Financial Accounting-w/pier 1+cd-pkg.
3rd Edition
ISBN: 9780131638051
Author: REIMERS
Publisher: PEARSON
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Chapter 7, Problem 39EA
To determine
Prepare an amortization schedule for the life of the bonds.
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On January 1, 2018, Reese Incorporated issued bonds with a face value of $140,000, a stated rate of interest of 8 percent, and a five-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 7 percent at the time the bonds were issued. The bonds sold for $145,740. Reese used the effective interest rate method to amortize bond premium.
Prepare an amortization table.
What item(s) in the table would appear on the 2020 balance sheet?
What item(s) in the table would appear on the 2020 income statement?
What item(s) and amount in the table would appear on the 2020 statement of cash flows (Direct Method) and under what section the bond liability appear?
cash payment
interest expense
discount amortization
carrying value
jan 1 2018
145740
dec 31 2018
11200
10202
998
144742
dec 31 2019
dec 31 2020
dec 31 2021
dec 31 2022
totals
56000
50260
5740
Sheffield Company issued $400,000, 12%, 10-year bonds on January 1, 2022, for $423,557. This price resulted in an effective-interest
rate of 11% on the bonds. Interest is payable annually on January 1. Sheffield uses the effective-interest method to amortize bond
premium or discount.
(a)
Your answer is correct.
Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is
entered. Do not indent manually.)
(b)
Date
Jan. 1,
2022
Account Titles and Explanation
Cash
Premium on Bonds Payable
eTextbook and Media
Date
Bonds Payable
List of Accounts
Dec. 31,
2022
Your answer is partially correct.
Account Titles and Explanation
Interest Expense
Premium on Bonds Payable
Debit
Prepare the journal entry to record the accrual of interest and the premium amortization on December 31, 2022. (Round answers
to O decimal places, e.g. 15,250. Credit account titles are automatically indented when amount is entered. Do not indent manually.)…
Hasley Company issued $800,000, 11%, 10-year bonds on December 31, 2018, for $730,000.
Interest is payable annually on December 31.The Company uses the straight-line method to
amortize bond premium or discount.
Prepare the journal entry to record the issuance of the bonds. (Credit account titles are
automatically indented when amount is entered. Do not indent manually.)
Prepare the journal entry to record the payment of interest and the discount amortization on
December 31, 2019. (Credit account titles are automatically indented when amount is entered. Do
not indent manually.)
Prepare the journal entry to record the redemption of the bonds at maturity, assuming interest for the
last interest period has been paid and recorded. (Credit account titles are automatically indented
when amount is entered. Do not indent manually.)
Chapter 7 Solutions
Financial Accounting-w/pier 1+cd-pkg.
Ch. 7 - Prob. 1YTCh. 7 - Prob. 2YTCh. 7 - Prob. 3YTCh. 7 - If a 1,000 bond is selling for 95.5, how much cash...Ch. 7 - Prob. 5YTCh. 7 - Prob. 6YTCh. 7 - Prob. 7YTCh. 7 - Prob. 1QCh. 7 - Prob. 2QCh. 7 - What is a mortgage?
Ch. 7 - Prob. 4QCh. 7 - Prob. 5QCh. 7 - Prob. 6QCh. 7 - Prob. 7QCh. 7 - Prob. 8QCh. 7 - Prob. 9QCh. 7 - Prob. 10QCh. 7 - Prob. 11QCh. 7 - Prob. 12QCh. 7 - Prob. 13QCh. 7 - Prob. 1MCQCh. 7 - All of the following are current liabilities...Ch. 7 - Prob. 3MCQCh. 7 - Prob. 4MCQCh. 7 - Prob. 5MCQCh. 7 - Prob. 6MCQCh. 7 - Prob. 7MCQCh. 7 - Prob. 8MCQCh. 7 - A 1,000 bond with a stated rate of 8% is issued...Ch. 7 - Prob. 10MCQCh. 7 - Prob. 1SEACh. 7 - Prob. 2SEACh. 7 - Prob. 3SEACh. 7 - Prob. 4SEACh. 7 - Account for mortgages. (LO 3). Nunez Company has...Ch. 7 - Prob. 6SEACh. 7 - Account for bonds. (LO 4). If a 1,000 bound is...Ch. 7 - Prob. 8SEACh. 7 - Prob. 9SEACh. 7 - Prob. 10SEACh. 7 - Prob. 11SEACh. 7 - Prob. 12SEBCh. 7 - Prob. 13SEBCh. 7 - Prob. 14SEBCh. 7 - Prob. 15SEBCh. 7 - Account for mortgages. (LO 3). Curtain Company...Ch. 7 - Prob. 17SEBCh. 7 - Prob. 18SEBCh. 7 - Prob. 19SEBCh. 7 - Prob. 20SEBCh. 7 - Prob. 21SEBCh. 7 - Prob. 22SEBCh. 7 - Prob. 23EACh. 7 - Prob. 24EACh. 7 - Prob. 25EACh. 7 - Prob. 26EACh. 7 - Account for long-term liabilities. (LO 3, 5)....Ch. 7 - Prob. 28EACh. 7 - Prob. 29EACh. 7 - Prob. 30EACh. 7 - Prob. 31EACh. 7 - Prob. 32EACh. 7 - Prob. 33EACh. 7 - Prob. 34EACh. 7 - Prob. 35EACh. 7 - Prob. 36EACh. 7 - Prob. 37EACh. 7 - Prob. 38EACh. 7 - Prob. 39EACh. 7 - Prob. 40EACh. 7 - Prob. 41EACh. 7 - Prob. 42EBCh. 7 - Prob. 43EBCh. 7 - Prob. 44EBCh. 7 - Prob. 45EBCh. 7 - Prob. 46EBCh. 7 - Prob. 47EBCh. 7 - Prob. 48EBCh. 7 - Account for long-term liabilities. (LO 3, 5). On...Ch. 7 - Prob. 50EBCh. 7 - Prob. 51EBCh. 7 - Prob. 52EBCh. 7 - Prob. 53EBCh. 7 - Prob. 54EBCh. 7 - Prob. 55EBCh. 7 - Prob. 56EBCh. 7 - Prob. 57EBCh. 7 - Prob. 58EBCh. 7 - Prepare an amortization schedule for a bond issued...Ch. 7 - Prob. 60EBCh. 7 - Account for current liabilities. (LO 1, 5). On...Ch. 7 - Prob. 62PACh. 7 - Prob. 63PACh. 7 - Prob. 64PACh. 7 - Prob. 65PACh. 7 - Prob. 66PACh. 7 - Prob. 67PBCh. 7 - Prob. 68PBCh. 7 - Prob. 69PBCh. 7 - Prob. 70PBCh. 7 - Prob. 71PBCh. 7 - Prob. 72PBCh. 7 - Prob. 1FSACh. 7 - Prob. 2FSACh. 7 - Prob. 3FSACh. 7 - Prob. 1IECh. 7 - Prob. 2IECh. 7 - Do owners or creditors have more claims on the...Ch. 7 - Prob. 4IE
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