Business, 03.07.2020 19:01 sandygarcia65

On January 1, 2018, Splash City issues $500,000 of 9% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. Required:

Assuming the market interest rate on the issue date is 10%, the bonds will issue at $457,102.

1. Complete the first three rows of an amortization table.

2. Record the bond issue on January 1, 2018, and the first two semiannual interest payments on June 30, 2018, and December 31, 2018.

Answers: 3

Show answers

Answers

Answer from: jonestrishy4803

Date Interest Interest Amortization Bond's

payment expense bond discount book value

Jan. 1, 2018 457,102

June 30, 2018 22,500 23,572.45 1,072.45 458,174.45

Dec. 31, 2018 22,500 23,572.45 1,072.45 459,246.90

Assuming you are using a straight line amortization of bond discount, then the amortization per coupon payment = $42,898 / 40 = $1,072.45

January 1, 2018, bonds are issued

Dr Cash 457,102

Dr Discount on bonds payable 42,898

Cr Bonds payable 500,000

June 30, 2021, first coupon payment

Dr Interest expense 23,572.45

Cr Cash 22,500

Cr Discount on bonds payable 1,072.45

December 31, 2021, second coupon payment

Dr Interest expense 23,572.45

Cr Cash 22,500

Cr Discount on bonds payable 1,072.45

If the company uses the effective interest method, the numbers vary a little:

amortization of bond discount on first coupon payment:

($457,102 x 5%) - ($500,000 x 4.5%) = $22,855.10 - $22,500 = $355.10

Journal entry to record first coupon payment:

Dr Interest expense 22,855.10

Cr Cash 22,500

Cr Discount on bonds payable 355.10

amortization of bond discount on second coupon payment:

($458,174.45 x 5%) - ($400,000 x 4.5%) = $22,908.72 - $22,500 = $408.72

Journal entry to record second coupon payment:

Dr Interest expense 22,908.72

Cr Cash 22,500

Cr Discount on bonds payable 408.72

Answer from: Quest

The answer is yes it's correct they have to guarantee that job back when they come back

Answer from: Quest

these are the four factors that influence enterpreneurship development

1. economic development

2. culture

3.technological development

4. education

Other questions on the subject: Business

Business, 21.06.2019 16:00, burnsmykala23

Excellent inc. had a per-unit conversion cost of $3.00 during april and incurred direct materials cost of $112,000, direct labor costs of $84,000, and manufacturing overhead costs of $50,400 during the month. how many units did it manufacture during the month? a. 18,000 b. 44,800 c. 70,000 d. 30,000

Answers: 1

continue

Business, 21.06.2019 20:50, nathand200127

Suppose the price of frozen yogurt, a substitute for ice cream, increases. what happens to equilibrium price and quantity of ice cream? a. the price and quantity of ice cream both increase b. the price and quantity of ice cream both decrease c. the price of ice cream increases and the quantity decreases d. the price of ice cream decreases and the quantity increases

Answers: 3

continue

Business, 22.06.2019 13:00, dondre54

Explain the relationship between consumers and producers in economic growth and activity

Answers: 1

continue

Business, 22.06.2019 13:50, vegeta8375

The state troopers in one state have a motto, “nine you’re fine; ten you’re mine,” which is the standard that they use for pulling over speeders on the state highways. in other words, if the posted speed limit is 55 mph, drivers can drive at a rate up to 64 mph without fear of getting a ticket. which of the following best describes the ethical culture in the state? a. the troopers are following a standard of positive law. b. the troopers are following a normative standard. c. the troopers are following a headline test. d. the troopers are following the blanchard/peale standard.

Answers: 1

continue

You know the right answer?

On January 1, 2018, Splash City issues $500,000 of 9% bonds, due in 20 years, with interest payable...