Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period.
Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system
Rules of Debit and Credit:
Following rules are followed for debiting and crediting different accounts while they occur in business transactions:
- Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
- Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.
To Journalize: The interest at the effective rate. Also report the amount recorded by Company A, as on December 31, 2018, in the statement of cash flow if it uses indirect method.
Want to see the full answer?
Check out a sample textbook solutionChapter 21 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/CONNECT
- #205 The amortization of bond premium on long-term debt should be presented in a statement of cash flows (using the indirect method for operating activities) as a(n) Question 205 options: deduction from net income. investing activity. addition to net income. financing activity.arrow_forward48 Which of the following is true with regards to the accrued interest on bonds payable that are sold between interest dates? Group of answer choices The accrued interest is computed using the effective rate The accrued interest is extra income to the buyer and treated as bond issue cost of the buyer The accrued interest is added to the issue price of the bond to determine the total cash proceeds from bond issuance The accrued interest will be paid to the seller when the bonds maturearrow_forwardQUESTION 28 Bond (cash) interest payments can be calculated as follows: Interest Payment = Principal × Market Rate × Time True Falsearrow_forward
- q9. Bond premium should be reported in the statement of financial positionA. along with other premium accounts such as those resulting from stock transactions.B. as deferred credit.C. as a direct addition to the face amount of the bonds.D. as a deduction from the face of the bonds.arrow_forwardQuestion 47: Match each financial function to its best description. PMT PV Table FV Calculates the value of a bond at a later date Calculates the required payment for a bond Calculates the current value of a bondarrow_forwardCh 07- Assignment - Bonds and Their Valuation Fixed-income securities consist of debt instruments and preferred stock. Bonds are debt securitie interest rate and principal at a future date. Which of the following types of bonds have the least default risk? O Treasury bonds O Corporate bonds O Municipal bonds Based on the information given in the following statement, answer the questions that follow:arrow_forward
- 1. How much is the amortization of discount for 2021? 2. How much is the carrying value of the bonds payable as of December 31, 2021?arrow_forward1 med chp 14 excel pleae show formulas used to find price of bonds in excelarrow_forward20.1 Evaluate the following statements: S1 The proceeds of a bond with a face amount of P100,000,000 which sells at 102 will be P102,000,000. S2 The proceeds of a bond with a face amount of P100,000,000 which sells at 98 will be P98,000,000. S3 When bonds are issued at a discount, the bonds payable account may be credited for the proceeds from the issue. S4 When bonds are issued at a premium, amortizing the premium using the effective interest method, will increase the amortization. a. Only 1 statement is correct b. All statements are correct c. Only 2 statements are correct d. Only 3 statements are correct e. All statements are incorrectarrow_forward
- Q8 Which of the following bonds carry significant risk that the issuer will not make current or future payments? Multiple Choice junk bonds liquidity rate risk bonds credit quality risk bonds interest rate risk bondsarrow_forwardQuestion 13 (Mandatory) (1 point) Duration is a measure of bond price sensitivity to interest rate changes. True Falsearrow_forwardPart I(1) What does it mean to amortize a bond premium or discount? Why is it necessary? (2) What are the two bond amortization methods mentioned in the book and how are they different? Part IIPlease select ONE of the problems below and record the proper journal entry for recording the issuance of the bond. Hint: You will need to refer to the Present Value Tables.pdf Download Present Value Tables.pdf. Please indicate which scenario you are answering. (a) On January 1, a corporation issued a $1 million, five-year, 10 percent bond that pays interest semiannually. The market interest rate on January 1 was 12 percent. (b) On January 1, a corporation issued a $1 million, five-year, 11 percent bond that pays interest semiannually. The market interest rate on January 1 was 10 percent. Part IIIPlease describe what is meant by “Times Interest Earned.” How is it calculated? Suppose you calculated this ratio for a company for two consecutive years and the results were the following: Year…arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,