Homework Answers
Question 1
Answer: B. The Difference is accounted for using Amortization for Bond Discount.
.
Issuing bonds at a price less than the face value will result in bond discount.
Difference = Bond discount = Face Value - Issue Price
This difference (discount) will accounted for using Amortization for Bond Discount.
.
Note:
Issuing bonds at a price more than the face value will result in bond premium.
Difference = Bond premium = Issue Value - Face value
This difference (premium) will accounted for using Amortization for Bond Premium
.
.
Question 2
Answer: A. subtracting Discount on Bonds Payable from Bonds Payable
.
Issuing bonds at a price less than the face value will result in bond discount.
Difference = Bond discount = Face Value - Issue Price
This discount is debited to the account called "Discount on Bonds Payable"
Carrying amount (or Book Value) = Bonds Payable - Discount on Bonds Payable
.
.
Question 3
Answer: A. Will increase
.
Carrying value = Bonds Payable - Discount on Bonds Payable
The amortization of discount will result in the reduction of the balance in the "Discount on Bonds Payable" account.
The balance is bonds payable remains constant until the bonds are fully or partly repaid.
So, when discount is amortized, the carrying value of the bonds will increase (due to reduced balance in "Discount on Bonds Payable" account.)
Add Answer to:
How does a company account for the difference between interest expense and the cash payment of interest when bond...
C) debit to interest Expense D) credit to Interest Expense 9) Under the effective-interest method of...
C) debit to interest Expense D) credit to Interest Expense 9) Under the effective-interest method of amortization, the cash payment on each interest paymer date will: A) remain the same for each interest period B) decrease if bonds are issued at a premium C) increase if bonds are issued at par D) increase if bonds are issued at a discount 10) Current liabilities fall into two categories, which are referred to as: A) contra liabilities and contingent liabilities B) contingent...
9) Under the effective-interest method of amortization, the cash payment on each interest pas date will:...
9) Under the effective-interest method of amortization, the cash payment on each interest pas date will: A) remain the same for each interest period B) decrease if bonds are issued at a premium C) increase if bonds are issued at par D) increase if bonds are issued at a discount 10) Current liabilities fall into two categories, which are referred to as: A) contra liabilities and contingent liabilities B) contingent liabilities and non contingent liabilities C) liabilities of a known...
Dl credit to interest Expense 9) Under the effective interest method of amortization the cash samment...
Dl credit to interest Expense 9) Under the effective interest method of amortization the cash samment on A C ntheforchrest period si decrease if bands are issued at a premium crease beds are med at par increase bends data 10) Current abilities fall into two categories which are referred to as A) contra labies and contingent liabilities B) contenties and non contingent l es Clities of a known amount and lateswho t ube be of known amount and contingent es...
Amortization of Discount Stacy Company issued five-year, 10% bonds with a face value of $10,000 on...
Amortization of Discount
Stacy Company issued five-year, 10% bonds with a face value of
$10,000 on January 1, 2017. Interest is paid annually on December
31. The market rate of interest on this date is 12%, and Stacy
Company receives proceeds of $9,279 on the bond issuance.
Required:
Refer to the tables above for present value factors.
1. Prepare a five-year table to amortize the
discount using the effective interest method.
Note: Round the 12/31/18 interest expense and discount amortized...
A bond issued at a discount typically has a market price that decreases toward maturity value....
A bond issued at a discount typically has a market price that decreases toward maturity value. O 0 True False Which type of lease will not increase a company's assets or liabilities? O A. a lease in which title is transferred to the lessee at the end of the lease term OB. a finance lease O c. an operating lease OD. the present value of lease payments is 90% or more of the market value of the leased asset Under...
Can someone explain where the $2000/10 Years comes from? On January 1, Year 1, Dixon Company...
Can someone explain where the $2000/10 Years comes from?
On January 1, Year 1, Dixon Company issued bonds with a $50,000 face value at 96. The bonds had a 10 year term and an 8% stated rate of interest. Interest is payable in cash on December 31 of each year. Assuming straight-line amortization, which of the following statements regarding the recognition of interest expense on December 31, Year 1 is true? (Select all that apply.) Read about this The correct...
Smith Company borrows cash by issuing a bond payable with the following terms: $8,000,000, 8%...
Smith Company borrows cash by issuing a bond payable with the following terms: $8,000,000, 8% bond Issued on 1/1/21 Matures in 12 years Semi-annual interest payments on 6/30 and 12/31 of each year Market rate for bonds of this type was 7% at the time of their issue Required a. Compute the cash proceeds from the issuance of the bond. b. Create an effective interest amortization table in Excel for the entire life of the...
Bond discount, entries for bonds payable transactions, interest method of amortizing bond discount Journal Instructions Chart...
Bond discount, entries for bonds payable transactions, interest method of amortizing bond discount Journal Instructions Chart of Accounts Final Question Instructions On July 1, 20Y1, Danzer Industries Inc. issued $40,000,000 of 10-year, 7% bonds at a market (effective) interest rate of 8%, receiving cash of $37,282,062. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash...
Compute Bond Proceeds, Amortizing Discount by Interest Method, and Interest Expense Boyd Co. produces and sells...
Compute Bond Proceeds, Amortizing Discount by Interest Method, and Interest Expense Boyd Co. produces and sells aviation equipment. On the first day of its fiscal year, Boyd Co. issued $60,000,000 of five-year, 10% bonds at a market (effective) interest rate of 12%, with interest payable semiannually. Compute the following: a. The amount of cash proceeds from the sale of the bonds. Use the tables of present values in Exhibit 5 and Exhibit 7. Round to the nearest dollar. $ b....
Compute Bond Proceeds, Amortizing Discount by Interest Method, and Interest Expense Boyd Co. produces and sells...
Compute Bond Proceeds, Amortizing Discount by Interest Method, and Interest Expense Boyd Co. produces and sells aviation equipment. On the first day of its fiscal year, Boyd Co. issued $30,000,000 of five-year, 12% bonds at a market (effective) interest rate of 14%, with interest payable semiannually. Compute the following: a. The amount of cash proceeds from the sale of the bonds. Use the tables of present values in Exhibit 5 and Exhibit 7. Round to the nearest dollar. b. The...
C) debit to interest Expense D) credit to Interest Expense 9) Under the effective-interest method of amortization, the cash payment on each interest paymer date will: A) remain the same for each interest period B) decrease if bonds are issued at a premium C) increase if bonds are issued at par D) increase if bonds are issued at a discount 10) Current liabilities fall into two categories, which are referred to as: A) contra liabilities and contingent liabilities B) contingent...
9) Under the effective-interest method of amortization, the cash payment on each interest pas date will: A) remain the same for each interest period B) decrease if bonds are issued at a premium C) increase if bonds are issued at par D) increase if bonds are issued at a discount 10) Current liabilities fall into two categories, which are referred to as: A) contra liabilities and contingent liabilities B) contingent liabilities and non contingent liabilities C) liabilities of a known...
Dl credit to interest Expense 9) Under the effective interest method of amortization the cash samment on A C ntheforchrest period si decrease if bands are issued at a premium crease beds are med at par increase bends data 10) Current abilities fall into two categories which are referred to as A) contra labies and contingent liabilities B) contenties and non contingent l es Clities of a known amount and lateswho t ube be of known amount and contingent es...
Amortization of Discount
Stacy Company issued five-year, 10% bonds with a face value of
$10,000 on January 1, 2017. Interest is paid annually on December
31. The market rate of interest on this date is 12%, and Stacy
Company receives proceeds of $9,279 on the bond issuance.
Required:
Refer to the tables above for present value factors.
1. Prepare a five-year table to amortize the
discount using the effective interest method.
Note: Round the 12/31/18 interest expense and discount amortized...
A bond issued at a discount typically has a market price that decreases toward maturity value. O 0 True False Which type of lease will not increase a company's assets or liabilities? O A. a lease in which title is transferred to the lessee at the end of the lease term OB. a finance lease O c. an operating lease OD. the present value of lease payments is 90% or more of the market value of the leased asset Under...
Can someone explain where the $2000/10 Years comes from?
On January 1, Year 1, Dixon Company issued bonds with a $50,000 face value at 96. The bonds had a 10 year term and an 8% stated rate of interest. Interest is payable in cash on December 31 of each year. Assuming straight-line amortization, which of the following statements regarding the recognition of interest expense on December 31, Year 1 is true? (Select all that apply.) Read about this The correct...
Bond discount, entries for bonds payable transactions, interest method of amortizing bond discount Journal Instructions Chart of Accounts Final Question Instructions On July 1, 20Y1, Danzer Industries Inc. issued $40,000,000 of 10-year, 7% bonds at a market (effective) interest rate of 8%, receiving cash of $37,282,062. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash...
Compute Bond Proceeds, Amortizing Discount by Interest Method, and Interest Expense Boyd Co. produces and sells aviation equipment. On the first day of its fiscal year, Boyd Co. issued $30,000,000 of five-year, 12% bonds at a market (effective) interest rate of 14%, with interest payable semiannually. Compute the following: a. The amount of cash proceeds from the sale of the bonds. Use the tables of present values in Exhibit 5 and Exhibit 7. Round to the nearest dollar. b. The...
Most questions answered within 3 hours.
-
Le Terroir Winery is considering an expansion project to produce
fine wines. The trial expansion will...
asked 4 minutes ago -
The Bahraini public budget experiences deficit in the last
seven years, what are procedures are taken...
asked 11 minutes ago -
You invested $30,000 in a mutual fund at the beginning of the
year when the NAV...
asked 15 minutes ago -
Would you expect the price elasticity of supply for guitars to
be more inelastic in the...
asked 17 minutes ago -
A snowmobile is originally at the point with position vector
30.1 m at 95.0° counterclockwise from...
asked 17 minutes ago -
MAN3240 Organizational Behavior
In one to two paragraphs
6.) How can understanding emotions make me more...
asked 25 minutes ago -
Identify one individual who, in your opinion, is an excellent
leader. List the qualities that this...
asked 22 minutes ago -
For the data set shown below, complete parts (a) through (d)
below. x 3 4 5...
asked 28 minutes ago -
A university administrator working in student housing wants to
determine if the percentage of students residing...
asked 42 minutes ago -
3). Describe human population growth that has occurred in the
past 400 years. Use terms learned...
asked 39 minutes ago -
A
projectile is blue at a target. The distance from the point of
impact to the...
asked 1 hour ago -
Given a 32 bit processor, with 2 MB of physical RAM split into 512
frames. What...
asked 54 minutes ago