Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations. Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value. Effective-interest amortization method: Effective-interest amortization method it is an amortization model that apportions the amount of bond discount or premium based on the market interest rate. In this method, first, interest expense is calculated based on the current carrying amount and market interest rate and cash interest payment is calculated based on the face value amount and stated interest rate and then, the different between the cash interest payment and interest expense is amortized as a decrease to the discount or premium. To Journalize: Sale of the bonds.

Question

Want to see the full answer?

Answer 1

Question

Chapter 12, Problem 12.24EX

a.

1.

To determine

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

Effective-interest amortization method: Effective-interest amortization method it is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

In this method, first, interest expense is calculated based on the current carrying amount and market interest rate and cash interest payment is calculated based on the face value amount and stated interest rate and then, the different between the cash interest payment and interest expense is amortized as a decrease to the discount or premium.

To Journalize: Sale of the bonds.

2.

To determine

To Journalize: First semiannual interest payment and amortization of premium on bonds.

3.

To determine

To Journalize: Second semiannual interest payment and amortization of premium on bonds.

b.

To determine

The amount of bond interest expense for 2016.

c)

To determine

To explain: The reason why the company was able to issue the bonds for $23,829,684 rather than $22,000,000.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Amortize premium by interest method Shunda Corporation wholesales parts to appliance manufacturers. On January 1, Shunda issued $20,000,000 of 5-year, 10% bonds at a market (effective) interest rate of 8%, receiving cash of $21,622,179. Interest is payable semiannually. Shunda’s fiscal year begins on January 1. The company uses the interest method. a. Journalize the entries to record the following: Question Content Area 1. Sale of the bonds. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. 2. First semiannual interest payment, including amortization of premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. 3. Second semiannual interest payment, including amortization of premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. b. Determine the bond interest expense for the first year. Round to the nearest dollar. Annual Interest Paid Less premium…

Amortize premium by interest method Shunda Corporation wholesales parts to appliance manufacturers. On January 1, Shunda issued $20,000,000 of 5-year, 10% bonds at a market (effective) interest rate of 8%, receiving cash of $21,622,179. Interest is payable semiannually. Shunda's fiscal year begins on January 1. The company uses the interest method. a. Journalize the entries to record the following: 1. Sale of the bonds. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. €88 2. First semiannual interest payment, including amortization of premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. 3. Second semiannual interest payment, including amortization of premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. b. Determine the bond interest expense for the first year. Round to the nearest dollar. Annual interest paid Less premium amortized Interest expense for first…

Amortize Premium by Interest Method Shunda Corporation wholesales parts to appliance manufacturers. On January 1, Year 1, Shunda Corporation issued $22,000,000 of five-year, 9% bonds at a market (effective) interest rate of 7%, receiving cash of $23,829,684. Interest is payable semiannually. Shunda Corporation’s fiscal year begins on January 1. The company uses the interest method. a. Journalize the entries to record the following: 1. Sale of the bonds. Round amounts to the nearest dollar. For a compound transaction, if an amount box does not require an entry, leave it blank. Cash Premium on Bonds Payable Bonds Payable Feedback As the discount or premium is amortized, the carrying amount of the bond changes. As a result, interest expense also changes each period. Compare the rate on the bonds and the market rate. 2. First semiannual interest payment, including amortization of premium. Round to the nearest dollar. For…

Answer 2

Question

Chapter 12, Problem 12.24EX

a.

1.

To determine

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

Effective-interest amortization method: Effective-interest amortization method it is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

In this method, first, interest expense is calculated based on the current carrying amount and market interest rate and cash interest payment is calculated based on the face value amount and stated interest rate and then, the different between the cash interest payment and interest expense is amortized as a decrease to the discount or premium.

To Journalize: Sale of the bonds.

2.

To determine

To Journalize: First semiannual interest payment and amortization of premium on bonds.

3.

To determine

To Journalize: Second semiannual interest payment and amortization of premium on bonds.

b.

To determine

The amount of bond interest expense for 2016.

c)

To determine

To explain: The reason why the company was able to issue the bonds for $23,829,684 rather than $22,000,000.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 12, Problem 12.24EX

a.

1.

To determine

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

Effective-interest amortization method: Effective-interest amortization method it is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

In this method, first, interest expense is calculated based on the current carrying amount and market interest rate and cash interest payment is calculated based on the face value amount and stated interest rate and then, the different between the cash interest payment and interest expense is amortized as a decrease to the discount or premium.

To Journalize: Sale of the bonds.

2.

To determine

To Journalize: First semiannual interest payment and amortization of premium on bonds.

3.

To determine

To Journalize: Second semiannual interest payment and amortization of premium on bonds.

b.

To determine

The amount of bond interest expense for 2016.

c)

To determine

To explain: The reason why the company was able to issue the bonds for $23,829,684 rather than $22,000,000.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 12, Problem 12.24EX

a.

1.

To determine

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

Effective-interest amortization method: Effective-interest amortization method it is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

In this method, first, interest expense is calculated based on the current carrying amount and market interest rate and cash interest payment is calculated based on the face value amount and stated interest rate and then, the different between the cash interest payment and interest expense is amortized as a decrease to the discount or premium.

To Journalize: Sale of the bonds.

2.

To determine

To Journalize: First semiannual interest payment and amortization of premium on bonds.

3.

To determine

To Journalize: Second semiannual interest payment and amortization of premium on bonds.

b.

To determine

The amount of bond interest expense for 2016.

c)

To determine

To explain: The reason why the company was able to issue the bonds for $23,829,684 rather than $22,000,000.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 12, Problem 12.24EX

a.

1.

To determine

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

Effective-interest amortization method: Effective-interest amortization method it is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

In this method, first, interest expense is calculated based on the current carrying amount and market interest rate and cash interest payment is calculated based on the face value amount and stated interest rate and then, the different between the cash interest payment and interest expense is amortized as a decrease to the discount or premium.

To Journalize: Sale of the bonds.

2.

To determine

To Journalize: First semiannual interest payment and amortization of premium on bonds.

3.

To determine

To Journalize: Second semiannual interest payment and amortization of premium on bonds.

b.

To determine

The amount of bond interest expense for 2016.

c)

To determine

To explain: The reason why the company was able to issue the bonds for $23,829,684 rather than $22,000,000.

Answer 6

Chapter 12, Problem 12.24EX

a.

1.

To determine

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

Effective-interest amortization method: Effective-interest amortization method it is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

In this method, first, interest expense is calculated based on the current carrying amount and market interest rate and cash interest payment is calculated based on the face value amount and stated interest rate and then, the different between the cash interest payment and interest expense is amortized as a decrease to the discount or premium.

To Journalize: Sale of the bonds.

Answer 7

Chapter 12, Problem 12.24EX

a.

1.

To determine

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.

Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.

Effective-interest amortization method: Effective-interest amortization method it is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.

In this method, first, interest expense is calculated based on the current carrying amount and market interest rate and cash interest payment is calculated based on the face value amount and stated interest rate and then, the different between the cash interest payment and interest expense is amortized as a decrease to the discount or premium.

To Journalize: Sale of the bonds.

Answer 8

2.

To determine

To Journalize: First semiannual interest payment and amortization of premium on bonds.

Answer 9

2.

To determine

To Journalize: First semiannual interest payment and amortization of premium on bonds.

Answer 10

3.

To determine

To Journalize: Second semiannual interest payment and amortization of premium on bonds.

Answer 11

3.

To determine

To Journalize: Second semiannual interest payment and amortization of premium on bonds.

Answer 12

b.

To determine

The amount of bond interest expense for 2016.

Answer 13

b.

To determine

The amount of bond interest expense for 2016.

Answer 14

c)

To determine

To explain: The reason why the company was able to issue the bonds for $23,829,684 rather than $22,000,000.

Answer 15

c)

To determine

To explain: The reason why the company was able to issue the bonds for $23,829,684 rather than $22,000,000.

Answer 16

Expert Solution & Answer

Answer 17

Expert Solution & Answer

Answer 18

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 19

Ch. 12 - Describe the two distinct obligations incurred by...Ch. 12 - Explain the meaning of each of the following terms...Ch. 12 - Prob. 3DQ Ch. 12 - A corporation issues 26,000,000 of 9% bonds to...Ch. 12 - Prob. 5DQ Ch. 12 - The following data relate to a 2,000,000, 8% bond...Ch. 12 - Prob. 7DQ Ch. 12 - Prob. 8DQ Ch. 12 - Fleeson Company needs additional funds to purchase...Ch. 12 - Prob. 10DQ

Solution Summary: The author explains the effective-interest amortization method, which apportions the amount of bond discount or premium based on the market interest rate.

Videos

To Journalize: First semiannual interest payment and amortization of premium on bonds.

To Journalize: Second semiannual interest payment and amortization of premium on bonds.

The amount of bond interest expense for 2016.

To explain: The reason why the company was able to issue the bonds for $23,829,684 rather than $22,000,000.

Want to see the full answer?

Chapter 12 Solutions