Exercise 11-8 Effective Interest Method Linz Company sold $250,000 of 9.5 percen

Question

Exercise 11-8 Effective Interest Method Linz Company sold $250,000 of 9.5 percent, 20-year bonds on April 1, 2014, at 106. The semiannual Interest payment dates are March 31 and September 30. The market interest rate s 8.9 percent. The company's fiscal year ends September 30. Use the effective interest method to calculate the amortization 1. with regard to the bond issue on April 1, 2014: a. How much cash is received? b. How much is Bonds Payable? c. What is the dfference between a and b called? How much is it? 2. With regard to the bond interest payment on September 30, 2014 a. How much cash is paid in interest? b. How much is the amortization? Round your answer to two decimal places E. How much is interest expense? Round your answer to two decimal places 3. With regard to the bond interest payment on March 31, 2015 a. How much cash is paid in interest? b. How much is the amortization? Round your answer to two dedimal places 3. How much is interest expense? Round your answer to two decimal places

Explanation / Answer

1a Cash Received (250000 x 106%) $265,000 b Bonds Payable $250,000 c Difference $15,000 Premium on bonds payable 2a Cash paid (250000 x 9.5%/2) $        11,875 b Amortization (11875-11792.50) $          82.50 c Interest Expense (265000 x 8.9%/2) $ 11,792.50 3a Cash paid (250000 x 9.5%/2) $        11,875 Amortization (11875-11788.83) $          86.17 Interest Expense (265000-82.50) x 8.9%/2) $ 11,788.83 Note: I have tried my best for correct soluion, still need any further help please ask in coment, hope a positive feedback.

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.