FUND.ACCT.PRIN.(LOOSELEAF)-W/ACCESS
FUND.ACCT.PRIN.(LOOSELEAF)-W/ACCESS
24th Edition
ISBN: 9781260260724
Author: Wild
Publisher: MCG
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Chapter 14, Problem 4BTN
To determine

Concept Introduction:

Bonds:

Bonds are debt instruments issued by the borrower company to its lenders. Bonds are issued at a specified rate of interest and for a specified time period. The bondholders get a fixed rate of interest on the bonds and repayment of the bonds at the maturity date.

Amortization of Bonds premium or discount:

Bonds may be issued at a premium or discount. The premium or discount on issue of binds is amortized or the life of bonds using the straight line or effective rate methods.

Requirement-1:

To Prepare:

The blank table for the amortization of the bond's premium using the effective interest amortization method

Expert Solution
Check Mark

Answer to Problem 4BTN

The blank table for the amortization of the bond's premium using the effective interest amortization method is as follows:

    Amortization Table
    Using the effective interest rate method
    S.No.Semiannual Interest Period-EndCash Interest Paid Bond Interest Expense Premium Amortized Unamortized Premium Carrying Value

Explanation of Solution

The blank table for the amortization of the bond's premium using the effective interest amortization method is as follows:

    Amortization Table
    Using the effective interest rate method
    S.No.Semiannual Interest Period-EndCash Interest Paid Bond Interest Expense Premium Amortized Unamortized Premium Carrying Value
To determine

Concept Introduction:

Bonds:

Bonds are debt instruments issued by the borrower company to its lenders. Bonds are issued at a specified rate of interest and for a specified time period. The bondholders get a fixed rate of interest on the bonds and repayment of the bonds at the maturity date.

Amortization of Bonds premium or discount:

Bonds may be issued at a premium or discount. The premium or discount on issue of binds is amortized or the life of bonds using the straight line or effective rate methods.

Requirement-2:

To Prepare:

The amortization table

Expert Solution
Check Mark

Answer to Problem 4BTN

The amortization table is as follows:

    Amortization Table
    Using the effective interest rate method
    S.No.Semiannual Interest Period-EndCash Interest Paid Bond Interest Expense Premium Amortized Unamortized Premium Carrying Value
    0Jan. 1, 2019 $ - $ - $4,100 $ 104,100
    1Jun. 30, 2019 $ 4,500 $ 4,164 $336 $3,764 $ 103,764
    2Dec. 31, 2019 $ 4,500 $ 4,151 $349 $3,415 $ 103,415
    3Jun. 30, 2020 $ 4,500 $ 4,137 $363 $3,051 $ 103,051
    4Dec. 31, 2020 $ 4,500 $ 4,122 $378 $2,673 $ 102,673
    5Jun. 30, 2021 $ 4,500 $ 4,107 $393 $2,280 $ 102,280
    6Dec. 31, 2021 $ 4,500 $ 4,091 $409 $1,871 $ 101,871
    7Jun. 30, 2022 $ 4,500 $ 4,075 $425 $1,446 $ 101,446
    8Dec. 31, 2022 $ 4,500 $ 4,058 $442 $1,004 $ 101,004
    9Jun. 30, 2023 $ 4,500 $ 4,040 $460 $ 544 $ 100,544
    10Dec. 31, 2023 $ 4,500 $ 4,022 $478 $ 66 $ 100,066

Explanation of Solution

The amortization table calculations are explained as follows:

    Amortization Table
    Using the effective interest rate method
    S.No.Semiannual Interest Period-EndCash Interest Paid Bond Interest Expense Premium Amortized Unamortized Premium Carrying Value
    A=100000*9%/2 B =Prior E *8%/2 C =A-B D =Prior D -C E = 100000+D
    0Jan. 1, 2019 $ - $ - $4,100 $ 104,100
    1Jun. 30, 2019 $ 4,500 $ 4,164 $336 $3,764 $ 103,764
    2Dec. 31, 2019 $ 4,500 $ 4,151 $349 $3,415 $ 103,415
    3Jun. 30, 2020 $ 4,500 $ 4,137 $363 $3,051 $ 103,051
    4Dec. 31, 2020 $ 4,500 $ 4,122 $378 $2,673 $ 102,673
    5Jun. 30, 2021 $ 4,500 $ 4,107 $393 $2,280 $ 102,280
    6Dec. 31, 2021 $ 4,500 $ 4,091 $409 $1,871 $ 101,871
    7Jun. 30, 2022 $ 4,500 $ 4,075 $425 $1,446 $ 101,446
    8Dec. 31, 2022 $ 4,500 $ 4,058 $442 $1,004 $ 101,004
    9Jun. 30, 2023 $ 4,500 $ 4,040 $460 $ 544 $ 100,544
    10Dec. 31, 2023 $ 4,500 $ 4,022 $478 $ 66 $ 100,066
    Total $ 45,000 $ 40,966 $ 4,034
To determine

Concept Introduction:

Bonds:

Bonds are debt instruments issued by the borrower company to its lenders. Bonds are issued at a specified rate of interest and for a specified time period. The bondholders get a fixed rate of interest on the bonds and repayment of the bonds at the maturity date.

Amortization of Bonds premium or discount:

Bonds may be issued at a premium or discount. The premium or discount on issue of binds is amortized or the life of bonds using the straight line or effective rate methods.

Requirement-3:

To identify:

Each Column of the amortization table

Expert Solution
Check Mark

Answer to Problem 4BTN

Each Column of the amortization table is as follows:

    Amortization Table
    Using the effective interest rate method
    S.No.Semiannual Interest Period-EndCash Interest Paid Bond Interest Expense Premium Amortized Unamortized Premium Carrying Value

Explanation of Solution

Each Column of the amortization table is explained as follows:

    Amortization Table
    Using the effective interest rate method
    S.No.Semiannual Interest Period-EndCash Interest Paid Bond Interest Expense Premium Amortized Unamortized Premium Carrying Value
    A=100000*9%/2 B =Prior E *8%/2 C =A-B D =Prior D -C E = 100000+D
To determine

Concept Introduction:

Bonds:

Bonds are debt instruments issued by the borrower company to its lenders. Bonds are issued at a specified rate of interest and for a specified time period. The bondholders get a fixed rate of interest on the bonds and repayment of the bonds at the maturity date.

Amortization of Bonds premium or discount:

Bonds may be issued at a premium or discount. The premium or discount on issue of binds is amortized or the life of bonds using the straight line or effective rate methods.

Requirement-4:

To identify:

Total Bond interest expense if bonds are not retired before the maturity

Expert Solution
Check Mark

Answer to Problem 4BTN

Total Bond interest expense if bonds are not retired before the maturity shall be $40,966

Explanation of Solution

The Total bond interest expense is calculated as follows:

    Amortization Table
    Using the effective interest rate method
    S.No.Semiannual Interest Period-EndCash Interest Paid Bond Interest Expense Premium Amortized Unamortized Premium Carrying Value
    A=100000*9%/2 B =Prior E *8%/2 C =A-B D =Prior D -C E = 100000+D
    0Jan. 1, 2019 $ - $ - $4,100 $ 104,100
    1Jun. 30, 2019 $ 4,500 $ 4,164 $336 $3,764 $ 103,764
    2Dec. 31, 2019 $ 4,500 $ 4,151 $349 $3,415 $ 103,415
    3Jun. 30, 2020 $ 4,500 $ 4,137 $363 $3,051 $ 103,051
    4Dec. 31, 2020 $ 4,500 $ 4,122 $378 $2,673 $ 102,673
    5Jun. 30, 2021 $ 4,500 $ 4,107 $393 $2,280 $ 102,280
    6Dec. 31, 2021 $ 4,500 $ 4,091 $409 $1,871 $ 101,871
    7Jun. 30, 2022 $ 4,500 $ 4,075 $425 $1,446 $ 101,446
    8Dec. 31, 2022 $ 4,500 $ 4,058 $442 $1,004 $ 101,004
    9Jun. 30, 2023 $ 4,500 $ 4,040 $460 $ 544 $ 100,544
    10Dec. 31, 2023 $ 4,500 $ 4,022 $478 $ 66 $ 100,066
    Total $ 45,000 $ 40,966 $ 4,034
To determine

Concept Introduction:

Bonds:

Bonds are debt instruments issued by the borrower company to its lenders. Bonds are issued at a specified rate of interest and for a specified time period. The bondholders get a fixed rate of interest on the bonds and repayment of the bonds at the maturity date.

Amortization of Bonds premium or discount:

Bonds may be issued at a premium or discount. The premium or discount on issue of binds is amortized or the life of bonds using the straight line or effective rate methods.

Requirement-5:

To discuss:

The comparison between the amortization table for premium and for discount

Expert Solution
Check Mark

Answer to Problem 4BTN

The comparison between the amortization table for premium and for discount is shown as below:

    Amortization Table- Premium
    Using the effective interest rate method
    S.No.Semiannual Interest Period-End Cash Interest Paid Bond Interest Expense Premium Amortized Unamortized Premium Carrying Value
    Amortization Table-Discount
    Using the effective interest rate method
    S.No.Semiannual Interest Period-End Cash Interest Paid Bond Interest Expense Discount Amortized Unamortized Discount Carrying Value

Explanation of Solution

The comparison between the amortization table for premium and for discount is shown as below:

    Amortization Table- Premium
    Using the effective interest rate method
    S.No.Semiannual Interest Period-End Cash Interest Paid Bond Interest Expense Premium Amortized Unamortized Premium Carrying Value
    Amortization Table-Discount
    Using the effective interest rate method
    S.No.Semiannual Interest Period-End Cash Interest Paid Bond Interest Expense Discount Amortized Unamortized Discount Carrying Value

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Chapter 14 Solutions

FUND.ACCT.PRIN.(LOOSELEAF)-W/ACCESS

Ch. 14 - Prob. 11DQCh. 14 - Prob. 12DQCh. 14 - Prob. 13DQCh. 14 - Prob. 14DQCh. 14 - Prob. 15DQCh. 14 - Refer to the statements for Google in Appendix A....Ch. 14 - Prob. 17DQCh. 14 - Prob. 18DQCh. 14 - Prob. 19DQCh. 14 - Prob. 1QSCh. 14 - QS 14-2 Issuing bonds at par P1 Dunphy Company...Ch. 14 - QS 14-3 Issuing bonds at par P1 Madrid Company...Ch. 14 - QS 14-4 Recording bond issuance and interest P1 P2...Ch. 14 - QS 14-5 Journalizing discount bond issuance...Ch. 14 - Prob. 6QSCh. 14 - OS 14-6 Straight line: Bond computations...Ch. 14 - QS 14-8 Recording bond issuance and discount...Ch. 14 - QS 14-9 Straight-Line: Premium bond computations...Ch. 14 - On July 1. Aloha Co. s a call option that...Ch. 14 - Prob. 11QSCh. 14 - Prob. 12QSCh. 14 - Prob. 13QSCh. 14 - Prob. 14QSCh. 14 - Prob. 15QSCh. 14 - Prob. 16QSCh. 14 - Prob. 17QSCh. 14 - Prob. 18QSCh. 14 - QS 14–17C Recording operating leases C3 Jin Li,...Ch. 14 - Prob. 20QSCh. 14 - Prob. 1ECh. 14 - Exercise 14-2 Recording bond issuance at par....Ch. 14 - Exercise 14-3 Recording bond issuance and...Ch. 14 - Prob. 4ECh. 14 - Prob. 5ECh. 14 - Prob. 6ECh. 14 - Prob. 7ECh. 14 - Prob. 8ECh. 14 - Prob. 9ECh. 14 - Exercise 14-10 Bond retirement by call option...Ch. 14 - Exercise 14-11 Straight-Line: Bond computations,...Ch. 14 - Installment note amortization table C1 On January...Ch. 14 - Prob. 13ECh. 14 - Prob. 14ECh. 14 - Prob. 15ECh. 14 - Prob. 16ECh. 14 - Prob. 17ECh. 14 - Prob. 18ECh. 14 - Exercise 14-19u Effective Interest: Amortization...Ch. 14 - Prob. 20ECh. 14 - Prob. 21ECh. 14 - Prob. 22ECh. 14 - Prob. 1APSACh. 14 - Prob. 2APSACh. 14 - Prob. 3APSACh. 14 - Prob. 4APSACh. 14 - Prob. 5APSACh. 14 - Prob. 6APSACh. 14 - Prob. 7APSACh. 14 - Prob. 8APSACh. 14 - Prob. 9APSACh. 14 - Problem 14-10AB Effective Interest: Amortization...Ch. 14 - Prob. 11APSACh. 14 - Prob. 12APSACh. 14 - Problem 14-1B Straight-Line: Amortization of bond...Ch. 14 - Prob. 2BPSBCh. 14 - Prob. 3BPSBCh. 14 - Prob. 4BPSBCh. 14 - Prob. 5BPSBCh. 14 - Prob. 6BPSBCh. 14 - Prob. 7BPSBCh. 14 - Prob. 8BPSBCh. 14 - Prob. 9BPSBCh. 14 - Prob. 10BPSBCh. 14 - Prob. 11BPSBCh. 14 - Prob. 12BPSBCh. 14 - Prob. 14SPCh. 14 - Prob. 1AACh. 14 - Prob. 2AACh. 14 - Prob. 3AACh. 14 - Prob. 1BTNCh. 14 - Prob. 2BTNCh. 14 - Prob. 3BTNCh. 14 - Prob. 4BTNCh. 14 - Prob. 5BTNCh. 14 - Prob. 6BTN
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