On January 1, Jim Shorts Corporation issued bonds for $580 million. This bond issue was originally issued at premium. During the same year, $1,500,000 of the bond premium was amortized. On a statement of cash flows prepared using the indirect method, Jim Shorts Corporation should report: O that $1.5 million to be added to net income O An investing activity of $580 million. O A financing activity of $300 million. O that $1.5 million to be deducted from net income
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- Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the market of interest was 9%. The company uses the effective-interest method of amortization. At the end of the year, the company will record ________. A. a credit to cash for $28,733 B. a debit to interest expense for $31,267 C. a debit to Discount on Bonds Payable for $1,267 D. a debit to Premium on Bonds Payable for $1.267Starmount Inc. sold bonds with a $50,000 face value, 12% interest, and 10-year term at $48,000. What is the total amount of interest expense over the life of the bonds?On January 1, Year 1, Residence Company issued bonds with a $50,000 face value. The bonds were issued at face value. They had a 20 year term and a stated rate of interest of 7%. Which of the following shows how the payoff of the bond liability will affect Residence’s financial statements on December 31, Year 20 (the maturity date)? Balance Sheet Income Statement Statement of Cash Flows Assets = Liab. + Equity Rev. − Exp. = Net Inc. A. NA = NA + NA NA − NA = NA (50,000) IA B. NA = NA + NA NA − NA = NA (50,000) FA C. 50,000 = 50,000 + NA NA − NA = NA 50,000 IA D. (50,000) = (50,000) + NA NA − NA = NA (50,000) FA
- Kier Company issued $620,000 in bonds on January 1, Year 1. The bonds were issued at face value and carried a 3-year term to maturity. They had a 5.50% stated rate of interest that was payable in cash on December 31st. Based on this information alone, the amount of interest expense shown on the December 31, Year 1 income statement and the cash flow from operating activities shown on the December 31, Year 1 statement of cash flows would be: Interest Expense A. B. C. D. $34,100 zero $34,100 zero Cash Outflow zero $34,100 $34,100 zeroKier Company issued $620,000 in bonds on January 1, Year 1. The bonds were issued at face value and carried a 3-year term to maturity. They had a 5.50% stated rate of interest that was payable in cash on December 31st. Based on this information alone, the amount of interest expense shown on the December 31, Year 1 income statement and the cash flow from operating activities shown on the December 31, Year 1 statement of cash flows would be: A. B. C. D. Interest Expense $34,100 zero $34,100 zero Cash Outflow zero $34,100 $34,100 zero 9:34 PM ✓Consider the following independent situations: a. On March 1, 2020, Heide Co. issued at 103 plus accrued interest $3,000,000, 9% bonds. The bonds are dated January 1, 2020, and pay interest semiannually on July 1 and January 1. In addition, Heide Co. incurred $27,000 of bond issuance costs. Compute the net amount of cash received by Heide Co. as a result of the issuance of these bonds. b. On January 1, 2020, Reymont Co. issued 9% bonds with a face value of $500,000 for $469,280 to yield 10%. The bonds are dated January 1, 2020, and pay interest annually. What amount is reported as bond discount on the issue date? Prepare the journal entry to record interest expense on December 31, 2020. c. Czeslaw Building Co. has a number of long-term bonds outstanding at December 31, 2020. These long-term bonds have the following sinking fund requirements and maturities for the next 6 years. Sinking Fund Maturities 2021 $300,000 $100,000 2022 100,000 250,000 2023…
- On January 1, Year 1, Victor Company issued bonds with a $269,000 face value, a stated rate of interest of 5%, and a 5-year term to maturity. The bonds sold at 96. Interest is payable in cash on December 31 of each year. Victor uses the straight-line method to amortize bond discounts and premiums. What is the amount of cash flow from operating activities on the statement of cash flows for the year ending December 31, Year 3? Multiple Choice $15,602 $13,450 $12,700 $10,760Pace Company issued bonds with a face value of $200,000 at 97. How does the issuance affect the company's accounting equation? Multiple Choice O Assets and liabilities would both increase by $194,000. Assets would increase by $200,000, and liabilities would increase $194,000. Assets would increase by $194,000 and liabilities would increase by $200,000. Assets and liabilities would both increase by $200,000.The following are four independent situations. a. On March 1, 2021, Wilke Co. issued at 103 plus accrued interest $4,000,000, 9% bonds. The bonds are dated January 1, 2021, and pay interest semiannually on July 1 and January 1. In addition, Wilke Co. incurred $27,000 of bond issuance costs. Compute the net amount of cash received by Wilke Co. as a result of the issuance of these bonds. b. On January 1, 2020, Langley Co. issued 9% bonds with a face value of $700,000 for $656,992 to yield 10%. The bonds are dated January 1, 2020, and pay interest annually. What amount is reported for interest expense in 2020 related to these bonds, assuming that Langley used the effective-interest method for amortizing bond premium and discount? c. Tweedie Building Co. has a number of long-term bonds outstanding at December 31, 2020. These long-term bonds have the following sinking fund requirements and maturities for the next 6 years. 0000 Sinking Fund )Maturities) 2021 $300,0000…
- A ten-year bond was issued at par for $250,000 cash. This transaction should be shown on a statement of cash flows under a. noncash investing and financing activities b. operating activities c. investing activities d. financing activitiesKier Company issued $740,000 in bonds on January 1, Year 1. The bonds were issued at face value and carried a 3-year term to maturity. The bonds have a 5.50% stated rate of interest interest is payable in cash on December 31 each year. Based on this information alone, what are the amounts of interest expense and cash flows from operating activities, respectively, that will be reported in the financial statements for the year ending December 31, Year 1? Multiple Choice O Zero and $40,700 $40,700 and $40,700 Zero and Zero $40,700 and ZeroEmil Corp. produces and sells wind-energy-driven engines. To finance its operations, Emil Corp. issued $15,000,000 of 20-year, 9% callable bonds on May 1, 20Y1, at their face amount, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year. Journalize the entries to record the following selected transactions:20Y1May 1. Issued the bonds for cash at their face amount.Nov. 1. Paid the interest on the bonds.20Y5Nov. 1. Called the bond issue at 96, the rate provided in the bond indenture.(Omit entry for payment of interest.)