Bonds; issuance; effective interest; financial statement effects
• LO14–2
Myriad Solutions, Inc., issued 10% bonds, dated January 1, with a face amount of $320 million on January 1, 2018, for $283,294,720. The bonds mature on December 31, 2027 (10 years). For bonds of similar risk and maturity the market yield is 12%. Interest is paid semiannually on June 30 and December 31.
Required:
1. What would be the net amount of the liability Myriad would report in its
2. What would be the amount related to the bonds that Myriad would report in its income statement for the year ended December 31, 2018?
3. What would be the amount(s) related to the bonds that Myriad would report in its statement of cash flows for the year ended December 31, 2018?
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INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
- Exercise 10.9 (Algo) Accounting for Bonds Issued at a Premium: Issuance, Interest Payments, and Retirement (LO10-5, LO10-6) Xonic Corporation issued $8.5 million of 20-year, 8 percent bonds on April 1, 2021, at 102. Interest is paid on March 31 and September 30 of each year, and all of the bonds in the issue mature on March 31, 2041 Xonic's fiscal year ends on December 31. Prepare the following journal entries. a. April 1, 2021, to record the issuance of the bonds. b. September 30, 2021, to pay interest and to amortize the bond premium. c. March 31, 2041, to pay interest, amortize the bond premium, and retire the bonds at maturity (make two separate entries). Assume an adjusting entry was made on December 31, 2040, to recognize interest from October 1 to December 31. d. What is the effect of amortizing the bond premium on (1) annual net income and (2) annual net cash flow from operating activities. (ignore possible income tax effects.) (If no entry is required for a transaction/event,…arrow_forward18 A company issues P5,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2022. Interest is paid on June 30 and December 31. The proceeds from the bonds are P4,901,036. Using effective-interest amortization, what will the carrying value of the bonds be on the December 31, 2022 statement of financial position? 4,903,160.00 4903160 4,903,160 4903160arrow_forwardExercise 14-9 (Algo) Issuance of bonds; effective interest; amortization schedule; financial statement effects [LO14-2] When Patey Pontoons issued 6% bonds on January 1, 2024, with a face amount of $680,000, the market yield for bonds of similar risk and maturity was 11%. The bonds mature December 31, 2027 (4 years). Interest is paid semiannually on June 30 and December 31. Required: Determine the price of the bonds at January 1, 2024. (fill out table provided in image) Prepare the appropriate journal entries at maturity on December 31, 2027. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)arrow_forward
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- 18 Required information [The following information applies to the questions displayed below.] Temptation Vacations issues $49 million in bonds on January 1, 2024, that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: (1) Date 1/1/2024 6/30/2024 12/31/2024 (2) Cash Paid for Interest Face amount $1,470,000 1,470,000 (3) Interest Expense $1,378,755 1,376,473 (4) Decrease in Carrying Value $91,245 93,527 (5) Carrying Value $55,150, 180 55,058,935 54,965,408 3. What is the face amount of the bonds? (Enter your answer in whole dollars, not millions (i.e., $5.5 million should be entered as 5,500,000).)arrow_forwardProblem 10.5A (Static) Bond Interest (Bonds Issued at Face Value) (LO10-5) Green Mountain Power Company obtained authorization to issue 20-year bonds with a face value of $10 million. The bonds are dated May 1, 2021, and have a contract rate of interest of 10 percent. They pay interest on November 1 and May 1. The bonds were issued on August 1, 2021, at 100 plus three months' accrued interest Required: Prepare the necessary journal entries in general journal form on the following a. August 1, 2021, to record the issuance of the bords. b. November 1, 2021, to record the first semiannual interest payment on the bond issue. c. December 31, 2021, to record interest expense accrued through year-end. (Round to the nearest dollar) d. May 1, 2022, to record the second semiannual interest payment. (Round to the nearest dollar) e. What was the prevailing market rate of interest on the date that the bonds were issued? (If no entry is required for a transaction/event, select "No journal entry…arrow_forwardExercise 5-22 (Algo) Price of a bond; interest expense [LO5-9, 5-10] On June 30, 2024, Single Computers issued 7% stated rate bonds with a face amount of $200 million. The bonds mature on June 30, 2039 (15 years). The market rate of interest for similar bond issues was 6% (3.0 % semiannual rate). Interest is paid semiannually (3.5%) on June 30 and December 31, beginning on December 31, 2024. Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Required: 1. Determine the price of the bonds on June 30, 2024. 2. Calculate the interest expense Single reports in 2024 for these bonds using the effective interest method. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the interest expense Single reports in 2024 for these bonds using the effective interest method. Note: Enter all the values as positive value. Round your final answers to nearest whole dollar amount, not in…arrow_forward
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- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning