. Prepare an amortization table through the maturity date for the bonds using Excel. (Roundall amounts to the nearest dollar.) How much is Thorson’s interest expense on the bonds forthe year ended December 31, Year 4?3. Show how Thorson would report these bonds and notes at December 31, Year 4.

On the first day of the fiscal year, a company issues an $565,000, 9%, 5-year bond that pays semiannual interest of $25,425 ($565,000 x 9% x 1/2), receiving cash of $531,100. Journalize the entry to record the first interest payment and the amortization of the related bond discount using the straight-line method. If an amount box does not require an entry, leave it blank. Interest Expense Discount on Bonds Payable Cash

Based on Question No. 1, I want answer of Question No. 2 On September 1, Deutsch Limited issues 8%, 5-year bonds payable with a maturity value of OR 20,000. The bonds sell at 98 and pay interest on March 1 and September Deutsch amortize bond discount by the straight-line method. Required: Journalize the issuance of the bonds on September 1, and the semiannual interest payment on March 1 and September 1. Answer: Bonds: Bonds are a kind of interest-bearing notes payable, usually issued by companies, universities, and governmental organizations. It is a debt instrument used for the purpose of raising a fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If the selling price of the bond is lesser than the face value, it is known as a discount on bond. If the selling price of the bond is greater than the face value, it is known as premium on bond. 2. What are the two categories of liabilities…

Answer 2

Question

Chapter 10, Problem 16E

1.

To determine

To prepare: Journal entry to record the issuance of the bonds on January 1.

2.

To determine

To prepare: Journal entry to record first interest payment on December 31.

3.

To determine

To prepare: A bond discount amortization schedule for the bonds.

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Answer 3

Question

Chapter 10, Problem 16E

1.

To determine

To prepare: Journal entry to record the issuance of the bonds on January 1.

2.

To determine

To prepare: Journal entry to record first interest payment on December 31.

3.

To determine

To prepare: A bond discount amortization schedule for the bonds.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 4

Question

Chapter 10, Problem 16E

1.

To determine

To prepare: Journal entry to record the issuance of the bonds on January 1.

2.

To determine

To prepare: Journal entry to record first interest payment on December 31.

3.

To determine

To prepare: A bond discount amortization schedule for the bonds.

Expert Solution & Answer

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Answer 5

Chapter 10, Problem 16E

1.

To determine

To prepare: Journal entry to record the issuance of the bonds on January 1.

2.

To determine

To prepare: Journal entry to record first interest payment on December 31.

3.

To determine

To prepare: A bond discount amortization schedule for the bonds.

Answer 6

Chapter 10, Problem 16E

1.

To determine

To prepare: Journal entry to record the issuance of the bonds on January 1.

Answer 7

Chapter 10, Problem 16E

1.

To determine

To prepare: Journal entry to record the issuance of the bonds on January 1.

Answer 8

2.

To determine

To prepare: Journal entry to record first interest payment on December 31.

Answer 9

2.

To determine

To prepare: Journal entry to record first interest payment on December 31.

Answer 10

3.

To determine

To prepare: A bond discount amortization schedule for the bonds.

Answer 11

3.

To determine

To prepare: A bond discount amortization schedule for the bonds.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 10 - Prob. 1Q Ch. 10 - Prob. 2Q Ch. 10 - What three factors influence the dollar amount...Ch. 10 - Prob. 4Q Ch. 10 - Why is Deferred Revenue considered a liability?Ch. 10 - Prob. 6Q Ch. 10 - Prob. 7Q Ch. 10 - If a company has a long-term loan that has only...Ch. 10 - What are the reasons that some bonds are issued at...Ch. 10 - Prob. 10Q

Journal entry to record the issuance of the bonds on January 1.

Solution Summary: The author explains that bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

To prepare: Journal entry to record the issuance of the bonds on January 1.

To prepare: Journal entry to record first interest payment on December 31.

To prepare: A bond discount amortization schedule for the bonds.

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Chapter 10 Solutions