The journal for recording adjusted balance of the debt to fair value at the end of the first, second and third year. Given information: Company issued bonds worth $86,000. Term period for conversion is 6 years Market rate of interest is 3.25%.

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Answer 1

Question

Chapter 14, Problem 14.20E

To determine

To prepare: The journal for recording adjusted balance of the debt to fair value at the end of the first, second and third year.

Given information:

Company issued bonds worth $86,000.

Term period for conversion is 6 years

Market rate of interest is 3.25%.

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On January 1, 2021, Essence Communications issued $800,000 of its 10-year, 8% bonds for $700,302. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. Essence Communications records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2021, the market interest rate for bonds of similar risk and maturity was 9%. The bonds are not traded on an active exchange. The decrease in the market interest rate was due to a 1% decrease in general (riskfree) interest rates.Required:1. Using the information provided, estimate the fair value of the bonds at December 31, 2021.2. Prepare the journal entry to record interest on June 30, 2021 (the first interest payment).3. Prepare the journal entry to record interest on December 31, 2021 (the second interest payment).4. Prepare the journal entry to adjust the bonds to their fair value for presentation in the December 31, 2021,balance sheet.

Answer 2

Question

Chapter 14, Problem 14.20E

To determine

To prepare: The journal for recording adjusted balance of the debt to fair value at the end of the first, second and third year.

Given information:

Company issued bonds worth $86,000.

Term period for conversion is 6 years

Market rate of interest is 3.25%.

Expert Solution & Answer

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Answer 3

Question

Chapter 14, Problem 14.20E

To determine

To prepare: The journal for recording adjusted balance of the debt to fair value at the end of the first, second and third year.

Given information:

Company issued bonds worth $86,000.

Term period for conversion is 6 years

Market rate of interest is 3.25%.

Expert Solution & Answer

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Answer 4

Question

Chapter 14, Problem 14.20E

To determine

To prepare: The journal for recording adjusted balance of the debt to fair value at the end of the first, second and third year.

Given information:

Company issued bonds worth $86,000.

Term period for conversion is 6 years

Market rate of interest is 3.25%.

Expert Solution & Answer

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Answer 5

Chapter 14, Problem 14.20E

To determine

To prepare: The journal for recording adjusted balance of the debt to fair value at the end of the first, second and third year.

Given information:

Company issued bonds worth $86,000.

Term period for conversion is 6 years

Market rate of interest is 3.25%.

Answer 6

Chapter 14, Problem 14.20E

To determine

To prepare: The journal for recording adjusted balance of the debt to fair value at the end of the first, second and third year.

Given information:

Company issued bonds worth $86,000.

Term period for conversion is 6 years

Market rate of interest is 3.25%.

Answer 7

Chapter 14, Problem 14.20E

To determine

To prepare: The journal for recording adjusted balance of the debt to fair value at the end of the first, second and third year.

Given information:

Company issued bonds worth $86,000.

Term period for conversion is 6 years

Market rate of interest is 3.25%.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 14 - What conditions or terms does a note payable...Ch. 14 - If the market rate of interest exceeds the face or...Ch. 14 - What is included in bond issue costs and how...Ch. 14 - Prob. 14.4Q Ch. 14 - When a bond is issued at a discount, will its...Ch. 14 - Prob. 14.6Q Ch. 14 - Prob. 14.7Q Ch. 14 - Under IFRS, how do firms account for convertible...Ch. 14 - Prob. 14.9Q Ch. 14 - Can companies reclassify short-term debt expected...

The journal for recording adjusted balance of the debt to fair value at the end of the first, second and third year. Given information: Company issued bonds worth $86,000. Term period for conversion is 6 years Market rate of interest is 3.25%.

Solution Summary: The author explains the process of journalizing the transactions of an organization in a chronological order.

To prepare: The journal for recording adjusted balance of the debt to fair value at the end of the first, second and third year.

Given information:

Company issued bonds worth $86,000.

Term period for conversion is 6 years

Market rate of interest is 3.25%.

Want to see the full answer?

Chapter 14 Solutions

The journal for recording adjusted balance of the debt to fair value at the end of the first, second and third year. Given information: Company issued bonds worth $86,000. Term period for conversion is 6 years Market rate of interest is 3.25%.

Solution Summary: The author explains the process of journalizing the transactions of an organization in a chronological order.

To prepare: The journal for recording adjusted balance of the debt to fair value at the end of the first, second and third year. Given information: Company issued bonds worth $86,000. Term period for conversion is 6 years Market rate of interest is 3.25%.

Want to see the full answer?

Chapter 14 Solutions

To prepare: The journal for recording adjusted balance of the debt to fair value at the end of the first, second and third year.

Given information:

Company issued bonds worth $86,000.

Term period for conversion is 6 years

Market rate of interest is 3.25%.