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iogann1982 [59]
3 years ago
7

Matt Winne​, Inc. issued $ 1 comma 000 comma 000 of 9​%, nine​-year bonds payable on January​ 1, 2018. The market interest rate

at the date of issuance was 6​%, and the bonds pay interest semiannually.
1) How much cash did the company receive upon issuance of the bonds​ payable?
2) Prepare an amortization table for the bond using the​effective-interest method, through the first two interest payments.​ (Round to the nearest​ dollar.)
3) Journalize the issuance of the bonds on January​ 1, 2018​, and the first and second payments of the semiannual interest amount and amortization of the bonds on June​ 30, 2018​, and December​ 31, 2018. Explanations are not required. ​
4) Journalize the payment of the first semiannual interest amount and amortization of the bond on June​ 30, 2018
5) Journalize the payment of the second semiannual interest amount and amortization of the bond on December​ 31, 2018.​
Business
1 answer:
alekssr [168]3 years ago
4 0

Answer:

1) $1,223,163

2) bond premium amortization coupon 1 = $8,305

bond premium amortization coupon 2 = $8,554

3)

January 1, 2018, bonds are issued

Dr Cash 1,223,163

    Cr Bonds payable 1,000,000

    Cr Premium on bonds payable 223,163

4)

June 30, 2018, first coupon payment

Dr Interest expense 36,695

Dr Premium on bonds payable 8,305

    Cr Cash 45,000

5)

December 31, 2018, second coupon payment

Dr Interest expense 36,446

Dr Premium on bonds payable 8,554

    Cr Cash 45,000

Explanation:

bonds price = PV of face value + PV of coupons

PV of face value = $1,000,000 / 1.03²⁰ = $553,675.75

PV of coupon payments = $45,000 x 14.8775 (annuity factor 3%, 20 payments) = $669,487.50

issue price = $553,675.75 + $669,487.50 = $1,223,163.25 ≈ $1,223,163

Dr Cash 1,223,163

    Cr Bonds payable 1,000,000

    Cr Premium on bonds payable 223,163

amortization coupon 1 = $45,000 - ($1,223,163 x 3%) = $45,000 - $36,695 = $8,305

amortization coupon 2 = $45,000 - ($1,214,858 x 3%) = $45,000 - $36,446 = $8,554

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British investors frequently invest in the u.s. or italy, depending on the prevailing interest rates. if italian interest rates
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decrease, upward

Explanation:

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Harwood Company uses a job-order costing system that applies overhead cost to jobs on the basis of machine-hours. The company's
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Answer:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base (machine hours)

Explanation:

Giving the following information:

The company's predetermined overhead rate of $2.40 per machine-hour was based on a cost formula that estimates $192,000 of total manufacturing overhead for an estimated activity level of 80,000 machine-hours.

To allocated overhead costs to a specific job, you need to multiply the estimated rate for the number of machine-hours required for the job.

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base (machine hours)

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3 years ago
Cairns owns 80 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date th
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Answer:

hello your question has a missing journal entry table attached below is the entry journal table completely filled

Explanation:

Amount of bonds acquired = 40% of original bond

i) Bonds payable = 40% * 1,300,000

                           = $520000

purchase price of bonds = $520000 * 96% ( FACE VALUE )

                                         = $499200

hence the annual amortization

(bonds payable - purchase price of bonds ) / 10 years - 2 years

(520000 - 499200 ) / 8  = $20800/8 = $2600

ii) premium on bonds payable

$20800 - $2600 = $18200

cash amount = $520000 * 8% = $41600

intra entity expense and income table is attached below

from the table

iii) intra-entity interest expense = $39000 and the

iv) intra-entity interest income = $44200

v) investment in bonds

purchase price of bonds + annual amortization

= $499200 + $2600 = $501800

the book value on bonds as at 1st January 2011

=$1300000 * 105% = $1365000

Premium on bonds as at January 1st 2011

= $1365000 - $1300000 = $65000

amortization of premium as at January 1st 2011

=( ($65000) / 10 years ) * 2 years

= $13000

hence the controlling interest in bonds payable = $540800

vi) gains on retirement bonds

=  $540800 - $499200 = $41600

attached below is the journal entry on 31st December 2013

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Answer:

600

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