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AccountingCornerstones of Financial Accounting4th Edition

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Chapter 9, Problem 82E
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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Problem 2DQ
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Problem 6DQ
Problem 7DQ
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Problem 11DQ
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Problem 15DQ
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Problem 20DQ
Problem 21DQ
Problem 22DQ
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Problem 14MCQ
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Problem 17MCQ
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Problem 43CE
Problem 44BE
Problem 45BE
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Problem 50BE
Problem 51BE
Problem 52BE
Problem 53BE
Problem 54BE
Problem 55BE
Problem 56BE
Problem 57BE
Problem 58BE
Problem 59BE
Problem 60BE
Problem 61BE
Problem 62BE
Problem 63BE
Problem 64BE
Problem 65BE
Problem 66E
Problem 67E
Problem 68E
Problem 69E
Problem 70E
Problem 71E
Problem 72E
Problem 73E
Problem 74E
Problem 75E
Problem 76E
Problem 77E
Problem 78E
Problem 79E
Problem 80E
Problem 81E
Problem 82E
Problem 83E
Problem 84E
Problem 85E
Problem 86E
Problem 87E
Problem 88E
Problem 89E
Problem 90E
Problem 91PSA
Problem 92PSA
Problem 93PSA
Problem 94PSA
Problem 95PSA
Problem 96PSA
Problem 97PSA
Problem 98PSA
Problem 99PSA
Problem 91PSB
Problem 92PSB
Problem 93PSB
Problem 94PSB
Problem 95PSB
Problem 96PSB
Problem 97PSB
Problem 98PSB
Problem 99PSB
Problem 100C
Problem 101.1C
Problem 101.2C
Problem 102.1C
Problem 102.2C
Problem 102.3C
Problem 102.4C
Problem 103.1C
Problem 103.2C
Problem 103.3C
Problem 103.4C
Problem 104.1C
Problem 104.2C
Problem 104.3C
Problem 104.4C
Problem 105.1C
Problem 105.2C
Problem 105.3C
Problem 105.4C
Problem 105.5C
Problem 105.6C
Problem 105.7C
Problem 106.1C
Problem 106.2C
Problem 106.3C
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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Exercise Completing a Bond Amortization Table (Effective Interest Rate Method

MacBride Enterprises sold S200,000 of bonds on January 1, 2020. A portion of the amortization table appears below.

Period

Cash Payment (Credit)

Interest Expense (Debit)

Premium on Bonds Payable (Debit)

Premium on Bonds Payable Balance

Carrying

Value

At issue

S6-457

52(16,457

06/30/20

$9,000

$8,465

$535

5,922

205,922

12/31/20

9,000

8,443

557

5,365

205,365

06/30/21

9,000

8,420

580

4,785

204,785

12/31/21

?

?

?

?

?

Required:

  1. Indicate the stated annual interest rate on these bonds.
  2. Calculate the effective annual interest rate on these bonds. (Note: Round to the nearest 0.1%.)
  3. Determine the interest expense and premium amortization for the interest period ending December 31, 2021. (Note: Round to the nearest dollar.)

4.Determine when the bonds will mature.

Use the following information for Exercises 9-83 and 9-84:

Dandy Candy bought a delivery vehicle for S45,000 by issuing an 8% installment note on January 1, 2021. Dandy will make 12 monthly payments of $3,914.50 at the end of each month.

To determine

(a)

Introduction:

As per the effective interest rate method, a constant interest rate on book or carrying value is assigned to each period.

To calculate:

Stated rate of interest on bonds.

Explanation

Given:

$200,000 were issued on 1st January 2020 and portion of amortization table:

Annual Period Cash Payment (Credit) Interest Expense (Debit) Premium on Bonds Payable (Debit) Premium on Bonds Payable Balance Carrying Value
At issue 6,457 206,457
06/30/2020 9,000 8,465 535 5,922 205,922
12/31/2020 9,000 8,443 557 5,365 205,365
06/30/2021 9,000 8,420 580 4,785 204,785
12/31/2021 ? ? ?
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 calculate:

The Effective annual interest rate on bonds.

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.

To calculate:

The interest expense and premium amortized for period ending on 31st Dec 2021.

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 find:

Maturity date of the bonds.

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