if bonds are issued initially at a premium and the effective interest method of amortization is...
Homework Answers
| if bonds are issued initially at a premium and the effective interest method of amortization is used, interest expense in the earlier years will be greater than if the straight line method were used |
| Interest expense under effective interest method of amortization is calculated based on Carrying value of bonds (Face amount+Premium). |
| In the earlier years when the carrying amount of bonds is higher, the interest expense will be greater based on carrying value. |
| Option A is correct |
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bonds are issued initially at a premium and the effective interest
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36. If bonds are issued initially at a premium and the effective-interest method of amortization is...
36. If bonds are issued initially at a premium and the effective-interest method of amortization is used, interest expense in the earlier years will be A) greater than if the straight-line method were used. B) greater than the amount of the interest payments. C) the same as if the straight-line method were used. D) less than if the straight-line method were used. 37. Stockholders' equity is generally classified into two major categories: A) contributed capital and appropriated capital. B) appropriated...
Hi, please help to these questions and explain why? S26 Ch14/. If bonds are issued initially...
Hi, please help to these questions and explain why? S26 Ch14/. If bonds are issued initially at a premium and the effective-interest method of amortization is used, interest expense in the earlier years will be a. greater than if the straight-line method were used. b. greater than the amount of the interest payments. c the same as if the straight-line method were used. 7 Ch14/. Amortization of a premium increases bond interest expense, while amortization of a discount decreases bond...
Hi, please help to these questions and explain why? 7 Ch14/. Amortization of a premium increases...
Hi, please help to these questions and explain why? 7 Ch14/. Amortization of a premium increases bond interest expense, while amortization of a discount decreases bond interest expense? S26 Ch14/. If bonds are issued initially at a premium and the effective-interest method of amortization is used, interest expense in the earlier years will be a. greater than if the straight-line method were used. b. greater than the amount of the interest payments. c the same as if the straight-line method...
When bonds are issued at a discount and interest expense is recorded at the effective interest...
When bonds are issued at a discount and interest expense is recorded at the effective interest rate, interest expense in the earlier years of the term to maturity will be Less than the cash interest payments made. Less than if the straight-line method were used. Greater that if the straight-line method were used. The same as if the straight-line method were used.
Both the straight-line method and the effective-interest method of amortization will always result in the same...
Both the straight-line method and the effective-interest method
of amortization will always result in
the same amount of interest expense being recognized each
year.
the same carrying value each year during the term of the
bonds.
more interest expense being recognized than if premium or
discounts were not amortized.
the same amount of interest expense being recognized over the
term of the bonds.
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. Provide the answers to the following questions. (1) What amount of interest expense is reported for 2021? (Round answer to 0 decimal places) (2) Will the bond interest expense reported in 2021 be the same as, greater than,...
On June 30, Year 7, Princess Company issued $4,000,000 face value of 13%, 20-year bonds at...
On June 30, Year 7, Princess Company issued $4,000,000 face value of 13%, 20-year bonds at $4,300,920, a yield of 12%. Princess uses the effective-interest method to amortize bond premiums and discounts. The bonds pay interest semiannually on June 30 and December 31. Instructions: Round all answers to the nearest dollar! A. Prepare the journal entries to record the following transactions: The issuance of the bonds on June 30, Year 7 The payment of interest and the amortization of the...
On June 30, 2020, Mischa Auer Company issued $4,000,000 face value of 13%, 20-year bonds at...
On June 30, 2020, Mischa Auer Company issued $4,000,000 face
value of 13%, 20-year bonds at $4,300,918, a yield of 12%. Auer
uses the effective-interest method to amortize bond premium or
discount. The bonds pay semiannual interest on June 30 and December
31.
I just need help with #3 in the last part
Prepare the journal entries to record the following transactions. (Round answer to o decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the...
Recording Bond Entries and Preparing an Amortization Schedule-Effective Interest Method, Premium Mitchell Inc. issued 120, 6%,...
Recording Bond Entries and Preparing an Amortization Schedule-Effective Interest Method, Premium Mitchell Inc. issued 120, 6%, $1,000 bonds on January 1, 2020. The bonds pay cash interest annually each December 31 and were issued to yield 5%. The bonds mature December 31, 2024, and the company uses the effective interest method to amortize bond discounts or premiums. Required a. Determine the selling price of the bonds. Round amount to the nearest whole dollar. b. Prepare an amortization schedule for the...
On June 30, 2020, Shamrock Company issued $4,470,000 face value of 14%, 20-year bonds at $5,142,560,...
On June 30, 2020, Shamrock Company issued $4,470,000 face value of 14%, 20-year bonds at $5,142,560, a yield of 12%. Shamrock 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" for the account titles and enter 0 for the amounts. Credit account titles...
36. If bonds are issued initially at a premium and the effective-interest method of amortization is used, interest expense in the earlier years will be A) greater than if the straight-line method were used. B) greater than the amount of the interest payments. C) the same as if the straight-line method were used. D) less than if the straight-line method were used. 37. Stockholders' equity is generally classified into two major categories: A) contributed capital and appropriated capital. B) appropriated...
Both the straight-line method and the effective-interest method
of amortization will always result in
the same amount of interest expense being recognized each
year.
the same carrying value each year during the term of the
bonds.
more interest expense being recognized than if premium or
discounts were not amortized.
the same amount of interest expense being recognized over the
term of the bonds.
On June 30, 2020, Mischa Auer Company issued $4,000,000 face
value of 13%, 20-year bonds at $4,300,918, a yield of 12%. Auer
uses the effective-interest method to amortize bond premium or
discount. The bonds pay semiannual interest on June 30 and December
31.
I just need help with #3 in the last part
Prepare the journal entries to record the following transactions. (Round answer to o decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the...
Recording Bond Entries and Preparing an Amortization Schedule-Effective Interest Method, Premium Mitchell Inc. issued 120, 6%, $1,000 bonds on January 1, 2020. The bonds pay cash interest annually each December 31 and were issued to yield 5%. The bonds mature December 31, 2024, and the company uses the effective interest method to amortize bond discounts or premiums. Required a. Determine the selling price of the bonds. Round amount to the nearest whole dollar. b. Prepare an amortization schedule for the...
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