2. (15 points) Webb Co. sold a 7%, 10-year bond with a $3,000,000 face value on...

Question

Question

2. (15 points) Webb Co. sold a 7%, 10-year bond with a $3,000,000 face value on January 1, 2019. Interest is payable annually

business accounting

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

a) Interest paid in Cash each year = 3000000*7% = 210000

b) Selling price of bonds = 210000*7.3601+3000000*.5584 = 3220821

c) Journal entry

Date	account and explanation	Debit	Credit
	Interest expense (3220821*6%)	193249.26
	Premium on bonds payable	16750.74
	Interest payable		210000

Add a comment

Answer 2

Similar Homework Help Questions

On January 1, 2019, Wildhorse Co. issued $2,360,000 face value, 7%, 10-year bonds at $2,201,642. This...

On January 1, 2019, Wildhorse Co. issued $2,360,000 face value, 7%, 10-year bonds at $2,201,642. This price resulted in an effective-interest rate of 8% on the bonds. Wildhorse uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest on January 1. Prepare the journal entry to record the issuance of the bonds on January 1, 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation...
Saylor Co. sold $3,000,000, 8%, 10-year bonds on January 1, 2022. The bonds were dated January...

Saylor Co. sold $3,000,000, 8%, 10-year bonds on January 1, 2022. The bonds were dated January 1, 2022, and pay interest on January 1. The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually. Your answer is partially correct. Prepare the journal entries to record the issuance of the bonds assuming they sold at: (1) 103 and (2) 98. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Date...
5 % On January 1, 2017, Lock Corporation issued $1,800,000 face value, 1 10 -year bonds...

5 % On January 1, 2017, Lock Corporation issued $1,800,000 face value, 1 10 -year bonds at $1,667,518 This price resulted in an effective-interest rate of 6% on the bonds. Lock uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest January 1. Instructions: (Round all computations to the nearest dollar.) (a) Prepare the journal entry to record the issuance of the bonds on January 1, 2017. 01/01/14 Account title Account title Account title Amount...

Illustration #1 - BOND issued @ PAR Collandra Co. issues $100,000 Bond on Jan 1, 2020,...

Illustration #1 - BOND issued @ PAR Collandra Co. issues $100,000 Bond on Jan 1, 2020, dae in 5 years on Dec 31, 2024 with 7% stated interest rate payable annually a year-end. At the time of issue, the market rate for such boods is also 7% D. Prepare the Joumal entry for the issuance of the band, subsequent payments of interest and motivation of discounts, and final payment of the principal Date Accounts Debe Cerdit Jan 1, 2010 Dec...
The following is taken from the Colaw SA statement of financial position: Colaw Sa Statement of Financial Position (Partial) December 31, 2020 Non-current liabilities Bonds payable (face value $3,000,000), 7% Due January 1, 2031 $3,200,000 Current Lia

The following is taken from the Colaw SA statement of financial position: Colaw Sa Statement of Financial Position (Partial) ...
Apply the Straight-Line Method of Amortizing Bond Discount and Bond Premium 7. In the Cromwell Inc....

Apply the Straight-Line Method of Amortizing Bond Discount and Bond Premium 7. In the Cromwell Inc. example, the company sold $100,000, 5-year, 10% bonds on January 1, 2017, for $98,000. Interest is payable on January 1. The $2,000 bond discount ($100,000 - $98,000) amortization is $400 ($2,000 + 5) for each of the five amortization periods. a. The entry to record the accrual of bond interest and the amortization of bond discount on the first interest date (December 31) is:...

Karrie Co. has outstanding a 7%, 10-year bond with a $100,000 face amount. The bond was...

Karrie Co. has outstanding a 7%, 10-year bond with a $100,000 face amount. The bond was originally sold to yield 6% annual interest. Karrie uses the effective-interest-rate method to amortize bond premium. On June 30, year 1, the carrying amount of the outstanding bond was $105,000. What amount of unamortized premium on the bond should Karrie report in its June 30, year 2 balance sheet?Karrie Co. has outstanding a 7%, 10-year bond with a $100,000 face amount. The bond was...
On June 30, 2020, Kingbird Company issued $3,120,000 face value of 15%, 20-year bonds at $3,824,160,...

On June 30, 2020, Kingbird Company issued $3,120,000 face value of 15%, 20-year bonds at $3,824,160, a yield of 12%. Kingbird uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. Prepare the journal entries to record the following transactions. (Round answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry") (1)The issuance of the bonds on June 30, 2020. (2)The payment of interest...
Problem 10-12A On January 1, 2019, Windsor, Inc. issued $2,280,000 face value, 8%, 10-year bonds at...

Problem 10-12A On January 1, 2019, Windsor, Inc. issued $2,280,000 face value, 8%, 10-year bonds at $2,133,677. This price resulted in an effective-interest rate of 9% on the bonds. Windsor uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest on January 1. Your answer is partially correct. Try again. Prepare the journal entry to record the issuance of the bonds on January 1, 2019. (Credit account titles are automatically indented when amount is entered....

PART B Bill Corporation issued six-year, 7% bonds with a total face value of $1,250,000 on...

PART B Bill Corporation issued six-year, 7% bonds with a total face value of $1,250,000 on January 1, 2019. Interest is paid semi-annually on June 30 and December 31. The market rate of interest on this date was 10.0%. Bill uses the effective interest rate method. Required: 1. Determine the proceeds of the bond sale on 1/1/19. Explain your method of calculation. 2. Using the present value of a dollar table (found in Appendix E of your text), what factor...

2. (15 points) Webb Co. sold a 7%, 10-year bond with a $3,000,000 face value on...

Homework Answers

Add Answer to:
2. (15 points) Webb Co. sold a 7%, 10-year bond with a $3,000,000 face value on...

Post as a guest

Earn Coins

On January 1, 2019, Wildhorse Co. issued $2,360,000 face value, 7%, 10-year bonds at $2,201,642. This...

Saylor Co. sold $3,000,000, 8%, 10-year bonds on January 1, 2022. The bonds were dated January...

5 % On January 1, 2017, Lock Corporation issued $1,800,000 face value, 1 10 -year bonds...

Illustration #1 - BOND issued @ PAR Collandra Co. issues $100,000 Bond on Jan 1, 2020,...

The following is taken from the Colaw SA statement of financial position: Colaw Sa Statement of Financial Position (Partial) December 31, 2020 Non-current liabilities Bonds payable (face value $3,000,000), 7% Due January 1, 2031 $3,200,000 Current Lia

Apply the Straight-Line Method of Amortizing Bond Discount and Bond Premium 7. In the Cromwell Inc....

Karrie Co. has outstanding a 7%, 10-year bond with a $100,000 face amount. The bond was...

On June 30, 2020, Kingbird Company issued $3,120,000 face value of 15%, 20-year bonds at $3,824,160,...

Problem 10-12A On January 1, 2019, Windsor, Inc. issued $2,280,000 face value, 8%, 10-year bonds at...

PART B Bill Corporation issued six-year, 7% bonds with a total face value of $1,250,000 on...

2. (15 points) Webb Co. sold a 7%, 10-year bond with a $3,000,000 face value on...

Homework Answers

Add Answer to: 2. (15 points) Webb Co. sold a 7%, 10-year bond with a $3,000,000 face value on...

Post as a guest

Earn Coins

Add Answer to:
2. (15 points) Webb Co. sold a 7%, 10-year bond with a $3,000,000 face value on...