Company A To: Glenda Weber, Accounting Director Shawn Grayson, Finance Director From: Robert Fleming, Treasury Director...
Company A
|
To: |
Glenda Weber, Accounting Director |
|
Shawn Grayson, Finance Director |
|
|
From: |
Robert Fleming, Treasury Director |
|
Date: |
January 5, Year 1 |
|
Subject: |
Purchase of Bonds from Company B |
Glenda/Shawn,
On January 1, Year 1, 50 bonds, each valued at $1,000, 8% stated rate, were purchased from Company B. These bonds are expected to mature on December 31, Year 3, paying interest annually on December 31st.
Bonds were purchased to yield 5%. Please classify these bonds as held-to-maturity securities.
Let me know if you have any questions.
-Robert Fleming
|
PRESENT VALUE OF $1 |
||||||||
|
RATE PER PERIOD |
||||||||
|
Period |
1.00% |
2.00% |
3.00% |
4.00% |
5.00% |
6.00% |
7.00% |
8.00% |
|
1 |
0.9901 |
0.9804 |
0.9709 |
0.9615 |
0.9524 |
0.9434 |
0.9346 |
0.9259 |
|
2 |
0.9803 |
0.9612 |
0.9426 |
0.9246 |
0.9070 |
0.8900 |
0.8734 |
0.8573 |
|
3 |
0.9706 |
0.9423 |
0.9151 |
0.8890 |
0.8638 |
0.8396 |
0.8163 |
0.7938 |
|
4 |
0.9610 |
0.9239 |
0.8885 |
0.8548 |
0.8227 |
0.7921 |
0.7629 |
0.7350 |
|
5 |
0.9515 |
0.9057 |
0.8626 |
0.8219 |
0.7835 |
0.7473 |
0.7130 |
0.6806 |
|
6 |
0.9421 |
0.8880 |
0.8375 |
0.7903 |
0.7462 |
0.7050 |
0.6663 |
0.6302 |
|
7 |
0.9327 |
0.8706 |
0.8131 |
0.7599 |
0.7107 |
0.6651 |
0.6228 |
0.5835 |
|
8 |
0.9235 |
0.8535 |
0.7894 |
0.7307 |
0.6768 |
0.6274 |
0.5820 |
0.5403 |
|
9 |
0.9143 |
0.8368 |
0.7664 |
0.7026 |
0.6446 |
0.5919 |
0.5439 |
0.5003 |
|
10 |
0.9053 |
0.8204 |
0.7441 |
0.6756 |
0.6139 |
0.5584 |
0.5084 |
0.4632 |
|
PRESENT VALUE OF AN ORDINARY ANNUITY OF $1 |
||||||||
|
RATE PER PERIOD |
||||||||
|
Period |
1.00% |
2.00% |
3.00% |
4.00% |
5.00% |
6.00% |
7.00% |
8.00% |
|
1 |
.9901 |
.9804 |
.9709 |
.9615 |
.9524 |
.9434 |
.9346 |
.9259 |
|
2 |
1.9704 |
1.9416 |
1.9135 |
1.8861 |
1.8594 |
1.8334 |
1.8080 |
1.7833 |
|
3 |
2.9410 |
2.8839 |
2.8286 |
2.7751 |
2.7232 |
2.6730 |
2.6243 |
2.5771 |
|
4 |
3.9020 |
3.8077 |
3.7171 |
3.6299 |
3.5460 |
3.4651 |
3.3872 |
3.3121 |
|
5 |
4.8534 |
4.7135 |
4.5797 |
4.4518 |
4.3295 |
4.2124 |
4.1002 |
3.9927 |
|
6 |
5.7955 |
5.6014 |
5.4172 |
5.2421 |
5.0757 |
4.9173 |
4.7665 |
4.6229 |
|
7 |
6.7282 |
6.4720 |
6.2303 |
6.0021 |
5.7864 |
5.5824 |
5.3893 |
5.2064 |
|
8 |
7.6517 |
7.3255 |
7.0197 |
6.7327 |
6.4632 |
6.2098 |
5.9713 |
5.7466 |
|
9 |
8.5660 |
8.1622 |
7.7861 |
7.4353 |
7.1078 |
6.8017 |
6.5152 |
6.2469 |
|
10 |
9.4713 |
8.9826 |
8.5302 |
8.1109 |
7.7217 |
7.3601 |
7.0236 |
6.7101 |
Scroll down to complete all parts of this task.
Using the information provided in the exhibits, enter the appropriate amounts in the designated cells below. Enter all amounts as positive values. Round all amounts to the nearest dollar. If no entry is necessary, enter a zero (0).
|
Items |
Amount |
|
The amount Company A paid for the bonds. |
|
|
The amount of premium on the bonds on January 1, Year 1. |
|
|
The amount of cash interest received by Company A during Year 1. |
|
|
The amount of interest revenue recognized in the Year 1 income statement. |
|
|
The amount of bond premium amortized in Year 1. |
|
|
The carrying amount of the bonds presented in the December 31, Year 1, financial statements. |
Homework Answers
ANSWER:
Required 1) The amount Company A paid for the bonds.
n = 3, i = 5%
| Cash Flow | Table Value | Amount | Present Value |
| Par (Maturity) Value | 0.8638 | 50,000 (50 * 1,000) | 43,190 |
| Interest (Annuity) | 2.7232 | 4,000 (50,000 * 8%) | 10,893 |
| Price of bonds | 54,083 |
Required 2) The amount of premium on the bonds on January 1, Year 1.
Amount of premium on the bonds on January 1, Year 1. = $54,083 - $50,000 = $4,083
Required 3) The amount of cash interest received by Company A during Year 1.
Amount of cash interest received by Company A during Year 1 = $4,000
Required 4) The amount of interest revenue recognized in the Year 1 income statement.
Amount of interest revenue recognized in the Year 1 income statement. = $54,083 * 5% = $2,704
Required 5) The amount of bond premium amortized in Year 1.
Amount of bond premium amortized in Year 1 = $4,000 - $2,704 = $1,296
Required 6) The carrying amount of the bonds presented in the December 31, Year 1, financial statements.
Carrying amount of the bonds presented in the December 31, Year 1, financial statements
= $54,083 - $1,296 = $52,787
Add Answer to:
Company A
To:
Glenda Weber, Accounting Director
Shawn Grayson, Finance Director
From:
Robert Fleming, Treasury Director...
It is November 1 of Year 1. Sales for Robert Company for November and December of...
It is November 1 of Year 1. Sales for Robert Company for November and December of Year 1 and January of Year 2 are forecasted to be as follows: November, 400,000; December 600,000; January, 200,000 If you could explain this step by step it would help me understand how to do these greatly! thank you :) On average, cost of goods sold is 70% of sales. During this period, Robert Company expects inventory levels to remain constant. This means that...
Penn Company uses a periodic inventory system. At the end of the annual accounting period, December...
Penn Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 1: Units 2,600 Unit Cost $8.00 Inventory, December 31, prior year For the current year: Purchase, March 21 Purchase, August 1 Inventory, December 31, current year 5,600 3,600 5,800 9.00 4.00 Required: Compute ending inventory and cost of goods sold for the current year under FIFO, LIFO, and average cost...
Problem 10-05A Crane Company sold $4,800,000, 7%, 15-year bonds on January 1, 2022. The bonds were...
Problem 10-05A Crane Company sold $4,800,000, 7%, 15-year bonds on January 1, 2022. The bonds were dated January 1, 2022, and pay interest on December 31. The bonds were sold at 96. Prepare the journal entry to record the issuance of the bonds on January 1, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1 enter an account title for the journal entry on January...
. Mr. Aaron is a director of Geo Bhd, a controlled company, from which he received director's fees of RM120,430 f...
.
Mr. Aaron is a director of Geo Bhd, a controlled company, from which he received director's fees of RM120,430 for the year ended 31 December 2020. The following benefits were also provided by the company to Aaron for the year of assessment 2020: a. A free use of a six-year-old car that cost RM133,000 when new, together with fuel for the period 01 January 2020 to 30 April 2020. From 1 May, 2020 he was provided with a company...
Problem 9-93A (Algorithmic) Preparing a Bond Amortization Table (Straight Line) On January 1, 2021, Distel Company...
Problem 9-93A (Algorithmic) Preparing a Bond Amortization Table (Straight Line) On January 1, 2021, Distel Company borrowed $27,500 by issuing 3-year, 8.5% bonds with a face amount of $25,000. Interest is paid annually on December 31. Required: Prepare an amortization table. Note: If an amount box does not require an entry, leave it blank and if the answer is zero, enter "O". Round all amounts to the nearest dollar. And, if necessary, round final year to complete the amortization. Distel...
Grade: Chapter 3: Accrual Basis of Accounting 1. Fred Company paid $48,000 for a two-year insurance...
Grade: Chapter 3: Accrual Basis of Accounting 1. Fred Company paid $48,000 for a two-year insurance policy on October 1 and recorded the $48,000 as a debit to Prepaid Insurance and a credit to Cash. What adjusting entry should Fred make on December 31, the end of the accounting period (no previous adjustment has been made)? 2. As of the beginning of 2016, the Let's Move Company had equipment totaling $1,800,000 which was depreciated at $150,000 per year. If Let's...
On January 1, Year 1, Weller Company issued bonds with a $230,000 face value, a stated...
On January 1, Year 1, Weller
Company issued bonds with a $230,000 face value, a stated rate of
interest of 10.00%, and a 10-year term to maturity. Weller uses the
effective interest method to amortize bond discounts and premiums.
The market rate of interest on the date of issuance was 8.00%.
Interest is paid annually on December 31.
QUESTION 9 During Year 1, El Paso Company had the following changes in account balances The Accumulated Depreciation account had a beginning...
Cullumber Company, a manufacturer of small tools, provided the following information from its accounting records for...
Cullumber Company, a manufacturer of small tools, provided the
following information from its accounting records for the year
ended December 31, 2017.
Inventory at December 31,
2017 (based on physical count of goods in Cullumber’s plant, at
cost, on December 31, 2017)
$1,467,950
Accounts payable at December
31, 2017
1,182,000
Net sales (sales less sales
returns)
7,990,400
Additional information is as follows.
1.
Included in the physical
count were tools billed to a customer f.o.b. shipping point on
December 31,...
The following information is from the December 31 un-adjusted trial balance of Excelsior Shop. Credit Debit...
The following information is from the December 31 un-adjusted trial balance of Excelsior Shop. Credit Debit $ 100,000.00 $ 204,000.00 $ 145,000.00 $ 72,000.00 $ 12,000.00 Cash Accounts Receivable Equipment Accumulated Depreciation - Equipment Supplies Notes Payable Service Revenue Insurance Expense Salaries Expense Interest Expense Advertising Expense $ 100,000.00 $ 450,000.00 $ 24,000.00 $ 125,000.00 $ 2,500.00 $ 9,500.00 a. From the trial balance and the following information, prepare the annual adjusting necessary on December 31. 1.00 The equiment has...
Concord Company, a manufacturer of small tools, provided the following information from its accounting records for...
Concord Company, a manufacturer of small tools, provided the following information from its accounting records for the year ended December 31, 2020. Inventory at December 31, 2020 (based on physical count of goods in Concord's plant, at cost, on December 31, 2020) $1,377,820 Accounts payable at December 31, 2020 1,262,700 Net sales (sales less sales returns) 8,704.300 Additional information is as follows. 1. Included in the physical count were tools billed to a customer f.o.b. shipping point on December 31,...
Penn Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 1: Units 2,600 Unit Cost $8.00 Inventory, December 31, prior year For the current year: Purchase, March 21 Purchase, August 1 Inventory, December 31, current year 5,600 3,600 5,800 9.00 4.00 Required: Compute ending inventory and cost of goods sold for the current year under FIFO, LIFO, and average cost...
.
Mr. Aaron is a director of Geo Bhd, a controlled company, from which he received director's fees of RM120,430 for the year ended 31 December 2020. The following benefits were also provided by the company to Aaron for the year of assessment 2020: a. A free use of a six-year-old car that cost RM133,000 when new, together with fuel for the period 01 January 2020 to 30 April 2020. From 1 May, 2020 he was provided with a company...
Problem 9-93A (Algorithmic) Preparing a Bond Amortization Table (Straight Line) On January 1, 2021, Distel Company borrowed $27,500 by issuing 3-year, 8.5% bonds with a face amount of $25,000. Interest is paid annually on December 31. Required: Prepare an amortization table. Note: If an amount box does not require an entry, leave it blank and if the answer is zero, enter "O". Round all amounts to the nearest dollar. And, if necessary, round final year to complete the amortization. Distel...
Grade: Chapter 3: Accrual Basis of Accounting 1. Fred Company paid $48,000 for a two-year insurance policy on October 1 and recorded the $48,000 as a debit to Prepaid Insurance and a credit to Cash. What adjusting entry should Fred make on December 31, the end of the accounting period (no previous adjustment has been made)? 2. As of the beginning of 2016, the Let's Move Company had equipment totaling $1,800,000 which was depreciated at $150,000 per year. If Let's...
On January 1, Year 1, Weller
Company issued bonds with a $230,000 face value, a stated rate of
interest of 10.00%, and a 10-year term to maturity. Weller uses the
effective interest method to amortize bond discounts and premiums.
The market rate of interest on the date of issuance was 8.00%.
Interest is paid annually on December 31.
QUESTION 9 During Year 1, El Paso Company had the following changes in account balances The Accumulated Depreciation account had a beginning...
Cullumber Company, a manufacturer of small tools, provided the
following information from its accounting records for the year
ended December 31, 2017.
Inventory at December 31,
2017 (based on physical count of goods in Cullumber’s plant, at
cost, on December 31, 2017)
$1,467,950
Accounts payable at December
31, 2017
1,182,000
Net sales (sales less sales
returns)
7,990,400
Additional information is as follows.
1.
Included in the physical
count were tools billed to a customer f.o.b. shipping point on
December 31,...
The following information is from the December 31 un-adjusted trial balance of Excelsior Shop. Credit Debit $ 100,000.00 $ 204,000.00 $ 145,000.00 $ 72,000.00 $ 12,000.00 Cash Accounts Receivable Equipment Accumulated Depreciation - Equipment Supplies Notes Payable Service Revenue Insurance Expense Salaries Expense Interest Expense Advertising Expense $ 100,000.00 $ 450,000.00 $ 24,000.00 $ 125,000.00 $ 2,500.00 $ 9,500.00 a. From the trial balance and the following information, prepare the annual adjusting necessary on December 31. 1.00 The equiment has...
Concord Company, a manufacturer of small tools, provided the following information from its accounting records for the year ended December 31, 2020. Inventory at December 31, 2020 (based on physical count of goods in Concord's plant, at cost, on December 31, 2020) $1,377,820 Accounts payable at December 31, 2020 1,262,700 Net sales (sales less sales returns) 8,704.300 Additional information is as follows. 1. Included in the physical count were tools billed to a customer f.o.b. shipping point on December 31,...
Most questions answered within 3 hours.
-
Discuss how Entrepreneurial leadership style differs
from traditional leadership?
asked 10 minutes ago -
A futuristic design for a car is to have a large solid
disk-shaped flywheel within the...
asked 8 minutes ago -
Solid NaOH is added to a solution of 0.50 M acetic acid until
the pH of...
asked 12 minutes ago -
Which of the following statements is not a characteristic of the
Internal Revenue Code?
A) The...
asked 19 minutes ago -
Say true or false and explain it.
A heap is represented using an array. The array...
asked 29 minutes ago -
Explain how the DNA replication enzyme complex is organized and
functions, please don't copy paste from...
asked 29 minutes ago -
how
can personality contribute to one scoring high on the need to
evaluate measurement by Jarvis?
asked 30 minutes ago -
A high jumper is attempting to jump over a crossbar that is
placed at a height...
asked 34 minutes ago -
1.
A hemophiliac male mates with a healthy female. what are the
possible genotypes for the...
asked 52 minutes ago -
You could argue that even though Rockefeller clearly had
enormous market power (90% of the market)...
asked 1 hour ago -
At the beginning of the year, Palermo Brothers, Inc., purchased
a new plastic water bottle making...
asked 1 hour ago -
Calculate the change in the Gibbs energy of the system for the
following processes: a) 6.0...
asked 55 minutes ago