On November 1, 2013, Davis Company issued $30,000, ten-year, 7% bonds for $29,100. The bonds were dated November 1, 2013, and interest is payable each November 1 and May 1. How much is the book value of the bonds after the November 1, 2014 interest paymen
C. $29,190.
(Par value- PV )/ number of period = interest payment
(30,000- 29,100) / 20 = 45 (Credit to discount)
45 x 2 (the number of periods) = 90
PV + interest payments = 29100 + 90 = 29,190
On November 1, 2013, Davis Company issued $30,000, ten-year, 7% bonds for $29,100. The bonds were dated November 1, 2013, and interest is payable each November 1 and May 1. How much is the semi-annual interest expense when the straight-line method is util
C. $1,095.
30,000 (.07) = 2100 /2 = 1050
(30,000-29100)/ 20 = 45
On November 1, 2013, Davis Company issued $30,000, ten-year, 7% bonds for $29,100. The bonds were dated November 1, 2013, and interest is payable each November 1 and May 1. How much is the amount of straight-line discount amortization on each semi-annual
B.$45
(30,000-29100)/20
On January 1, 2014, Tonika Corporation issued a four-year, $10,000, 7% bond. The interest is payable annually each December 31. The issue price was $9,668 based on an 8% effective interest rate. Assuming effective-interest amortization is used, the intere
C. $773.
.08 * 9668
On January 1, 2014, Tonika Corporation issued a four-year, $10,000, 7% bond. The interest is payable annually each December 31. The issue price was $9,668 based on an 8% effective interest rate. Assuming effective-interest amortization is used, the book v
D. $9,741.
Interest Expense 9668 * .08 = 773
Cash 10,000 * .07 = 700
Discount amortization= 73
9668 + 73 = 9741
Gammell Company issued $50,000 of 9% bonds with annual interest payments. The bonds mature in ten years. The bonds were issued at $48,000. Gammell Company uses the straight-line method of amortization. How much is the annual interest expense?
A. $4,700.
B
A. $4,700.
50,000 (.09) = 4500
(50,000-48,000) / 10 = 200
On July 1, 2014, Garden Works, Inc. issued $300,000 of ten-year, 7% bonds for $303,000. The bonds were dated July 1, 2014, and semi-annual interest will be paid each December 31 and June 30. Garden Works Inc. uses the straight-line
method of amortization.
C. $10,350.
Cash = .07 * 300,000 = 21,000 /2 = 10,500
Premium = (303,000-300,000)/ 20 = 150
Interest Expense = 10,350
Which of the following statements correctly describes the accounting for bonds that were issued at a
premium?
A.The interest expense over the life of the bond is less than the cash interest payments.
B.The interest expense over the life of the bonds incre
A.The interest expense over the life of the bond is less than the cash interest payments.