![Bundle: Financial & Managerial Accounting, 14th + Working Papers for Warren/Reeve/Duchac's Corporate Financial Accounting, 14th + Working Papers, ... & Managerial Accounting, 14th + CengageNOWv2,](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781337804011/9781337804011_smallCoverImage.gif)
Bundle: Financial & Managerial Accounting, 14th + Working Papers for Warren/Reeve/Duchac's Corporate Financial Accounting, 14th + Working Papers, ... & Managerial Accounting, 14th + CengageNOWv2,
14th Edition
ISBN: 9781337804011
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 14, Problem 14.8EX
A.
To determine
Financial Ratios: Financial ratios are the metrics used to evaluate the capabilities, profitability, and overall performance of a company.
To list: The errors in the determination of the three measures of current position analysis.
B.
To determine
Whether company satisfies the terms of the bond indenture
Expert Solution & Answer
![Check Mark](/static/check-mark.png)
Want to see the full answer?
Check out a sample textbook solution![Blurred answer](/static/blurred-answer.jpg)
Students have asked these similar questions
The bond indenture for the 10-year, 9% debenture bonds issued January 2, 20Y5, required working capital of $100,000, a current ratio of 1.5, and a quick ratio of 1.0 at the end of each calendar year until the bonds mature. At December 31, 20Y6, the three measures were computed as follows:
Please see the attachment for details:
a. List the errors in the determination of the three measures of current position analysis.b. Is the company satisfying the terms of the bond indenture? Explain.
Analyzing and Reporting Financial Statement Effects of Bond Transactions
On January 1 of the current year, Shields Inc. issued $700,000 of 9%, 20-year bonds for $769,275, yielding a market (yield) rate of 8%. Semiannual interest is payable on June 30 and December 31 of each year.
a. Show Excel inputs to confirm the bond issue price.
Note: Round your answer to two decimal places.
rate=
nper
pmt
FV =>
Answer = $
b. Indicate the financial statement effects using the template for (1) bond issuance, (2) semiannual interest payment and premium amortization on June 30 of the current year, and (3) semiannual interest payment
and premium amortization on December 31 of the current year.
Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction.
Note: Indicate a decrease in an account category by including a negative sign with the amount.
Note: Round your answers to the nearest whole dollar.
Balance Sheet…
Requirement 1. Determine the present value of 10-year bonds payable with face value of $93,000 and stated interest rate of 12%, paid semiannually. The market rate of interest is 12% at issuance. (Round intermediary calculations and final answer to the nearest whole dollar.)
1.
Determine the present value of 10-year bonds payable with face value of $93,000 and stated interest rate of 12%,paid semiannually. The market rate of interest is 12%at issuance.
2.
Same bonds payable as in Requirement 1, but the market interest rate is
16%.
3.
Same bonds payable as in Requirement 1, but the market interest rate is
8%.
Chapter 14 Solutions
Bundle: Financial & Managerial Accounting, 14th + Working Papers for Warren/Reeve/Duchac's Corporate Financial Accounting, 14th + Working Papers, ... & Managerial Accounting, 14th + CengageNOWv2,
Ch. 14 - Prob. 1DQCh. 14 - What is the advantage of using comparative...Ch. 14 - A companys current year net income (after income...Ch. 14 - Prob. 4DQCh. 14 - Prob. 5DQCh. 14 - Prob. 6DQCh. 14 - Prob. 7DQCh. 14 - Prob. 8DQCh. 14 - Prob. 9DQCh. 14 - Prob. 10DQ
Ch. 14 - Prob. 14.1BECh. 14 - Vertical analysis Income statement information for...Ch. 14 - Prob. 14.3BECh. 14 - Accounts receivable analysis A company reports the...Ch. 14 - Inventory analysis A company reports the...Ch. 14 - Long-term solvency analysis The following...Ch. 14 - Times interest earned A company reports the...Ch. 14 - Asset turnover A company reports the following:...Ch. 14 - Prob. 14.9BECh. 14 - Common stockholders' profitability analysis A...Ch. 14 - Earnings per share and price-earnings ratio A...Ch. 14 - Vertical analysis of income statement Revenue and...Ch. 14 - Vertical analysis of income statement The...Ch. 14 - Common-sized income statement Revenue and expense...Ch. 14 - Vertical analysis of balance sheet Balance shed...Ch. 14 - Horizontal analysis of the income statement Income...Ch. 14 - Current position analysis The following data were...Ch. 14 - Prob. 14.7EXCh. 14 - Prob. 14.8EXCh. 14 - Prob. 14.9EXCh. 14 - Prob. 14.10EXCh. 14 - Inventory analysis The following data were...Ch. 14 - Prob. 14.12EXCh. 14 - Ratio of liabilities to stockholders' equity and...Ch. 14 - Prob. 14.14EXCh. 14 - Prob. 14.15EXCh. 14 - Prob. 14.16EXCh. 14 - Profitability ratios The following selected data...Ch. 14 - Profitability ratios Ralph Lauren Corporation...Ch. 14 - Six measures of solvency or profitability The...Ch. 14 - Five measures of solvency or profitability The...Ch. 14 - Prob. 14.21EXCh. 14 - Prob. 14.22EXCh. 14 - Prob. 14.23EXCh. 14 - Prob. 14.24EXCh. 14 - Prob. 14.25EXCh. 14 - Comprehensive Income Anson Industries, Inc....Ch. 14 - Horizontal analysis of income statement For 20V2,...Ch. 14 - Prob. 14.2APRCh. 14 - Prob. 14.3APRCh. 14 - Measures of liquidity, solvency, and profitability...Ch. 14 - Prob. 14.5APRCh. 14 - Horizontal analysis of income statement For 20Y2,...Ch. 14 - Prob. 14.2BPRCh. 14 - Effect of transactions on current position...Ch. 14 - Measures of liquidity, solvency and profitability...Ch. 14 - Prob. 14.5BPRCh. 14 - Financial Statement Analysis The financial...Ch. 14 - Continuing Company AnalysisAmazon, Best Buy, and...Ch. 14 - Prob. 2ADMCh. 14 - Prob. 3ADMCh. 14 - Prob. 14.1TIFCh. 14 - Prob. 14.3TIF
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- The bond indenture for the 10-year, 9% debenture bonds issued January 2, 20Y5, required working capital of $100,000, a current ratio of 1.5, and a quick ratio of 1.0 at the end of each calendar year until the bonds mature. At December 31, 20Y6, the three measures were computed as follows: 1. Current assets: Cash $102,000 Temporary investments 48,000 Accounts and notes receivable (net) 120,000 Merchandise inventory 36,000 Prepaid expenses 24,000 Intangible assets 124,800 Property, plant, and equipment 55,200 Total current assets (net) $510,000 Current liabilities: Accounts and short-term notes payable $96,000 Accrued liabilities 204,000 Total current liabilities 300,000 Working capital $210,000 2. Current ratio 1.7 $510,000 ÷ $300,000 3. Quick ratio 1.2 $115,200 ÷ $96,000 a. Find the errors in the determination of the…arrow_forwardThe bond indenture for the 10-year, 9% debenture bonds issued January 2, 20Y5, required working capital of $100,000, a current ratio of 1.5, and a quick ratio of 1.0 at the end of each calendar year until the bonds mature. At December 31, 20Y6, the three measures were computed as follows: 1. Current assets: Cash $99,000 Temporary investments 48,000 Accounts and notes receivable (net) 123,000 Inventories 36,000 Prepaid expenses 24,000 Intangible assets 115,200 Property, plant, and equipment 64,800 Total current assets (net) $510,000 Current liabilities: Accounts and short-term notes payable $96,000 Accrued liabilities 204,000 Total current liabilities (300,000) Working capital $210,000 2. Current ratio 1.7 $510,000 ÷ $300,000 3. Quick ratio 1.3 $124,800 ÷ $96,000 a. Find the errors in the determination of the three…arrow_forwarda. On January 1, 20X1, your firm issues a $15,000, 4-year, 5% bond with interest payable annually for $13,056. At the time of the issuance, market rates are 9%. Journalize the issuance of the bond. DATE Debit Credit XIX b. Journalize the first annual interest payment on December 31, 20X1. DATE Debit Credit XIX c. Journalize the amortization of the premium/discount on December 31, 20X1. (If necessary, round to the nearest dollar.) DATE Debit Credit XIX d. On January 1, 20X2, the bonds are called at 99. Journalize this transaction. DATE Debit Credit XIXarrow_forward
- Given the following data: Bonds payable, maturing in 10 years = $8,000,000 Contract interest rate = 5% Market ( effective) interest rate = 6% Journalize the entry for interest expense and any related amortization on December 31 of the first year using the effective interest rate method. Assume interest is paid annually on January 1. The bonds were issued on January 1 for $7,411,233. Round your answers to nearest dollar. If an amount box does not require an entry, leave it blank.arrow_forwardComplete the below table to calculate the price of a $1.9 million bond issue under each of the following independent assumptions (EV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1): 1. Maturity 13 years, interest paid annually, stated rate 9%, effective (market) rate 12% 2. Maturity 9 years, interest paid semiannually, stated rate 9%, effective (market) rate 12%. 3. Maturity 7 years, interest paid semiannually, stated rate 11%, effective (market) rate 12%. 4. Maturity 15 years, interest paid semiannually, stated rate 11%, effective (market) rate 12%. 5. Maturity 10 years, interest paid semiannually, stated rate 10%, effective (market) rate 10%. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 5 Maturity 13 years, interest paid annually, stated rate 9%, effective (market) rate 12%. (Round your answers to the nearest whole dollar.) Price of bonds $ 2,170,005 Required 4arrow_forward1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 2a. Journalize the entry to record the first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the straight-line method.Compute the price of $42,601,480 received for the bonds by using the present value tablesarrow_forward
- 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.arrow_forwardPresent entries to record the selected transactions described below: a. Issued $2,750,000 of 10-year, 8% bonds at 97. If an amount box does not require an entry, leave it blank. b. Amortized bond discount for a full year, using the straight-line method. If an amount box does not require an entry, leave it blank. c. Called bonds at 98. Assume the bonds were carried at $2,692,250 at the time of the redemption. If an amount box does not require an entry, leave it blank.arrow_forwardComplete the below table to calculate the price of a $1.5 million bond issue under each of the following independent assumptions (EV of $1, PV of $1, EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) 1. Maturity 15 years, interest paid annually, stated rate 8%, effective (market) rate 10% 2. Maturity 15 years, interest paid semiannually, stated rate 8%, effective (market) rate 10% 3. Maturity 5 years, interest paid semiannually, stated rate 10%, effective (market) rate 8% 4. Maturity 10 years, interest paid semiannually, stated rate 10%, effective (market) rate 8%. 5. Maturity 10 years, interest paid semiannually, stated rate 10%, effective (market) rate 10%. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required S Maturity 15 years, interest paid annually, stated rate 8%, effective (market) rate 10%. (Round your answers to the nearest whole dollar.) Price of bonds Required 2 > Prev 1 of 5 Next > DIN PRO 2:09 Parrow_forward
- a. on january 1, 20x1, your firm issues a $10,000, 5-year, 10% bond with interest payable annually for $10,389. at the time of the issuance, market rates are 9%. journalize the issuance of the bond. debit credit date xix b. journalize the first annual interest payment on december 31, 20x1. debit credit date xix c. journalize the amortization of the premium/discount on december 31, 20x1. (if necessary, round to the nearest dollar.) date debit credit xix d. on january 1, 20x2, the bonds are called at 99. journalize this transaction. debit credit date xixarrow_forwardComplete the below table to calculate the price of a $1.0 million bond issue under each of the following independent assumptions (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1):1. Maturity 12 years, interest paid annually, stated rate 10%, effective (market) rate 12%.2. Maturity 9 years, interest paid semiannually, stated rate 10%, effective (market) rate 12%.3. Maturity 8 years, interest paid semiannually, stated rate 12%, effective (market) rate 10%.4. Maturity 10 years, interest paid semiannually, stated rate 12%, effective (market) rate 10%.5. Maturity 15 years, interest paid semiannually, stated rate 12%, effective (market) rate 12%.arrow_forwardHartford Research issues bonds dated January 1 that pay interest semiannually on June 30 and December 31. The bonds have a $31,000 par value and an annual contract rate of 12%, and they mature in 10 years. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided. Round all table values to 4 decimal places, and use the rounded table values in calculations.) Required: Consider each separate situation. 1. The market rate at the date of issuance is 10%. (a) Complete the below table to determine the bonds' issue price on January 1. (b) Prepare the journal entry to record their issuance. 2. The market rate at the date of issuance is 12%. (a) Complete the below table to determine the bonds' issue price on January 1. (b) Prepare the journal entry to record their issuance. 3. The market rate at the date of issuance is 14%. (a) Complete the below table to determine the bonds' issue price on January 1. (b) Prepare the journal entry to record their…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337912020/9781337912020_smallCoverImage.jpg)
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
BIG Problem with Bond Investing Today!!!; Author: Learn to Invest - Investors Grow;https://www.youtube.com/watch?v=1ScT15of0Vo;License: Standard Youtube License