Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 38CE
To determine
Concept introduction:
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.
Amortization of Bonds premium or discount:
Bonds may be issued at a premium or discount. The premium or discount on issue of binds is amortized or the life of bonds using the straight line or effective rate methods.
To prepare:
The
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Questions:
1. How much is the estimated purchase price of the bonds on January 1, 2021?
2. Compute the interest income for 2021.
3. Compute for the interest income for 2022.
4. Write all necessary journal entries from 2018 - 2020.
Record the issue of the bonds on July 31,2024. (List debit entry before credit entry.
Record the payment of interest on January 31, 2025, assuming the semi-annual amortization amount for this interest period is \$895. (list all debit entries before credit entries
Please answer all three requirements without image format answer thanku
The following amortization and interest schedule reflects the issuance of 10-year bonds by Wildhorse Corporation on January 1,
2019, and the subsequent interest payments and charges. The company's year-end is December 31, and financial statements are
prepared once yearly.
Year
1/1/2019
2020
2019 $12,500 $13,305
12,500
13,401
13,510
13,631
13,767
13,919
2021
2024
2025
2022 12,500
2023 12,500
12,500
12,500
12,500 14,280
12,500
14,493
14,731
2026
Amortization Schedule
2027
Cash Interest
2028
12,500
12,500
14,089
Amount
Unamortized
$14,126
13,321
12,420
11,410
10,279
9,012
7,593
6,004
4,224
2,231
Carrying
Value
$ 110,874
111,679
112,580
113,590
114,721
115,988
117,407
118,996
120,776
122,769
125,000
Click here to view factor tables.
a. Indicate whether the bonds were issued at a premium or a discount.
Chapter 9 Solutions
Cornerstones of Financial Accounting
Ch. 9 - Prob. 1DQCh. 9 - What is the difference between a bond and a note?...Ch. 9 - What does the face (or Par) value of a bond...Ch. 9 - Prob. 4DQCh. 9 - What is the stated or coupon rate of a bond?Ch. 9 - Prob. 6DQCh. 9 - How does a secured bond differ from an unsecured...Ch. 9 - Prob. 8DQCh. 9 - Prob. 9DQCh. 9 - Prob. 10DQ
Ch. 9 - Prob. 11DQCh. 9 - Prob. 12DQCh. 9 - Prob. 13DQCh. 9 - Prob. 14DQCh. 9 - Prob. 15DQCh. 9 - Prob. 16DQCh. 9 - Prob. 17DQCh. 9 - Prob. 18DQCh. 9 - Prob. 19DQCh. 9 - Prob. 20DQCh. 9 - Prob. 21DQCh. 9 - Prob. 22DQCh. 9 - Which of the following statements regarding bonds...Ch. 9 - Prob. 2MCQCh. 9 - If bonds are issued at 101.25, this means that a...Ch. 9 - What best describes the discount on bonds payable...Ch. 9 - The premium on bonds payable account is shown on...Ch. 9 - When bonds are issued by a company, the accounting...Ch. 9 - Prob. 7MCQCh. 9 - Bonds in the amount of $100,000 with a life of 10...Ch. 9 - Prob. 9MCQCh. 9 - Prob. 10MCQCh. 9 - Prob. 11MCQCh. 9 - Prob. 12MCQCh. 9 - Prob. 13MCQCh. 9 - Prob. 14MCQCh. 9 - Prob. 15MCQCh. 9 - Prob. 16MCQCh. 9 - Which of the following statements regarding the...Ch. 9 - Willow Corporations balance sheet showed the...Ch. 9 - Prob. 19MCQCh. 9 - McLaughlin Corporations balance sheet showed the...Ch. 9 - (Appendix 9A) The bond issue price is determined...Ch. 9 - Cornerstone Exercise 9-22 Reporting Long-Term Debt...Ch. 9 - Cornerstone Exercise 9-23 Issuance of Long-Term...Ch. 9 - Cornerstone Exercise 9-24 Issuance of Long-Term...Ch. 9 - Prob. 25CECh. 9 - Cornerstone Exercise 9-26 Debt Issued at Par On...Ch. 9 - Prob. 27CECh. 9 - Cornerstone ExerciseDebt Issued at a Premium...Ch. 9 - Cornerstone Exercise 9-29 Debt issued at a Premium...Ch. 9 - Cornerstone Exercise Debt Issued at a Premium...Ch. 9 - Prob. 31CECh. 9 - Cornerstone Exercise Bonds Issued at a Discount...Ch. 9 - Prob. 33CECh. 9 - Prob. 34CECh. 9 - Prob. 35CECh. 9 - Prob. 36CECh. 9 - Prob. 37CECh. 9 - Prob. 38CECh. 9 - Cornerstone Exercise Ratio Analysis Watterson...Ch. 9 - Cornerstone Exercise Ratio Analysis Blue...Ch. 9 - Cornerstone Exercise Ratio Analysis Red...Ch. 9 - Prob. 42CECh. 9 - Cornerstone Exercise (Appendix 9A) Bond Issue...Ch. 9 - Prob. 44BECh. 9 - Brief Exercise Issuance of Long-Term Debt Natalie...Ch. 9 - Prob. 46BECh. 9 - Prob. 47BECh. 9 - Brief Exercise Debt Issued at Par On January 1,...Ch. 9 - Prob. 49BECh. 9 - Prob. 50BECh. 9 - Brief Exercise Debt Issued at a Premium (Straight...Ch. 9 - Prob. 52BECh. 9 - Prob. 53BECh. 9 - Prob. 54BECh. 9 - Prob. 55BECh. 9 - Brief ExerciseBonds Issued at a Premium (Effective...Ch. 9 - Prob. 57BECh. 9 - Brief Exercise Bonds issued at a Premium...Ch. 9 - Brief Exercise Cost of Debt Financing Topple...Ch. 9 - Prob. 60BECh. 9 - Brief Exercise Ratio Analysis Whitten Corporations...Ch. 9 - Brief ExerciseRatio Analysis Valiant Corporation...Ch. 9 - Brief Exercise Ratio Analysis Trevor Corporation...Ch. 9 - Brief Exercise (Appendix 9A) Bond Issue Price On...Ch. 9 - Prob. 65BECh. 9 - Prob. 66ECh. 9 - Exercise Bond Premium and Discount Markway Inc. is...Ch. 9 - Exercise Bonds with Annual Interest Payments Kiwi...Ch. 9 - Exercise Issuance and Interest Amortization for...Ch. 9 - Prob. 70ECh. 9 - Prob. 71ECh. 9 - Exercise Interest Payments and Interest Expense...Ch. 9 - Prob. 73ECh. 9 - Prob. 74ECh. 9 - Prob. 75ECh. 9 - Prob. 76ECh. 9 - Prob. 77ECh. 9 - Prob. 78ECh. 9 - Prob. 79ECh. 9 - Prob. 80ECh. 9 - Prob. 81ECh. 9 - Prob. 82ECh. 9 - Prob. 83ECh. 9 - Prob. 84ECh. 9 - ExerciseInstallment Notes ABC bank loans $250,000...Ch. 9 - Prob. 86ECh. 9 - Cost of Debt Financing Stinson Corporations cost...Ch. 9 - Cost of Debt Financing Diamond Companys cost of...Ch. 9 - Ratio Analysis Rising Stars Academy provided the...Ch. 9 - Prob. 90ECh. 9 - Problem Reporting Long-Term Debt Fridley...Ch. 9 - Prob. 92PSACh. 9 - Prob. 93PSACh. 9 - Prob. 94PSACh. 9 - Prob. 95PSACh. 9 - Prob. 96PSACh. 9 - Prob. 97PSACh. 9 - Prob. 98PSACh. 9 - Prob. 99PSACh. 9 - Prob. 91PSBCh. 9 - Prob. 92PSBCh. 9 - Prob. 93PSBCh. 9 - Prob. 94PSBCh. 9 - Prob. 95PSBCh. 9 - Prob. 96PSBCh. 9 - Prob. 97PSBCh. 9 - Prob. 98PSBCh. 9 - Prob. 99PSBCh. 9 - Long-Term Debt and Ethics You arc the CFO of...Ch. 9 - Debtholders receive note contracts, one for each...Ch. 9 - Debtholders receive note contracts, one for each...Ch. 9 - Prob. 102.1CCh. 9 - Prob. 102.2CCh. 9 - Prob. 102.3CCh. 9 - Prob. 102.4CCh. 9 - Leverage Cook Corporation issued financial...Ch. 9 - Prob. 103.2CCh. 9 - Prob. 103.3CCh. 9 - Prob. 103.4CCh. 9 - Prob. 104.1CCh. 9 - Prob. 104.2CCh. 9 - Prob. 104.3CCh. 9 - Prob. 104.4CCh. 9 - Prob. 105.1CCh. 9 - Prob. 105.2CCh. 9 - Prob. 105.3CCh. 9 - Prob. 105.4CCh. 9 - Prob. 105.5CCh. 9 - Comparative Analysis: Under Armour, Inc., versus...Ch. 9 - Prob. 105.7CCh. 9 - Prob. 106.1CCh. 9 - Prob. 106.2CCh. 9 - Prob. 106.3C
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Brief Exercise Bonds issued at a Premium (Effective Interest) Refer to the information above for Haley Industries. Required: Record the journal entries for December 31,2021 and 2022.arrow_forwardJournal entry worksheet: 1. Record the bond issue. (Jan. 01, 2021)2. Record the first semiannual interest payment. (June 30, 2021). 3. Record the second semiannual interest payment. (Dec. 31, 2021)arrow_forwardJournal Entry Worksheet: 1. Record the bond issue on January 1, 2021.2. Record the first interest payment on December 31, 2021.arrow_forward
- Requirement:1. The unamortized adjusted balance of the bond premium account as of December 31, 2020.arrow_forwardPrepare a schedule of interest expense and bond amortization for 2025-2027. (Round answer to 2 decimal places, e.g. 38,548.25.) Date 1/1/25 $ 12/31/25 12/31/26 12/31/27 Cash Paid Schedule of Interest Expense and Bond Premium Amortization Effective-Interest Method $ Interest Expense $ Premium Amortized $ Carry Value ofarrow_forwardentry to record the issuance of the bonds on January 1, 2019. b) Prepare the journal entry to record the interest on July 1, 2019. c) Prepare the journal entry on December 31, 2019. d) Prepare Statement of Financial Position as at December 31, 2019. 1/1/191/9/19 1/20 1/21 3/12/20 QUESTION 8 On January 1 2018, Trademark Bhd issued 1,000 units, 10-year debentures, RM1,000 per unit, 6%. Interest payment is made once a year, on January 1. (Assume 360 days a year). REQUIRED: రింరి a) Calculate the annual interest payable to holders of debentures. 6o b) Determine the maturity date of debentures. c) Prepare the journal entries to record: i) ii) iii) iv) 000 The issuance of the debentures. The adjustment for the year ended June 30 2019. The payment of interest on January 1 2020. The redemption of debentures at maturity date. IE 1/1/18 2/19 3,4 30/619 45 1G00 GOo 00arrow_forward
- Federal Semiconductors issued 8% bonds, dated January 1, with a face amount of $830 million on January 1, 2021. The bonds sold for $753,634,356 and mature on December 31, 2040 (20 years). For bonds of similar risk and maturity the market yield was 9%. Interest is paid semiannually on June 30 and December 31. Required: 1. to 3. Prepare the journal entries to record their issuance by Federal on January 1, 2021, interest on June 30, 2021 (at the effective rate) and interest on December 31, 2021 (at the effective rate). 4. At what amount will Federal report the bonds among its liabilities in the December 31, 2021, balance sheet? Complete this question by entering your answers in the tabs below. Req 1 to 3 Req 4 Prepare the journal entries to record their issuance by Federal on January 1, 2021, interest on June 30, 2021 (at the effective rate) and interest on December 31, 2021 (at the effective rate). (If no entry is required for a transaction/event, select "No journal entry required" in…arrow_forward10. Journal entry worksheet: 1. Record the bond issue. (Jan. 01, 2021)2. Record the first semiannual interest payment. (June 30, 2021)3. Record the second semiannual interest payment. (Dec. 31, 2021)thank you so much!arrow_forwardThe redemption of bonds at maturity, assuming interest for the latinterest period has Problem 1 bond discount. Prepare the journal entries to record these events: The issuance of the bonds on January 1, 2021 2. The accrual of interest and the discount amortization on December 31, 2021. 3. The payment of interest on January 1, 2022 4. been paid and recorded.arrow_forward
- Please help find issue price of bonds Requirements- Using PV function in excel calculate issue price of bonds Prepare effective interest amortization table for bonds through the first three interest payments Record ranking corporations issuance of bonds on March 31 2018. And payment of first semiannual interest amount and amortization of bond and discount on September 30,209. Explanations are not required.arrow_forwardSheridan Inc. is building a new hockey arena at a cost of $2,150,000. It received a down payment of $430,000 from local businesses to support the project, and now needs to borrow $1,720,000 to complete the project. It therefore decides to issue $1,720,000 of 10- year, 10.5% bonds. These bonds were issued on January 1, 2023, and pay interest annually on each January 1. The bonds yield 10.5% to the investor and have an effective interest rate to the issuer of 10.40530%. (There is an increased effective interest rate due to the capitalization of the bond issue costs.) Any additional funds that are needed to complete the project will be obtained from local businesses. Sheridan paid and capitalized $43,000 in bond issuance costs related to the bond issue. Sheridan prepares financial statements in accordance with IFRS.arrow_forwardQuestion 5. On 1 January 2021 Corgi Ltd issued a £5m convertible bond at nominal value. There were no issue costs. The bond is redeemable at par on 1 January 2024 or bond holders can convert their bond into ordinary shares, with a nominal value of £1. The terms of the conversion are 2 shares for every £100 of bond. The coupon rate on the bond is 10%, payable annually in arrears. Bonds issued by similar entities without the conversion rights bear interest at 15%.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Financial Accounting - Long-term Liabilities - Bonds; Author: Finance & Accounting Videos by Prof Coram;https://www.youtube.com/watch?v=_1fwsJIGMos;License: Standard Youtube License