ACCT 211 Homework 10 Accounting for Long-Term Liabilities Exercises Assignment solutions answers

ACCT 211 Homework 10 Accounting for Long-Term Liabilities Exercises Assignment solutions complete answers 

 

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On January 1, Boston Enterprises issues bonds that have a $2,050,000 par value, mature in 20 years, and pay 8% interest semiannually on June 30 and December 31. The bonds are sold at par.
 
1. How much interest will the issuer pay (in cash) to the bondholders every six months?
2. Prepare journal entries to record (a) the issuance of bonds on January 1, (b) the first interest payment on June 30, and (c) the second interest payment on December 31.
3. Prepare the journal entry for issuance assuming the bonds are issued at (a) 95 and (b) 105.

 

Tano Company issues bonds with a par value of $99,000 on January 1, 2021. The bonds' annual contract rate is 6%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 8%, and the bonds are sold for $93,809.
 
1. What is the amount of the discount on these bonds at issuance?
2. How much total bond interest expense will be recognized over the life of these bonds?
3. Prepare a straight-line amortization table for these bonds.

 

Paulson Company issues 10%, four-year bonds, on January 1 of this year, with a par value of $102,000 and semiannual interest payments.
 

 
Semiannual Period-End
Unamortized Discount
Carrying Value
(0)
January 1, issuance
$ 6,773
$ 95,227
(1)
June 30, first payment
5,926
96,074
(2)
December 31, second payment
5,079
96,921

Use the above straight-line bond amortization table and prepare journal entries for the following.
 
(a) The issuance of bonds on January 1.
(b) The first interest payment on June 30.
(c) The second interest payment on December 31.

 

Quatro Company issues bonds dated January 1, 2021, with a par value of $840,000. The bonds’ annual contract rate is 13%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 12%, and the bonds are sold for $860,685.
 
1. What is the amount of the premium on these bonds at issuance?
2. How much total bond interest expense will be recognized over the life of these bonds?
3. Prepare a straight-line amortization table for these bonds.

 

Brin Company issues bonds with a par value of $510,000. The bonds mature in 9 years and pay 7% annual interest in semiannual payments. The annual market rate for the bonds is 10%. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided.)
 
1. Compute the price of the bonds as of their issue date.
2. Prepare the journal entry to record the bonds’ issuance.

 

On January 1, Boston Enterprises issues bonds that have a $1,450,000 par value, mature in 20 years, and pay 9% interest semiannually on June 30 and December 31. The bonds are sold at par.
 
1. How much interest will the issuer pay (in cash) to the bondholders every six months?
2. Prepare journal entries to record (a) the issuance of bonds on January 1, (b) the first interest payment on June 30, and (c) the second interest payment on December 31.
3. Prepare the journal entry for issuance assuming the bonds are issued at (a) 95 and (b) 105.

 

Tano Company issues bonds with a par value of $92,000 on January 1, 2021. The bonds' annual contract rate is 10%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 12%, and the bonds are sold for $87,480.
 
1. What is the amount of the discount on these bonds at issuance?
2. How much total bond interest expense will be recognized over the life of these bonds?
3. Prepare a straight-line amortization table for these bonds.

 

Paulson Company issues 7%, four-year bonds, on January 1 of this year, with a par value of $91,000 and semiannual interest payments.
 

 
Semiannual Period-End
Unamortized Discount
Carrying Value
(0)
January 1, issuance
$ 6,553
$ 84,447
(1)
June 30, first payment
5,734
85,266
(2)
December 31, second payment
4,915
86,085

Use the above straight-line bond amortization table and prepare journal entries for the following.
 
(a) The issuance of bonds on January 1.
(b) The first interest payment on June 30.
(c) The second interest payment on December 31.

 

Paulson Company issues 10%, four-year bonds, on January 1 of this year, with a par value of $107,000 and semiannual interest payments.
 

 
Semiannual Period-End
Unamortized Discount
Carrying Value
(0)
January 1, issuance
$ 6,873
$ 100,127
(1)
June 30, first payment
6,014
100,986
(2)
December 31, second payment
5,155
101,845

Use the above straight-line bond amortization table and prepare journal entries for the following.
 
(a) The issuance of bonds on January 1.
(b) The first interest payment on June 30.
(c) The second interest payment on December 31.

 

Quatro Company issues bonds dated January 1, 2021, with a par value of $890,000. The bonds’ annual contract rate is 12%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 10%, and the bonds are sold for $935,160.
 
1. What is the amount of the premium on these bonds at issuance?
2. How much total bond interest expense will be recognized over the life of these bonds?
3. Prepare a straight-line amortization table for these bonds.