Homework Answers
Due to bond premium amortization, Interest expense is reduced.
Unamortized bond premium is shown as a deduction from the bonds payable in the Balance sheet. Thus, unamortized bond premium reduce the carrying value of Bonds. when there is omission of bond premium amortization in the year 2017, it will have the following effects:
(i) Interest expense of the year 2017 will be overstated.
(ii) Net income for 2017 will be understated.
(iii) Retained earnings for 2017 will be understated.
(iv) Bonds carrying value will be overstated.
Hence,
Correct option is b (cause the bond carrying value to be overstated.)
Please give a positive rating if you are satisfied with this solution and if you have any query kindly ask.
Thanks!!!
Add Answer to:
Wertz Corporation issued ten-year, 8% bonds on January 1, 2017 at a premium. During 2017, the...
Novak Corp. issued $ 400,000, 6%, 25-year bonds on January 1, 2017, for $ 353,386. This price resulted...
Novak Corp. issued $ 400,000, 6%, 25-year bonds on January 1, 2017, for $ 353,386. This price resulted in an effective-interest rate of 7% on the bonds. Interest is payable annually on January 1. Novak uses the effective-interest method to amortize bond premium or discount. Prepare the schedule using effective-interest method to amortize bond premium or discount of Novak Corp.. (Round answers to 0 decimal places, e.g. 5,250.) Interest Periods Interest to Be Paid Interest Expense to Be Recorded Discount Amortization Unamortized Discount...
On January 1, 2017, Lock Corporation issued $3,520,000 facevalue, 8%, 10-year bonds at $3,294,098. This...
On January 1, 2017, Lock Corporation issued $3,520,000 face
value, 8%, 10-year bonds at $3,294,098. This price resulted in an
effective-interest rate of 9% on the bonds. Lock uses the
effective-interest method to amortize bond premium or discount. The
bonds pay annual interest on January 1.
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...
Strathern Corporation issued ten-year term bonds dated January 1, 2017, with a face value of $800,000....
Strathern Corporation issued ten-year term bonds dated January 1, 2017, with a face value of $800,000. The face interest rate is 10 percent, and interest is payable annually December 31. The bonds were issued for $708,400 to yield an effective annual rate of 12 percent. Use the effective interest method of amortization. Round answers to the nearest dollar. a. Prepare entries in journal form without explanations to record the bond issue on January 1, 2017, and the payments of interest on January,...
On July 1, 2017, Global Satellites Corporation issued $1,280,000 of 10-year, 7% bonds to yield a...
On July 1, 2017, Global Satellites Corporation issued $1,280,000 of 10-year, 7% bonds to yield a market interest rate of 6%. The bonds pay semi annual interest on July 1 and January 1. Global has a December 31 year end. When the bonds were issued, Global received $1,375,221 Click here to view the factor table. (a) Prepare an amortization table through January 1, 2019 (three interest periods) for this bond issue. (Round all amounts to the nearest dollar, e.g. 5,275.)...
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,...
On January 1, 2017, Citywide Sales issued $23,000 in bonds for $30,800. These are eight-year bonds...
On January 1, 2017, Citywide Sales issued $23,000 in bonds for $30,800. These are eight-year bonds with a stated rate of 13% and pay semiannual interest. Citywide Sales uses the straight-line method to amortize the bond premium. On June 30, 2017, when Citywide makes the first payment to bondholders, what is the amount that will be reported as Interest Expense? (Round your intermediate answers to the nearest dollar.)
Question 1 On April 1, 2017, Burton Corporation issued $3,000,000 of 8%, 10-year bonds dated April...
Question 1 On April 1, 2017, Burton Corporation issued $3,000,000 of 8%, 10-year bonds dated April 1, 2017, with interest payments made each October 1 and April 1. The bonds are issued at 103. Burton Corporation amortizes any premium or discount using the straight-line method REQUIRED: a) Is this bond selling at a premium or a discount? How do you tell? b) Prepare the journal entry on April 1, 2017, to issue the bonds c) Prepare the journal entry on...
Diaz Company issued bonds with a $116,000 face value on January 1, Year 1. The bonds had a 8 percent stated rate o...
Diaz Company issued bonds with a $116,000 face value on January 1, Year 1. The bonds had a 8 percent stated rate of interest and a 10-year term. Interest is paid in cash annually, beginning December 31, Year 1. The bonds were issued at 98. The straight-line method is used for amortization. Required a. Use a financial statements model like the one shown next to demonstrate how (1) the January 1, Year 1, bond issue and (2) the December 31,...
Stuart Company issued bonds with a $216,000 face value on January 1, Year 1. The bonds...
Stuart Company issued bonds with a $216,000 face value on January 1, Year 1. The bonds had a 6 percent stated rate of interest and a five-year term. Interest is paid in cash annually, beginning December 31, Year 1. The bonds were issued at 103. The straight-line method is used for amortization. Required a. Use a financial statements model like the one shown next to demonstrate how (1) the January 1, Year 1, bond issue and (2) the December 31,...
On January 1, 2017, Lock Corporation issued $3,520,000 face
value, 8%, 10-year bonds at $3,294,098. This price resulted in an
effective-interest rate of 9% on the bonds. Lock uses the
effective-interest method to amortize bond premium or discount. The
bonds pay annual interest on January 1.
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...
On July 1, 2017, Global Satellites Corporation issued $1,280,000 of 10-year, 7% bonds to yield a market interest rate of 6%. The bonds pay semi annual interest on July 1 and January 1. Global has a December 31 year end. When the bonds were issued, Global received $1,375,221 Click here to view the factor table. (a) Prepare an amortization table through January 1, 2019 (three interest periods) for this bond issue. (Round all amounts to the nearest dollar, e.g. 5,275.)...
Question 1 On April 1, 2017, Burton Corporation issued $3,000,000 of 8%, 10-year bonds dated April 1, 2017, with interest payments made each October 1 and April 1. The bonds are issued at 103. Burton Corporation amortizes any premium or discount using the straight-line method REQUIRED: a) Is this bond selling at a premium or a discount? How do you tell? b) Prepare the journal entry on April 1, 2017, to issue the bonds c) Prepare the journal entry on...
Diaz Company issued bonds with a $116,000 face value on January 1, Year 1. The bonds had a 8 percent stated rate of interest and a 10-year term. Interest is paid in cash annually, beginning December 31, Year 1. The bonds were issued at 98. The straight-line method is used for amortization. Required a. Use a financial statements model like the one shown next to demonstrate how (1) the January 1, Year 1, bond issue and (2) the December 31,...
Stuart Company issued bonds with a $216,000 face value on January 1, Year 1. The bonds had a 6 percent stated rate of interest and a five-year term. Interest is paid in cash annually, beginning December 31, Year 1. The bonds were issued at 103. The straight-line method is used for amortization. Required a. Use a financial statements model like the one shown next to demonstrate how (1) the January 1, Year 1, bond issue and (2) the December 31,...
Most questions answered within 3 hours.
-
Consider the schema below that models a bank’s branches,
customers and their accounts and loans. Provide...
asked 4 seconds ago -
What kinds of policies should be considered when individuals
decisions may likely impact public expense? For...
asked 8 minutes ago -
The financial statements of Apple Inc. show the following
numbers for fiscal year 2017 ($000,000):
Revenue...
asked 13 minutes ago -
Suppose that you are given the following results. Find the
correlation coefficient of the data.
sx...
asked 22 minutes ago -
The width of a tool used for semiconductor manufacturing
is assumed to be normally distributed with...
asked 24 minutes ago -
A
runaway train car that has a mass of 1,400 kg travels at a speed of...
asked 28 minutes ago -
The expected abnormal earnings of a firm that has earnings of
$40,000 with a required equity...
asked 27 minutes ago -
A spherical surface completely surrounds a collection of
charges. Find the electric flux through the surface...
asked 42 minutes ago -
Two capacitors with capacitances of 12 and 18.1 µF,
respectively, are connected in parallel. The system...
asked 29 minutes ago -
Let's say you are a small business owner that provides
business-to-business software-as-a-service to non-profit
organizations. Your...
asked 34 minutes ago -
A circuit is constructed with five resistors and a battery as
shown. The battery voltage is...
asked 42 minutes ago -
A. What is the U.S.
economic system and what do you think are the advantages and...
asked 42 minutes ago