INTERMEDIATE ACCT.(LOOSELEAF)-W/CONNECT
9th Edition
ISBN: 9781260821130
Author: SPICELAND
Publisher: MCG
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Chapter 6, Problem 6.15P
To determine
Present Value:
The value of today’s amount to be paid or received in the future at a compound interest rate is called as present value. The following formula is used to calculate the present value of an amount:
Bonds
Governmental agencies, companies and universities are issuing a type of interest bearing notes payable is called as bond. It is one of the important debt instrument used for raising funds.
To determine: The initial bond liability.
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Problem 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…
Exercise 10-7 (Algo) Straight-Line: Amortization table and bond interest expense LO P2
[The following information applies to the questions displayed below.
Duval Company issues four-year bonds with a $110,000 par value on January 1, 2021, at a price of $105,895. The annual
contract rate is 7%, and interest is paid semiannually on June 30 and December 31,
Exercise 10-7 (Algo) Part 1
1. Prepare a straight-line amortization table for these bonds
Note: Round your answers to the nearest dollar amount.
Semiannual
Period-End
1/01/2021
6/30/2021
12/31/2021
6/30/2022
12/31/2022
6/30/2023
12/31/2023
6/30/2024
12/31/2024
Unamortized
Discount
Carrying
Value
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,…
Chapter 6 Solutions
INTERMEDIATE ACCT.(LOOSELEAF)-W/CONNECT
Ch. 6 - Prob. 6.1QCh. 6 - Explain compound interest.Ch. 6 - Prob. 6.3QCh. 6 - Prob. 6.4QCh. 6 - Prob. 6.5QCh. 6 - Prob. 6.6QCh. 6 - What is an annuity?Ch. 6 - Explain the difference between an ordinary annuity...Ch. 6 - Prob. 6.9QCh. 6 - Prepare a time diagram for the present value of a...
Ch. 6 - Prepare a time diagram for the present value of a...Ch. 6 - What is a deferred annuity?Ch. 6 - Assume that you borrowed 500 from a friend and...Ch. 6 - Compute the required annual payment in Question...Ch. 6 - Explain how the time value of money concept is...Ch. 6 - Prob. 6.1BECh. 6 - Prob. 6.2BECh. 6 - Prob. 6.3BECh. 6 - Present value; single amount LO63 John has an...Ch. 6 - Present value; solving for unknown; single amount ...Ch. 6 - Future value; ordinary annuity LO66 Leslie...Ch. 6 - Future value; annuity due LO66 Refer to the...Ch. 6 - Prob. 6.8BECh. 6 - Prob. 6.9BECh. 6 - Prob. 6.10BECh. 6 - Solve for unknown; annuity LO68 Kingsley Toyota...Ch. 6 - Price of a bond LO69 On December 31, 2018,...Ch. 6 - Lease payment LO69 On September 30, 2018,...Ch. 6 - Prob. 6.1ECh. 6 - Future value; single amounts LO62 Determine the...Ch. 6 - Prob. 6.3ECh. 6 - Prob. 6.4ECh. 6 - Prob. 6.5ECh. 6 - Solving for unknowns; single amounts LO64 For...Ch. 6 - Future value; annuities LO66 Wiseman Video plans...Ch. 6 - Prob. 6.8ECh. 6 - Solving for unknowns; annuities LO68 For each of...Ch. 6 - Prob. 6.10ECh. 6 - Prob. 6.11ECh. 6 - Deferred annuities LO67 Required: Calculate the...Ch. 6 - Prob. 6.13ECh. 6 - Prob. 6.14ECh. 6 - Solving for unknown annuity amount LO68 Required:...Ch. 6 - Prob. 6.16ECh. 6 - Price of a bond LO69 On September 30, 2018, the...Ch. 6 - Price of a bond; interest expense LO69 On June...Ch. 6 - Lease payments LO69 On June 30, 2018,...Ch. 6 - Lease payments; solve for unknown interest rate ...Ch. 6 - Prob. 6.21ECh. 6 - Analysis of alternatives LO63, LO67 Esquire...Ch. 6 - Prob. 6.2PCh. 6 - Analysis of alternatives LO63, LO67 Harding...Ch. 6 - Investment analysis LO63, LO67 John Wiggins is...Ch. 6 - Prob. 6.5PCh. 6 - Prob. 6.6PCh. 6 - Prob. 6.7PCh. 6 - Deferred annuities LO67 On January 1, 2018, the...Ch. 6 - Prob. 6.9PCh. 6 - Noninterest-bearing note; annuity and lump-sum...Ch. 6 - Solving for unknown lease payment LO68, LO69...Ch. 6 - Solving for unknown lease payment; compounding...Ch. 6 - Lease v s. buy alternatives LO63, LO67, LO69...Ch. 6 - Prob. 6.14PCh. 6 - Prob. 6.15PCh. 6 - Prob. 6.1BYPCh. 6 - Prob. 6.2BYPCh. 6 - Prob. 6.3BYPCh. 6 - Prob. 6.4BYPCh. 6 - Judgment Case 65 Replacement decision LO63, LO67...Ch. 6 - Prob. 6.6BYPCh. 6 - Prob. 6.7BYP
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