Financial Accounting-w/cd-package
3rd Edition
ISBN: 9780131060876
Author: REIMERS
Publisher: PEARSON
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Chapter 7A, Problem 6PB
1.
To determine
Calculate the proceeds for the bond issue and the manner it would issuing the bonds affect the financial statements for G’s Gadgets.
2.
To determine
Prepare an amortization schedule for the first three years of the life of the bonds.
3.
To determine
Identify the amount of interest expenses related to issued bonds that G’s Gadgets would be reported on its income statement for the year ended December 31, 2015.
4.
To determine
Calculate the interest expense using the
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On January 1, 2020 Omsk Corporation issued
Bonds pay interest each July 1 and January 1.
150,000 of 5 % bonds, due in
17 years
12 % market rate of interest.
Assume
Requirements (Round to 0 decimals, Rounding errors do not matter):
1. Compute market price of bonds. Provide detailed computation. Use functions in Excel
2. What is an amount of discount /premium? Indicate, what it is (discount or premium). Computation.
3. Prepare amortization schedule for first 5 years. Use formulas in Excel.
4. Prepare journal entry to record bond issue.
5. Prepare journal entry on July 1, 2020.
6. Prepare journal entry on December 31, 2020.
7. Prepare journal entry on January 1, 2021
Some of the questions are in the screenshots to make it easier!
The following section is taken from Ohlman Corp.’s balance sheet at December 31, 2018.
Current liabilities
Interest payable
$ 112,000
Long-term liabilities
Bonds payable, 7%, due January 1, 2021
1,600,000
Bond interest is payable annually on January 1. The bonds are callable on any interest date.(a)Journalize the payment of the bond interest on January 1, 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually.
Use the following information for the following 3 questions: (round all parts to the nearest dollar)
Porter, Inc. issued $400,000, 10-year, 10% bonds for $354,200 on January 1, 2022; the bonds pay interest semiannually on June 30 and
December 31. On the date of issuance, the interest rate in the bond market is 12%. Round all parts of the problem to the nearest dollar.
What will Porter record as interest expense for the year ending December 31, 2022?
$42,579
$40,000
$21,252
$21,327
$20,000
Chapter 7A Solutions
Financial Accounting-w/cd-package
Ch. 7A - Prob. 1YTCh. 7A - Suppose Action Company issues a 1,000, 10-year,...Ch. 7A - Suppose HPS Company issues a 1,000 face value,...Ch. 7A - Present value. (LO 8). Suppose you want to have...Ch. 7A - Present value. (LO 8). Able Company has offered to...Ch. 7A - Calculate payments using time value of money...Ch. 7A - Calculate payments using time value of money...Ch. 7A - Prob. 5PACh. 7A - Prob. 6PB
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