Determine cash paid for bond interest
• LO21–3
For each of the four independent situations below, prepare a single
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- E Calculator The entry to record the amortization of a premium on bonds payable on an interest payment date would a debit to Premium on Bonds Payable and a credit to Interest Revenue a debit to Interest Expense and a credit to Premium on Bond Payable a debit to Bonds Payable and a credit to Interest Expense a debit to Interest Expense and Premium on Bonds Payable and a credit to Cash 4:12 PM 12/20/2019arrow_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_forwardCalculator The journal entry a company records for the issuance of bonds when the contract rate and the market rate are the same is to debit Cash and Discount on Bonds Payable, credit Bonds Payable debit Cash, credit Premium on Bonds Payable and Bonds Payable debit Cash, credit Bonds Payable debit Bonds Payable, credit Cash 4:14 PMarrow_forward
- What is the journal entry to record the bond interest payment if you do not have to neither a premium or discount is involved? O Debit Interest Expense; Credit Cash O Debit Cash; Credit Interest Payable O Credit Cash; Debit Interest Expense O Debit Interest Payable; Credit Interest Expensearrow_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_forwardCorrect answer please fastarrow_forward
- Q4arrow_forwardjournal entries I need help with I can not understand (a)Record the bond issue (b)Record the first semiannual interest payment. (c)Record the second semiannual interest payment.arrow_forward#45 A type of short-term loan where the borrower sells its accounts receivables to the lender at a discount to face value is called: a bond. a compensating balance. a letter of credit. an assignment. factoring.arrow_forward
- Plz help this is all the information for this questionarrow_forwardPurse Corporation owns 70 percent of Scarf Company's voting shares. On January 1, 20X3, Scarf sold bonds with a par value of $600,000 at 98. Purse purchased $400,000 par value of the bonds; the remainder was sold to nonaffiliates. The bonds mature in five years and pay an annual interest rate of 8 percent. Interest is paid semiannually on January 1 and July 1. Required: a. What amount of interest expense should be reported in the 20X4 consolidated income statement? (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) Answer is complete but not entirely correct. Interest expense $ 16,800 xarrow_forward#51 When an investor's accounting period ends on a date that does not coincide with an interest receipt date for bonds held as an investment, the investor must Question 51 options: a make an adjusting entry to debit Interest Receivable and to credit Interest Revenue for the amount of interest accrued since the last interest receipt date. b make an adjusting entry to debit Interest Receivable and to credit Interest Revenue for the total amount of interest to be received at the next interest receipt date. c notify the issuer and request that a special payment be made for the appropriate portion of the interest period. d do nothing special and ignore the fact that the accounting period does not coincide with the bond's interest period.arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,