1.
Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.
To determine: The total equal amount of each installment payment.
1.
Answer to Problem 6PSB
The total equal amount to be made every year constitutes the principal amount and accrued interest amount.
Total amount of each installment is
Explanation of Solution
Computation of the amount of each installment payment is shown below:
PVFA of
2.
Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.
To determine: The computation of the statement showing the amortization amount.
2.
Answer to Problem 6PSB
Amortization table and amount showing that is
Explanation of Solution
The computation of the statement showing the amortization amount is shown below:
Period Ending Date | Beginning Balance | Debit Interest Expense | Debit Notes Payable | Credit Cash | Ending Balance |
30/09/2016 | |||||
30/09/2017 | |||||
30/09/2018 | |||||
3.
Introduction: A bond refers to a security generally used for a debt investment under which an investor finances money to an entity for a specific time period at a fixed rate of interest.
To determine: Prepare the
3.
Answer to Problem 6PSB
Journal entries to record premium amortization and interest for six months.
Explanation of Solution
Date | Particulars | Debit | Credit |
31Dec | Bond Interest Expense | ||
Interest Expense | |||
(To record the interest and premium amortization for six months) |
Date | Particulars | Debit | Credit |
31Oct | Bond Interest Expense | ||
Interest payable | |||
Notes payable | |||
Cash | |||
(To record initial payment towards the installment note) |
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Chapter 10 Solutions
Financial Accounting: Information for Decisions
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