Bond Discount, Entries for Bonds Payable TransactionsOn July 1, Year 1, Danzer Industries Inc. issued $6,600,000 of 5-year, 10% bonds at a market (effective) interest rate of 12%, receiving cash of $6,114,204. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.Required:1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1. If an amount box does not require an entry, leave it blank. Cash 61142040 Discount on Bonds Payable 4857960 Bonds Payable 066000002. Journalize the entries to record the following: If an amount box does not require an entry, leave it blank.a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. (Round your answer to the nearest dollar.) Present value of the face amountPresent value of the semi-annual interest paymentsPrice received for the bonds%24 Interest Expense vDiscount on Bonds PayableÇash vb. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. (Round your answer to thenearest dollar.)Interest Expense vDiscount on Bonds Payable vCash v3. Determine the total interest expense for Year 1. Round to the nearest dollar.4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest?Yes v5. Compute the price of $6,114,204 received for the bonds by using Exhibit 5 and Exhibit 7. (Round you PV values to 5 decimal places and the finalanswers to the nearest dollar.) Your total may vary slightly from the price given due to rounding differences.00

Bonds Price will the Present Value of the interest to be paid over the period of the bonds and also…

1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1. If an amount box does not require an entry, leave it blank. Cash 6114204 0 Discount on Bonds Payable 485796 0 Bonds Payable 0 6600000 2. Journalize the entries to record the following: If an amount box does not require an entry, leave it blank. a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount,

1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1. If an amount box does not require an entry, leave it blank. Cash 6114204 0 Discount on Bonds Payable 485796 0 Bonds Payable 0 6600000 2. Journalize the entries to record the following: If an amount box does not require an entry, leave it blank. a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount,

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter10: Long-term Liabilities

Section: Chapter Questions

Problem 10.1E

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Wilbury Corporation issued 1 million of 13.5% bonds for 985,071.68. The bonds are dated and issued October 1, 2019, are due September 30, 2020, and pay interest semiannually on March 31 and September 30. Assume an effective yield rate of 14%. Required: 1. Prepare a bond interest expense and discount amortization schedule using the straight-line method. 2. Prepare a bond interest expense and discount amortization schedule using the effective interest method. 3. Prepare adjusting entries for the end of the fiscal year December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. If income before interest and income taxes of 30% in 2020 is 500,000, compute net income under each alternative. 5. Assume the company retired the bonds on June 30, 2020, at 98 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight line method of amortization b. effective interest method of amortization 6. Compute the companys times interest earned (pretax operating income divided by interest expense) for 2020 under each alternative.
Compute bond proceeds, amortizing premium by interest method, and interest expense DATA Face amount of bonds Contract rate of interest Term of bonds, years Market rate of interest Interest payment REQUIRED: a. Compute the amount of cash proceeds from the sale of the bonds. $41,000,000 11% 3 9% Semiannual b. Compute the amount of premium to be amortized for the first semiannual interest payment period, using the interest method. c. Compute the amount of premium to be amortized for the second semiannual interest payment period, using the interest method. d. Compute the amount of the bond interest expense for the first year. Using formulas and cell references from the problem data, perform the required analysis. Formulas entered in the green cells show in the orange cells. Transfer amounts to CNOWv2 for grading. a. PV of cash proceeds b. Premium amortized for the 1st interest payment period c. Premium amortized for the 2nd interest payment period d. Interest expense for the 1st year…
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