lWing by issuing bonds payable carries no risk to the company tl ownership of th
ID: 2593729 • Letter: L
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lWing by issuing bonds payable carries no risk to the company tl ownership of the corporation by the stockholders D) Debt does not have to be shown on the balance sheet. 21) On June 1, 2017, Smith & Beecham Services issued S32,00 of 8% bonds that mature in five years They were issued at par. The bonds pay semiannual interest payments on June 30 and December3 of each year. On December 31, 2017, what is the total amount paid to bondholders 21) A) $2,560 B) 5640 ) $1,280 $75,000. The balance in the Discount on C) $77,900 D) $853 2) The balance in the Bonds Payable account is a credit of Bonds Payable account is a debit of $2,900. What is the bond's carrying amount A) $75,000 B) $72,100 D) $2,900 ) On January 1, 2017, Streuly Sales issued S28,000 in bonds for S18.700. These are six-year bonds 23) with a stated rate of 13% and pay semiannual interest. Streuly Sales usesthe straight. line method to amortize the Bond Discount. Immediately after the issue of the bonds, the ledger balances appeared as follows: Bonds Payable 28,000 Discount on Bonds Payable 9,300 Payable? (Round any intermediate calculations to two decimal places, and your final answer to the earest dollar.) After the second interest payment on December 31, 2017, what is the balance of Discount on Bonds debit of $8,525 D credit of $9,300 A) debit of $10,075 B) debit of $7.750 24) hich of the following is true of the Premium on Bonds Payable account? A) It is subtracted from the Bonds Payable balance and shown with long-term liabilities on the B) It is subtracted from the Bonds Payable balance and shown with the current liabilities on the C) It is added to the Bonds Payable balance and shown with long-term liabilities on the balance D) It is added to the Bonds Payable balance and shown with stockholders' equity on the balance balance sheet. balance sheet. sheet sheetExplanation / Answer
1. On dec 31, interest shall be paid for 6 months
Interest paid = $32000 * 8% * 6/12 = $1280
Option c is correct
2. Carrying value of bond = face value - discount
= $75000 - $2900
= $72100
Option B is correct.
3. Discount on issue = $28000 - $18700 = $9300
Discount amortized at eact interest date = $9300/12 = $775
Balance after second interest = $9300 - ($775*2)
= $9300 - $1550
= $7750
Option B is correct
4. Premium on issue of bonds increase the carrying value of bonda. It is written off throughout the life of bond and is therefore long term liability
Option C is correct
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