Review Styles SmartArt me Layout Document Elements Tables Charts Paragraph - Lis
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Review Styles SmartArt me Layout Document Elements Tables Charts Paragraph - List Paragraph Text Box 2113 On January 1, 2018, Margo Company issued 100, $10,000, S-year bonds that pay interest annually on December 31 at a stated rate of 9% per year. The market rate of interest on the January 1, the date the bonds were issued was 6%. 1. a. Compute the issuance price of the bonds. Show your work. b. Prepare the journal entry issue the bonds c Prepare a table in Excel to show the journal entries and the Balance sheet amounts (similar to the one in the book and the ones we have completed in class) Prepare the journal entries for the 5 interest payments Prepare the journal entry for the final payment of principal. d. e. On January 1, 2018, Margo Company issued 100, $10,000, 5-year bonds that pay interest annually ON December 31 at a stated rate of 6% per year. The market rate of interest on the January 1, the date the bonds were sold was 9%. 2. Compute the issuance price of the bonds. Show your work a. b. Prepare the journal entry to issue the bonds c Prepare a table in Excel to show the journal entries and the Balance sheet amounts (similar to the one in the book and the ones we have completed in class) Prepare the journal entries for the 5 interest payments Prepare the journal entry for the final payment of principal. d. e. On January 1, 2018, Spencer Company issued 100, $ 10,000, 5-year bonds that pay interest annually ON December 31 at 5% per year. The market rate of interest on the January 1, the date the bonds were sold was 5%. 3. a. b. c. d. Compute the issuance price of the bonds. Show your work Prepare the journal entry to issue the bonds Prepare the journal entries for the interest payments Prepare the journal entry for the final payment of principal, Print Layout View Sec 1 Pages: 1 of 2 Words: 0 of 100%-Explanation / Answer
Answer 1-a. Table Value Based on n= 5 i= 6.00% Cash Flow Amount Present Value Interest - $1,000,000 X 9% 90,000 379,112 ($90,000 X 4.21236) Principal 1,000,000 747,260 ($1,000,000 X 0.74726) Issue Price of Bonds 1,126,372 Premium on issue of Bond 126,372 Answer 1-b. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1-Jan-18 Cash 1,126,372 Bonds Payable 1,000,000 Premium on Issue of Bonds 126,372 (Record the issue of Bonds) Anwer 1-c. Bond Premium Amortization Schedule Date Interest Paid - $1,000,000 X 9% Interest Expense - Preceeding Bond Carrying Value X 6% Premium Amortization Unamortized Premium Bonds Carrying Amount A B C = A - B D = D - C E = $1,000,000 + D 1-Jan-18 - - - 126,372 1,126,372 31-Dec-18 90,000 67,582 22,418 103,955 1,103,955 31-Dec-19 90,000 66,237 23,763 80,192 1,080,192 31-Dec-20 90,000 64,812 25,188 55,004 1,055,004 31-Dec-21 90,000 63,300 26,700 28,304 1,028,304 31-Dec-22 90,000 61,695 28,305 (0) 1,000,000 Answer 1-d. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 31-Dec-18 Interest Expense 67,582 Premium on Issue of Bonds 22,418 Cash 90,000 (record the Interest Paid) 31-Dec-19 Interest Expense 66,237 Premium on Issue of Bonds 23,763 Cash 90,000 (record the Interest Paid) 31-Dec-20 Interest Expense 64,812 Premium on Issue of Bonds 25,188 Cash 90,000 (record the Interest Paid) 31-Dec-21 Interest Expense 63,300 Premium on Issue of Bonds 26,700 Cash 90,000 (record the Interest Paid) 31-Dec-22 Interest Expense 61,695 Premium on Issue of Bonds 28,305 Cash 90,000 (record the Interest Paid) Answer 1-e Journal Entry Date Particulars Dr. Amt. Cr. Amt. 31-Dec-22 Bonds Payable 1,000,000 Cash 1,000,000 (record the final payment of Bonds)
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