18,000,000 $18,000,000 000,000 etermine the earnings per share of common stock f
ID: 2333952 • Letter: 1
Question
18,000,000 $18,000,000 000,000 etermine the earnings per share of common stock for each plan, assuming that the income before bond interest and income tax is $2,100,000. 2. Determine the earnings p income before bond interest and income tax is $1,050,000. er share of common stock for each plan, assuming that the 3. Discuss the advantages and disadvantages of each plan. PR 14-2A Bond discount, entries for bonds payable transactions OBJ. 2,3 n July 1, Year 1, 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 payabie semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Instructions 1. Journal ize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1. 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. Continued)Explanation / Answer
Ans- 1-As Danzer Industries Inc.issued the bonds $40,000,000 of 10 year 7%bonds at a market interest rate of 8 % receiving cash $37,282,062:
Journal Entry for the isssuance of the bonds on July 1 Year
2-(a)- As it is given that the bonds issued of $40,000,000 of 10 year 7% so the coupon price will be:
40,000,000*7/100=$2,800,000
The interest is semiannually so the price will be 2,800,000/2= $1,400,000
The discount amortization: $2,717,938*10/100= $271793.8
$271,793.8*6/12=$135,897
As the bonds issued for 10 years and the interest is paid semiannually so the amount of discount will be calculated for 6 months
Now Total interest is $1,400,000+135,897=$1,535,897
Journal Entry for record the Interest Expense
Year 1
Date Account Title and Explanation Debit Credit Year 1 Cash 37,282,062 July 1 Discount on notes payable 2,717,938 Bonds payable 40,000,000 ( the bonds issued$40,000,000 10 year 7 % at a discount)Related Questions
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