ZuoTi.Pro
Question

On January 1, 2018, Baltimore Company issued $200,000 face value, 7%, 10-year bonds at 102. Interest...

On January 1, 2018, Baltimore Company issued $200,000 face value, 7%, 10-year bonds at 102. Interest is paid annually on January 1. Baltimore uses the straight-line method for amortization. Use this information to determine the dollar value of the interest expense for the 2018 fiscal year. Round your answer to the nearest whole dollar.

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Bond is a fixed income security in which issuer promises to pay a series of interest payment and to repay the principle on maturity to the investor.

In straight line amortization, the premium received or discount given on issue of bond is amortized over the bond period maturity on straight line basis. Formula is (Discount / Premium Amount) divided by bond period.Ans Straight Line Amortisation table $200,000 700% Face Value Coupon Rate Coupon Payment Maturity Period (in Years) Sales Value [200000/$100 $102] Premium [$204000-$200000] Interest Payment IS200000 x 796)] Bond Amortisation [S4000/10] Amortisation schedule (Straight Line Annually 10 $204,000 $4,000 $14,000 $400 Opening book Balance Date Interest PaymentAmortisation of Bond Premium Interest Expense Closing Book Value 사HDHB 1Jan-18 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 30-Dec-24 30-Dec-25 30-Dec-26 30-Dec-27 Journal Entry on 31st December, 2018 Date 31-Dec-18 Interest Expense $204,000 $203,600 $203,200 $202,800 $202,400 $202,000 $201,600 $201,200 $200,800 $200,400 $14,000 $14,000 $14,000 $14,000 $14,000 $14,000 $14,000 $14,000 $14,000 $14,000 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $13,600 $13,600 $13,600 $13,600 $13,600 $13,600 $13,600 $13,600 $13,600 $13,600 $204,000 $203,600 $203,200 $202,800 $202,400 $202,000 $201,600 $201,200 $200,800 $200,400 $200,000 Particulars Debit Credit $13,600 $400 Premium on Bond Bond Interest Payable Being interest payment on Bond) $14,000 Interest Expense for the Fiscal Year 2018 is $13600

0 0
Add a comment
Know the answer?
Add Answer to:
On January 1, 2018, Baltimore Company issued $200,000 face value, 7%, 10-year bonds at 102. Interest...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • On January 1, 2018, Baltimore Company issued $200,000 face value, 4%, 5-year bonds at 102. Interest...

    On January 1, 2018, Baltimore Company issued $200,000 face value, 4%, 5-year bonds at 102. Interest is paid annually on January 1. Baltimore uses the straight-line method for amortization. Use this information to determine the dollar value of the interest expense for the 2018 fiscal year. Round your answer to the nearest whole dollar.

  • On January 1, 2018, Baltimore Company issued $150,000 face value, 7%, 10-year bonds at 102. Interest...

    On January 1, 2018, Baltimore Company issued $150,000 face value, 7%, 10-year bonds at 102. Interest is paid annually on January 1. Baltimore uses the straight-line method for amortization. Use this information to determine the dollar value of the interest expense for the 2018 fiscal year. Round your answer to the nearest whole dollar.

  • Question 7 (5 points) On April 1, 2019. Alaska Trading Company issued $900,000 of 6%, 10-year...

    Question 7 (5 points) On April 1, 2019. Alaska Trading Company issued $900,000 of 6%, 10-year bonds. The bonds, which were issued at 98, pay interest on October 1 and April 1. Use this information to prepare the General Journal entry (without explanation to record the April 1, 2019 bond issue. If no entry is required then write "No Entry Required." Deol - Format - B IU - General Journal: Date Accounts Debit Credit A « Ed S he Question...

  • The Square Foot Grill, Inc. issued $200,000 of 10-year, 6 percent bonds on January 1, 2018,...

    The Square Foot Grill, Inc. issued $200,000 of 10-year, 6 percent bonds on January 1, 2018, at 102. Interest is payable in cash annually on December 31. The straight-line method is used for amortization. Interest expense is $11,600 Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, 2018. Determine the carrying value of the bond liability as of December 31, 2019.

  • 1. Merchant Company issued 10-year bonds on January 1. The 7% bonds have a face value...

    1. Merchant Company issued 10-year bonds on January 1. The 7% bonds have a face value of $709,000 and pay interest every January 1 and July 1. The bonds were sold for $589,257 based on the market interest rate of 8%. Merchant uses the effective interest method to amortize bond discounts and premiums. On July 1 of the first year, Merchant should record interest expense (round to the nearest dollar) of a.$23,570 b.$20,624 c.$28,360 d.$24,815 2. Franklin Corporation issues $94,000,...

  • DajendJK Company issued bonds $267,000 of 5 year, 6 percent bonds on January 1, 2018, at 102. Interest is payable in cas...

    DajendJK Company issued bonds $267,000 of 5 year, 6 percent bonds on January 1, 2018, at 102. Interest is payable in cash annually on December 31. The straight-line method is used for amortization. What is the interest payment DajendJK will pay each year? $_______

  • Sparks Company received proceeds of $634,500 on 10-year, 8% bonds issued on January 1, 2016. The...

    Sparks Company received proceeds of $634,500 on 10-year, 8% bonds issued on January 1, 2016. The bonds had a face value of $600,000, pay interest annually on December 31st, and have a call price of 102. Sparks uses the straight-line method of amortization. What is the carrying value of the bonds on January 1, 2018? $600,000 $627,600 $572,400 $631,050

  • Diaz Company issued $122,000 face value of bonds on January 1, 2018. The bonds had a...

    Diaz Company issued $122,000 face value of bonds on January 1, 2018. The bonds had a 5 percent stated rate of interest and a ten-year term. Interest is paid in cash annually, beginning December 31, 2018. The bonds were issued at 99. The straight-line method is used for authorization. Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, 2018. Determine the amount of interest expense reported on the 2018 income...

  • Diaz Company issued $84,000 face value of bonds on January 1, 2018. The bonds had a...

    Diaz Company issued $84,000 face value of bonds on January 1, 2018. The bonds had a 8 percent stated rate of interest and a ten-year term. Interest is paid in cash annually, beginning December 31, 2018. The bonds were issued at 98. The straight-line method is used for amortization. Required Use a financial statements model like the one shown below to demonstrate how (1) the January 1, 2018, bond issue and (2) the December 31, 2018, recognition of interest expense,...

  • Diaz Company issued $122,000 face value of bonds on January 1, 2018. The bonds had a 5 percent stated rate of interest a...

    Diaz Company issued $122,000 face value of bonds on January 1, 2018. The bonds had a 5 percent stated rate of interest and a ten-year term. Interest is paid in cash annually, beginning December 31, 2018. The bonds were issued at 99. The straight-line method is used for authorization. Use a financial statements model like the one shown below to demonstrate how (1) the January 1, 2018, bond issue and (2) the December 31, 2018, recognition of interest expense, including...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT