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Scorpion4ik [409]
3 years ago
12

On November 1, 20x1, Bishop Company issued 10% bonds with a face amount of $20 million. The bonds mature in 10 years. For bonds

of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on April 30 and October 31. Bishop is a calendar-year corporation.Required:(1.) Determine the price of the bonds at November 1, 20x1.(2.) Prepare the journal entry to record the bond issuance by Bishop on November 1, 20x1.(3.) Prepare the journal entries (using the effective interest method):a. December 31, 20x1b. April 30, 20x2c. October 31, 20x2
Business
1 answer:
lapo4ka [179]3 years ago
7 0

Answer:

The issue price of the bonds is $ 17,706,015.76  as contained in the attached

The double entries upon bond issuance are as follows:

Dr Cash                            $17,706,015.76

Dr  Discount on bond      $ 2,293,984.24

Cr Bonds payable                                            $20,000,000.00

The journal entries for the interest are found in the attached.

Explanation:

Ultimately, the bond issue at a discount of $ 2,293,984.24  

($20,000,000.00-$17,706,015.76)  

Download xlsx
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On January 1, 2021, Blair Company sold $800,000 of 10% ten-year bonds. Interest is payable semiannually on June 30 and December
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Answer:

$42,480

Explanation:

Given that,

Value of bonds = $800,000

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Selling price of bond (Book value) = $708,000

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The semi-annual yield is calculated as follows:

= 12% / 2 (because the interest is payable semiannually on June 30 and December 31)

= 6%

Therefore, the semi-annual bond interest expense:

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= $708,000 × 6%

= $42,480

Hence, the Blair should report bond interest expense for the six months ended June 30, 2021 in the amount of $42,480.

But the actual cash paid for the interest expense will be:

= (Value of bonds × Interest rate on bonds)

= [$800,000 × (10%/2)]

= $800,000 × 5%

= $40,000

So, the amortization for bond discount is the difference between actual cash paid and bond interest expense:

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Operational effectiveness refers to: Group of answer choices matching the benefits of a successful position while maintaining an
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Answer:

refers to performing the same tasks better than rivals perform them.

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Answer:

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