BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

Solutions

Chapter
Section
BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
89 views

Exercise 9-75 Using a Discount Amortization Table {Straight Line)

Panamint Candy Company prepared the following amortization table for $300,000 of 5-year, 9% bonds issued and sold by Panamint on January 1, 2021, for $285,000:

Period

Cash

Payment

(Credit)

Interest

Expense

(Debit)

Discount on Hands Payable (Credit)

Discount on Bonds Payable Balance

Carrying

Value

At issue

$ 15,000

$285,000

06/30/21

$13,500

$15,000

51,500

13,500

286,500

12/31/21

13,500

15,000

1,500

12,000

288,000

06/30/22

13,500

15,000

1,500

10,500

289,500

12/31/22

13.500

15,000

1,500

9,000

291,000

06/30/23

13,500

15,000

1,500

7,500

292,500

12/31/23

13,500

15,000

1,500

6,000

294,000

06/30/24

! 3,500

15,000

1,500

4,500

295,500

12/31/24

13,500

15,000

1,500

3,000

297,000

0(5/30/25

13,500

15,000

1,500

1,500

298,500

12/31/25

13,500

15,000

1,500

0

300,000

Required:

  1. Prepare the entry to recognize the sale of the bonds on January 1, 2021.
  2. Prepare the entry to recognize the first interest payment on June 30, 2021,
  3. Determine the interest expense for these bonds that Panamint will report on its 2023 income statement.
  4. Indicate how these bonds will appear in Panamint’s December 31, 2024 balance sheet.

To determine

(a)

Introduction:

A bond is long term liability wherein the issuer is entitled to pay the face value of the bond at the time of maturity and make interest payments periodically. It is a breakdown of large debt to borrow as it may be too large for an individual lender.

To record:

Journal entry for the issuance of bonds.

Explanation

Given:

$300,000, 9% bonds for 5 years were issued at $285,000.

The face value of bonds issued is recorded as bonds payable and any premium or discount on issue of bonds is recorded in separate “Premium on Bonds Payable” or “Discount on Bonds Payable” account whereas in case of issuance of bonds at par it is a regular journal entry where cash (asset) increased along with Bonds Payable (long term liability)...

To determine

(b)

Introduction:

A bond is long term liability wherein the issuer is entitled to pay the face value of the bond at the time of maturity and make interest payments periodically. It is a breakdown of large debt to borrow as it may be too large for an individual lender.

To record:

Journal entry on 30th June 2021.

To determine

(c)

Introduction:

A bond is long term liability wherein the issuer is entitled to pay the face value of the bond at the time of maturity and make interest payments periodically. It is a breakdown of large debt to borrow as it may be too large for an individual lender.

The interest expense to be shown in Income Statement for year 2023.

To determine

(d)

Introduction:

A bond is long term liability wherein the issuer is entitled to pay the face value of the bond at the time of maturity and make interest payments periodically. It is a breakdown of large debt to borrow as it may be too large for an individual lender.

To show:

Bonds in the Balance Sheet for year ending on 31st December 2024.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started
Ch-9 P-11DQCh-9 P-12DQCh-9 P-13DQCh-9 P-14DQCh-9 P-15DQCh-9 P-16DQCh-9 P-17DQCh-9 P-18DQCh-9 P-19DQCh-9 P-20DQCh-9 P-21DQCh-9 P-22DQCh-9 P-1MCQCh-9 P-2MCQCh-9 P-3MCQCh-9 P-4MCQCh-9 P-5MCQCh-9 P-6MCQCh-9 P-7MCQCh-9 P-8MCQCh-9 P-9MCQCh-9 P-10MCQCh-9 P-11MCQCh-9 P-12MCQCh-9 P-13MCQCh-9 P-14MCQCh-9 P-15MCQCh-9 P-16MCQCh-9 P-17MCQCh-9 P-18MCQCh-9 P-19MCQCh-9 P-20MCQCh-9 P-21MCQCh-9 P-22CECh-9 P-23CECh-9 P-24CECh-9 P-25CECh-9 P-26CECh-9 P-27CECh-9 P-28CECh-9 P-29CECh-9 P-30CECh-9 P-31CECh-9 P-32CECh-9 P-33CECh-9 P-34CECh-9 P-35CECh-9 P-36CECh-9 P-37CECh-9 P-38CECh-9 P-39CECh-9 P-40CECh-9 P-41CECh-9 P-42CECh-9 P-43CECh-9 P-44BECh-9 P-45BECh-9 P-46BECh-9 P-47BECh-9 P-48BECh-9 P-49BECh-9 P-50BECh-9 P-51BECh-9 P-52BECh-9 P-53BECh-9 P-54BECh-9 P-55BECh-9 P-56BECh-9 P-57BECh-9 P-58BECh-9 P-59BECh-9 P-60BECh-9 P-61BECh-9 P-62BECh-9 P-63BECh-9 P-64BECh-9 P-65BECh-9 P-66ECh-9 P-67ECh-9 P-68ECh-9 P-69ECh-9 P-70ECh-9 P-71ECh-9 P-72ECh-9 P-73ECh-9 P-74ECh-9 P-75ECh-9 P-76ECh-9 P-77ECh-9 P-78ECh-9 P-79ECh-9 P-80ECh-9 P-81ECh-9 P-82ECh-9 P-83ECh-9 P-84ECh-9 P-85ECh-9 P-86ECh-9 P-87ECh-9 P-88ECh-9 P-89ECh-9 P-90ECh-9 P-91PSACh-9 P-92PSACh-9 P-93PSACh-9 P-94PSACh-9 P-95PSACh-9 P-96PSACh-9 P-97PSACh-9 P-98PSACh-9 P-99PSACh-9 P-91PSBCh-9 P-92PSBCh-9 P-93PSBCh-9 P-94PSBCh-9 P-95PSBCh-9 P-96PSBCh-9 P-97PSBCh-9 P-98PSBCh-9 P-99PSBCh-9 P-100CCh-9 P-101.1CCh-9 P-101.2CCh-9 P-102.1CCh-9 P-102.2CCh-9 P-102.3CCh-9 P-102.4CCh-9 P-103.1CCh-9 P-103.2CCh-9 P-103.3CCh-9 P-103.4CCh-9 P-104.1CCh-9 P-104.2CCh-9 P-104.3CCh-9 P-104.4CCh-9 P-105.1CCh-9 P-105.2CCh-9 P-105.3CCh-9 P-105.4CCh-9 P-105.5CCh-9 P-105.6CCh-9 P-105.7CCh-9 P-106.1CCh-9 P-106.2CCh-9 P-106.3C

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Some income from capital is taxed twice. Explain.

Brief Principles of Macroeconomics (MindTap Course List)

What is inflation and what causes it?

Principles of Macroeconomics (MindTap Course List)

Imagine the plug of the sink described in Problem 9.36 leaks. If it now takes 250 seconds to fill the sink to i...

Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)

What is the purpose of a typical inverter?

Automotive Technology: A Systems Approach (MindTap Course List)

Explain the purpose of the safe-start portion of a CNC program.

Precision Machining Technology (MindTap Course List)

What resources can Iris call on to assist her?

Management Of Information Security

Neglecting the weight of the frame, find the tension in cable CD.

International Edition---engineering Mechanics: Statics, 4th Edition

What issues does jailbreaking cause?

Enhanced Discovering Computers 2017 (Shelly Cashman Series) (MindTap Course List)