Concept Introduction:
Basic Earnings per share:
The Basic Earnings per share is the amount of net income earned by each common share outstanding. The Earnings per share calculated by with help of following formula:
Bonds:
Bonds are debt instruments issued by the borrower company to its lenders. Bonds are issued at a specified rate of interest and for a specified time period. The bondholders get a fixed rate of interest on the bonds and repayment of the bonds at the maturity date. Bonds may be issued at a premium or discount.
To Indicate:
The effect of the interest payment on net assets and EPS
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Survey of Accounting (Accounting I)
- BONDS ISSUED AT FACE VALUE Ito Co. issued the following bonds REQUIRED Prepare journal entries for: (a) Issuance of the bonds. (b) Interest payment on the bonds on September 30, 20-1. (c) Year-end adjustment on the bonds for 20-1. (d) Reversing entry for the beginning of 20-2. (e) Interest payments on the bonds for 20-2 (March 31 and September 30). (f) Redemption at maturity.arrow_forwardBONDS ISSUED AT FACE VALUE Ramona Arroyo Co. issued the following bonds: REQUIRED Prepare journal entries for: (a) Issuance of the bonds. (b) Interest payment on the bonds on September 30, 20-1. (c) Year-end adjustment on the bonds for 20-1. (d) Reversing entry for the beginning of 20-2. (e) Interest payments on the bonds for 20-2 (March 31 and September 30). (f) Redemption at maturity.arrow_forwardBONDS ISSUED AT FACE VALUE WITH SINKING FUND Martin Manufacturing issued the following bonds: REQUIRED Prepare journal entries for: (a) Issuance of the bonds. (b) Deposit to sinking fund on June 1. (c) Interest payment on the bonds on September 30, 20-1. (d) Earnings of 2,400 on the sinking fund in 20-1. (e) Year-end adjustment on the bonds for 20-1. (f) Reversing entry for the beginning of 20-2. (g) Interest payment on the bonds on March 31, 20-2. (h) Deposit to sinking fund on June 1, 20-2. (i) Redemption at maturity from the sinking fund. (j) Return of excess cash of 1,050 from the sinking fund to the corporation.arrow_forward
- Majestic Corporation holds an investment in Cromwell bonds that pays interest eachOctober 31. Majestic’s balance sheet at December 31 should reporta. interest expense.b. interest revenue.c. interest payable.d. interest receivable.arrow_forwardThe following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: 20Y1 July 1 Issued $74,000,000 of 20-year, 11% callable bonds dated July 1, 20Y1, at a market (effective) rate of 13%, receiving cash of $63,532,267. Interest is payable semiannually on December 31 and June 30. Dec. 31 Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. 20Y2 June 30 Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. Dec. 31 Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. 20Y3 June 30 Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $9,420,961 after payment of interest and amortization of discount have been recorded. (Record the…arrow_forwardEntries for Bonds Payable, including bond redemption The following transactions were completed by Montague Inc., whose fiscal year is the calendar year: 20Y1 July 1. Issued $55,000,000 of 10-year, 9% callable bonds dated July 1, 20Y1, at a market (effective) rate of 7%, receiving cash of $62,817,040. Interest is payable semiannually on December 31 and June 30. Dec. 31. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment. 20Y2 June 30. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment. Dec. 31. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment. 20Y3 June 30. Recorded the redemption of the bonds, which were called at 103. The balance in the bond premium account is $6,253,632 after payment…arrow_forward
- On September 1, 20x1, an entity issues bonds with face amount of P8,000,000 for P9,105,022, including accrued interest. The bonds are dated January 1, 20x1 and pay annual interest of 11% every December 31. The effective interest rate is 9%. ◦Requirements: ◦A. Compute for the initial carrying amount of the bonds. ◦B. Provide the entry on September 1, 20x1 to record the issuance of the bonds. ◦C. Compute for the interest expense in 20x1.arrow_forwardEntries for bonds payable, including bond redemptionThe following transactions were completed by Montague Inc., whosefiscal year is the calendar year: 20Y1 July 1. Issued $55,000,000 of 10-year, 9% callable bonds dated July 1,20Y1, at a market (effective) rate of 7%, receiving cash of $62,817,040.Interest is payable semiannually on December 31 and June 30. Dec. 31. Paid the semiannual interest on the bonds. The bonddiscount amortization of $390,852 is combined with the semiannualinterest payment. 20Y2 June 30. Paid the semiannual interest on the bonds. The bonddiscount amortization of $390,852 is combined with the semiannualinterest payment. Dec. 31. Paid the semiannual interest on the bonds. The bonddiscount amortization of $390,852 is combined with the semiannualinterest payment. 20Y3June 30. Recorded the redemption of the bonds, which were called at103. The balance in the bond premium account is $6,253,632 afterpayment of interest and amortization of premium have been recorded.…arrow_forward1. Journalize the entries to record the transactions. Round all amounts to the nearest dollar. Refer to the Chart of Accounts for exact wording of account titles. 2. Indicate the amount of the interest expense in (a) 20Y1 and (b) 20Y2. 3. Determine the carrying amount of the bonds as of December 31, 20Y2. (Refer to image, thank you!)arrow_forward
- (E7-39) Bonds Payable: On January 1, 20X7 – Arbor Corporation issued $800,000 of 20-year, 11% bonds for $739,814.81, yielding a market (yield) rate of 12%. Interest is payable semiannually on June 30th and December 31. Confirm the bond issue price. Indicate the financial statement effects using the template for (1) bond issuance, (2) semiannual interest payable and discount amortization on June 30, 20X7, and (3) semiannual interest payment and discount amortization on December 31, 20X7.arrow_forwardEntries for Bonds Payable, including bond redemption The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: Year 1 July 1. Issued $4,530,000 of five-year, 10% callable bonds dated July 1, Year 1, at a market (effective) rate of 11%, receiving cash of $4,359,272. Interest is payable semiannually on December 31 and June 30. Dec. 31. Paid the semiannual interest on the bonds. The bond discount amortization of $17,073 is combined with the semiannual interest payment. Dec. 31. Closed the interest expense account. Year 2 June 30. Paid the semiannual interest on the bonds. The bond discount amortization of $17,073 is combined with the semiannual interest payment. Dec. 31. Paid the semiannual interest on the bonds. The bond discount amortization of $17,073 is combined with the semiannual interest payment. Dec. 31. Closed the interest expense account. Year 3 June 30. Recorded the redemption of the bonds, which were called…arrow_forwardOn April 1, 20x1, an entity issues bonds with face amount of P5,000,000 for P5,415,183, including accrued interest. The bonds are dated January 1, 20x1 and pay annual interest of 14% every December 31. The effective interest rate is 12%. Requirements: a. Compute for the initial carrying amount of the bonds. b. Provide the entry on April 1, 20x1 to record the issuance of the bonds.arrow_forward
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