Problem: Module 3 Textbook Problem 7Learning Objective: 3-7 Using the straight-line method show how bonds issued at a premium affect financial statementsThe Square Foot Grill, Inc. issued $198,000 of 10-year, 8 percent bonds on January 1, Year 1, at 102. interest is payable in cash annuallyon December 31. The straight-line method is used for amortization.Requireda. Use a financial statements model like the one shown below to demonstrate how (1) the January 1, Year 1, bond issue and (2) theDecember 31, Year 1, recognition of interest expense, including the amortization of the premium and the cash payment, affects thecompany's financial statements. Use + for increase, - for decrease, and if there is no effect, leave the cell blank.b. Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, Year 1.c. Determine the amount of interest expense reported on the Year 1 income statement.d. Determine the carrying value of the bond liability as of December 31, Year 2.e. Determine the amount of interest expense reported on the Year 2 income statement.Complete this question by entering your answers in the tabs below.Req AUse a financial statements model like the one shown below to demonstrate how (1) the January 1, Year 1, bond issue and (2) the December 31,Year 1, recognition of interest expense, including the amortization of the premium and the cash payment, affects the company's financialstatements. Use + for increase, for decrease, and if there is no effect, leave the cell blank. (In the Cash Flow column, indicate whether theitem is an operating activity (OA), an investing activity (IA), or a financing activity (FA) and if there is no effect, leave the cell blank. Not allcells will require entry.)EventNo.Req B to E1.2a.2b.SQUARE FOOT GRILL, INC.Effect of Transactions on Financial StatementsIncome StatementBalance SheetAssets = Liabilities+++Stockholders'EquityRevenue ExpenseNetIncomeStatement ofCash FlowShow less A

The bonds has been issued for 102%This states that bonds are issued at premium as bonds are issued…

Answered: a. Use a financial statements model…

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter22: Corporations: Bonds

Section: Chapter Questions

Problem 1MP: MASTERY PROBLEM Jackson, Inc.s fiscal year ends December 31. Selected transactions for the period...

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Problem 4 - Bonds Payable Question Information: REQ A Bond Face Stated Effective Life PAR/PREMIUM/DISCOUNT Issuance Value Interest Interest Rate Rate A $ 100,000 6% 6% 10 years B $ 400,000 8% 6% 10 years C $ 600,000 6% 8% 5 years Insert Computations or Amortization Data analytics or Excel Data tools here: REQ B Compute the proceeds of each bond issuance A B C REQ C For Each, indicate whether the balance sheet value of the bond liability will increase, decrease or remain constant over the life of the bond A B C REQ D For Eaqch bond issuance indicate whether the interest expense recognized each period will increase decrease or remain constant over the life of the bond A B C
QUESTION 10 A $545,000 bond issue on which there is an unamortized discount of $44.000 is redeemed ior $474,000. Journalize the redemption of the bonds using the straight-line method and the chart of accounts below. Gain on Redemption of Bonds Interest Expense Interest Payable Interest Revenue Bonds Payable Cash Discount on Bonds Payable Loss on Redemption of Bonds Premiun on Bonds Payable Enter your answers into the table below. Key the account names carefully (exactly as shown above) and follow formatting instructions below. DO NOT USE A DECIMAL WITH ZEROES FOR WHOLE DOLLAR AMOUNTS AND USE COMMAS APPROPRIATELY. WHEN THE DEBIT/CREDIT DOES NOT REQUIRE AN ENTRY, LEAVE IT BLANK. Account Debit Credit THIS QUESTION WILL ALSO BE CHECKED MANUALLY (to make adjustments for typos). Click Save and Submit to saue and submit Clil Saue 47l aacars to na
Problem: Module 3 Textbook Problem 6 Learning Objectives: • 3-6 Using the straight-line method show how bonds issued at a discount affect financial statements ● › 3-7 Using the straight-line method show how bonds issued at a premium affect financial statements Required For each of the following situations, calculate the amount of bond discount or premium, if any. (Do not round intermediate calculations.) a. Gray Co. issued $66,000 of 6 percent bonds at 102 1/2 b. Bush, Inc. issued $81,000 of 10-year, 6 percent bonds at 98 1/2. Oak, Inc. issued $188,000 of 20-year, 6 percent bonds at 102. Willow Co. issued $157,000 of 15-year, 7 percent bonds at 97. C. d. $ 67,650 Premium Discount Premium 1,570 Discount $ Check
Part 1 The journal entry on the maturity date to record the retirement of bonds with a face value of $2,000,000 that were issued at a $80,000 discount includes Question content area bottom Part 1 A. a credit to Cash for $2,080,000. B. a debit to Discount on Bonds Payable for $80,000. C. a debit to Bonds Payable for $2,000,000. D. all of the above.
Question Content Area The following information relates to the Davensmith Company: Interest payable, beginning of period $ 60 Bond discount amortization, end of period 40 Interest payable, end of period 10 Total interest expense reported on the income statement 850 Bond discount amortization, beginning of period 70 What was the amount of interest paid? $820 $870 $830 $850
Instructions On the first day of the fiscal year, a company issues a $1,350,000, 11%, five-year bond that pays semiannual interest of $74,250 ($1,350,000 x 11% x %), receiving cash of $1,512,610. Journalize the first interest payment and the amortization of the related bond premium. Round to the nearest dollar. Refer to the Chart of Accounts for exact wording of account titles. 10:49 PM 0 40 4/28/2022 MacBook Air
Reporting Issuance and Retirement of Long-Term Debt On the basis of the details of the following bonds payable and related discount accounts, indicate the items to be reported in the Financing Activities section of the statement of c flows, assuming no gain or loss on retiring the bonds: ACCOUNT Bonds Payable ACCOUNT NO. Balance Date Item Debit Credit Debit Credit Jan. 1 Balance 750,000 Retire bonds 150,000 600,000 June 30 Issue bonds 450,000 1,050,000 ACCOUNT Discount on Bonds Payable ACCOUNT NO. Balance Item Debit Credit Debit Credit Date 33,750 Jan. 1 Balance 12,000 21,750 Retire bonds 51,750 30,000 June 30 Issue bonds 2,625 49,125 Dec. 31 Amortize discount Amount Added or Deducted ioction of Statement of Cash Flows
eBook G Calculator Print Item Compute Bond Proceeds, Amortizing Discount by Interest Method, and Interest Expense Lewis Co. produces and sells aviation equipment. On the first day of its fiscal year, Lewis Co. issued $30,000,000 of three-year, 10% bonds at a market (effective) interest rate of 12%, with interest payable semiannually. Compute the following: a. The amount of cash proceeds from the sale of the bonds. Use the tables of present values in Exhibit 8 and Exhibit 10. Round to the nearest dollar. b. The amount of discount to be amortized for the first semiannual interest payment period, using the interest method, Round to the nearest dollar. c. The amount of discount to be amortized for the second semiannual interest payment period, using the interest method. Round to the nearest dollar. d. The amount of the bond interest expense for the first year. Round to the nearest dollar. Previous Next Check My Work 3 more Check My Work uses remaining. 1. 0V 11:24 %24 %24 %24
Cornerstone Exercise 9-22 Reporting Long-Term Debt on the Balance Sheet Dennis Corp. has the following bonds: $2,000,000 in bonds that have $10,000 of unamortized discount associated with them $500,000 in bonds that have $25,000 of unamortized premium associated with them. Required: Prepare the balance sheet presentation for these two bonds.
MASTERY PROBLEM Jackson, Inc.s fiscal year ends December 31. Selected transactions for the period 20-1 through 20-8 involving bonds payable issued by Jackson are as follows: 20-1 Oct. 31 Issued 600,000 of 10-year, 7%, callable bonds dated October 31, 20-1, for 612,000. Interest is payable semiannually on October 31 and April 30. The bond indenture provides that Jackson is to pay to the trustee bank 20,000 by May 15 of each year (except the tenth year) as a sinking fund for the retirement of the bonds on call or at maturity. Dec. 31 Made the adjusting entry for interest payable and amortized two months premium on the bonds (straight-line method). 20-2 Jan. 2 Reversed the adjusting entry for interest payable and bond premium amortization. Apr. 30 Paid the semiannual interest on the bonds and amortized six months premium. May 15 Paid the sinking fund trustee 20,000. Oct. 31 Paid the semiannual interest on the bonds and amortized six months premium. Dec. 31 Made the adjusting entry for interest payable and amortized two months premium on the bonds. 31 Sinking fund earnings for the year were 900. 20-8 May 15 Paid the sinking fund trustee 20,000. Oct. 31 Paid the semiannual interest on the bonds and amortized six months premium. 31 Redeemed the bonds, which were called at 97. The balance in the bond premium account is 3,600 after the payment of interest and amortization of premium have been entered. The cash balance in the sinking fund is 200,000, which is applied to the redemption. Jackson paid the sinking fund trustee the additional cash needed to pay off the bonds. (Hint: First make the entry for payment to the sinking fund, then make the entry for redemption of the bonds.) REQUIRED 1. Enter the preceding transactions in general journal form. 2. Calculate the carrying value of the bonds as of December 31, 20-2.
Cornerstone Exercise 9-24 Issuance of Long-Term Debt EWO Enterprises issues $4,500,000 of bonds payable. Required: Prepare the necessary journal entries to record the issuance of the bonds assuming the bonds were issued (a) at par, (b) at 104.5, and (c) at 99.
Cornerstone Exercise 9-23 Issuance of Long-Term Debt Anne Corp. issued $600,000, 5% bonds. Required: Prepare the necessary journal entries to record the issuance of these bonds assuming the bonds were issued (a) at par, (b) at 102, and (c) at 92.

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