The following amortization schedule is related to a bond issuance on January 1, 2020. Amortization Schedule Bond Cash Effective Amortization carrying Interest Interest amount value 01/01/20 $41,066 07/01/20 $1,600 $1,437 $163 40,903 01/01/21 1,600 1,432 168 40,735 07/01/21 1,600 1,426 174 40,560 01/01/22 1,600 1,420 180 40,380 07/01/22 1,600 1,413 187 40,193 01/01/23 1,600 1,407 193 40,000 $9,600 $8,534 $1,066 The amount of interest paid in 2020 is $3,200. $1,600. O $2,869. $1,437.
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- Wilbury Corporation issued 1 million of 13.5% bonds for 985,071.68. The bonds are dated and issued October 1, 2019, are due September 30, 2020, and pay interest semiannually on March 31 and September 30. Assume an effective yield rate of 14%. Required: 1. Prepare a bond interest expense and discount amortization schedule using the straight-line method. 2. Prepare a bond interest expense and discount amortization schedule using the effective interest method. 3. Prepare adjusting entries for the end of the fiscal year December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. If income before interest and income taxes of 30% in 2020 is 500,000, compute net income under each alternative. 5. Assume the company retired the bonds on June 30, 2020, at 98 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight line method of amortization b. effective interest method of amortization 6. Compute the companys times interest earned (pretax operating income divided by interest expense) for 2020 under each alternative.(b) Prepare a bond amortization schedule up to and including January 1, 2028, using the effective-interest method. (Round present value factor to 5 decimal places, e.g. 1.24356 and final answers to 0 decimal places, e.g. 38,548.) Date 1/1/24 1/1/25 1/1/26 1/1/27 1/1/28 $ Cash Paid $ Interest Expense $ Premium Amortization GA Carrying Value of BondsPrepare a schedule of interest expense and bond amortization for 2025-2027. (Round answer to 2 decimal places, e.g. 38,548.25.) Date 1/1/25 $ 12/31/25 12/31/26 12/31/27 Cash Paid Schedule of Interest Expense and Bond Premium Amortization Effective-Interest Method $ Interest Expense $ Premium Amortized $ Carry Value of
- Sheridan Inc. is building a new hockey arena at a cost of $2,150,000. It received a down payment of $430,000 from local businesses to support the project, and now needs to borrow $1,720,000 to complete the project. It therefore decides to issue $1,720,000 of 10- year, 10.5% bonds. These bonds were issued on January 1, 2023, and pay interest annually on each January 1. The bonds yield 10.5% to the investor and have an effective interest rate to the issuer of 10.40530%. (There is an increased effective interest rate due to the capitalization of the bond issue costs.) Any additional funds that are needed to complete the project will be obtained from local businesses. Sheridan paid and capitalized $43,000 in bond issuance costs related to the bond issue. Sheridan prepares financial statements in accordance with IFRS.30 and December 31. Portions of the bond amortization schedule appear below: Payment Cash Payment Interest Effective Increase in Balance Outstanding Balance 6,627,273 12345622 320,000 331,364 11,364 6,638,637 320,000 331,932 11,932 6,650,569 320,000 332,528 12,528 6,663,097 320,000 333,155 13,155 6,676,252 320,000 333,813 13,813 6,690,065 320,000 334,503 14,503 6,704,568 ~ ~ 38 320,000 389,107 69,107 7,851,247 39 40 320,000 392,562 72,562 320,000 396,191 76,191 7,923,809 8,000,000 Required: 1. What is the face amount of the bonds? 2. What is the initial selling price of the bonds? 3. What is the term to maturity in years? 4. Interest is determined by what approach? 5. What is the stated annual interest rate? 6. What is the effective annual interest rate? 7. What is the total cash interest paid over the term to maturity? 8. What is the total effective interest expense recorded over the term to maturity?On January 1, 2020, Carla Vista Corp. sold at 103, 100 of its $1,000 face value, five-year, 10% non-convertible, retractable bonds. The retraction feature allows the holder to redeem the bonds at an amount equal to three times net income, to a maximum of $1,275 per bond. Carla Vista has net income of $267, $373, and $439 for the fiscal years ended December 31, 2020, 2021, and 2022, respectively. Carla Vista Corp. prepares its financial statements in accordance with ASPE. Prepare the entry to record the issuance of the bonds. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts) Account Titles and Explanation Debit Credit
- Tony Hawk's Adventure (THA) issued callable bonds on January 1, 2021. THA's accountant has projected the following amortization schedule from issuance until maturity: Date Cash Paid InterestExpense Increase inCarrying Value CarryingValue 01/01/2021 331,652 06/30/2021 10,500 13,266 2,766 334,418 12/31/2021 10,500 13,377 2,877 337,295 06/30/2022 10,500 13,492 2,992 340,287 12/31/2022 10,500 13,611 3,111 343,398 06/30/2023 10,500 13,736 3,236 346,634 12/31/2023 10,500 13,866 3,366 350,000 What is the annual market interest rate on the bonds? (Hint: Be sure to provide the annual rate rather than the six-month rate.) (Do not round your intermediate calculations.) Multiple Choice 6%. 3%. 7%. 8%.Tony Hawk's Adventure (THA) issued callable bonds on January 1, 2021. THA's accountant has projected the following amortization schedule from issuance until maturity: Date Cash Paid InterestExpense Increase inCarrying Value CarryingValue 01/01/2021 332,789 06/30/2021 17,500 19,967 2,467 335,256 12/31/2021 17,500 20,115 2,615 337,871 06/30/2022 17,500 20,272 2,772 340,643 12/31/2022 17,500 20,439 2,939 343,582 06/30/2023 17,500 20,615 3,115 346,697 12/31/2023 17,500 20,803 3,303 350,000 THA issued the bonds for: Multiple Choice $350,000. $332,789. $455,000. Cannot be determined from the given information.On January 1, 2021, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Payment CashPayment EffectiveInterest Increase inBalance OutstandingBalance 7,218,650 1 270,000 288,746 18,746 7,237,396 2 270,000 289,496 19,496 7,256,892 3 270,000 290,276 20,276 7,277,168 4 270,000 291,087 21,087 7,298,255 5 270,000 291,930 21,930 7,320,185 6 270,000 292,807 22,807 7,342,992 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 38 270,000 350,010 80,010 8,830,251 39 270,000 353,210 83,210 8,913,461 40 270,000 356,539 86,539 9,000,000 Required:1. What is the face amount of the bonds?2. What is the initial selling price of the bonds?3. What is the term to maturity in years?4. Interest is determined by what approach?5.…
- On January 1, 2021, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Payment CashPayment EffectiveInterest Increase inBalance OutstandingBalance 7,218,650 1 270,000 288,746 18,746 7,237,396 2 270,000 289,496 19,496 7,256,892 3 270,000 290,276 20,276 7,277,168 4 270,000 291,087 21,087 7,298,255 5 270,000 291,930 21,930 7,320,185 6 270,000 292,807 22,807 7,342,992 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 38 270,000 350,010 80,010 8,830,251 39 270,000 353,210 83,210 8,913,461 40 270,000 356,539 86,539 9,000,000 5. What is the stated annual interest rate?6. What is the effective annual interest rate?7. What is the total cash interest paid over the term to maturity?8. What is the total effective…Devin Company computes the following bond interest amortization table for bonds issued on January 1, 2021. Use the information on this table to answer the questions below. Interest Cash Payment Payment Interest Decrease in Вook Date Amount Discount Value Expense $441,068 $444,310 $447,683 $451,190 $454,838 $458,631 $462,577 $466,680 $470,947 $475,385 Discount $360,000 $360,000 $360,000 $360,000 $360,000 $360,000 $360,000 $360,000 $360,000 $360,000 $81,068 $84,310 $87,683 $91,190 $94,838 $98,631 $102,577 $106,680 $110,947 $115,385 $892,240 $807,929 $720,247 $629,056 $534,219 $435,587 $333,011 $226,331 $115,385 $0 $11,107,760 $11,192,071 $11,279,753 $11,370,944 $11,465,781 $11,564,413 $11,666,989 $11,773,669 $11,884,615 $12,000,000 June 30, 2021 Dec 31, 2021 June 30, 2022 Dec 31, 2022 June 30, 2023 Dec 31, 2023 June 30, 2024 Dec 31, 2024 June 30, 2025 Dec 31, 2025ony Hawk's Adventure (THA) issued callable bonds on January 1, 2021. THA's accountant has projected the following amortization schedule from issuance until maturity: Date cash paid Interest Expense Increase in carrying value carrying value 01/01/2021 $218,690 06/30/2021 $11,500 $13,121 $1,621 220,311 12/31/2021 11,500 13,219 1,719 222,030 06/30/2022 11,500 13,322 1,822 223,852 12/31/2022 11,500 13,431 1,931 225,783 06/30/2023 11,500 13,547 2,047 227,830 12/31/2023 11,500 13,670 2,170 230,000 THA issued the bonds for: Multiple Choice $230,000. $218,690. $299,000. Cannot be determined from the given information.