Question 1

On January 1,2010,the Plimpton Corporation leased some equipment on a 2-year lease,paying $15,000 per year each December 31.The lease is considered to be an operating lease.Prepare the general journal entry to record the first lease payment on December 31,2010.

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Question 2

A company issues bonds with a par value of $800,000 on their issue date.The bonds mature in 5 years and pay 6% annual interest in two semiannual payments.On the issue date,the market rate of interest is 8%.Compute the price of the bonds on their issue date.The following information is taken from present value tables:
 $\begin{array}{|l|l|}
\hline \text { Present value of an annuity for } 10 \text { periods at } 3 \% & 8.5302 \
\hline \text { Present value of an annuity for } 10 \text { periods at } 4 \% & 8.1109 \
\hline \text { Present value of } 1 \text { due in } 10 \text { periods at } 3 \% & 0.7441 \
\hline \text { Present value of } 1 \text { due in } 10 \text { periods at } 4 \% & 0.6756\
\hline
\end{array}$

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Question 3

Describe the recording procedures for the issuance,retirement and paying of interest for notes.

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Question 4

A company issued 9.2%,10-year bonds with a par value of $100,000.Interest is paid semiannually.The market interest rate on the issue date was 10% and the issuer received $95,016 cash for the bonds.On the first semiannual interest date,what amount of cash should be paid to the holders of these bonds for interest?

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Question 5

A company issued 9%,10-year bonds with a par value of $1,000,000 on September 1,2010 when the market rate was 9%.The bonds were dated June 30,2010.The bond issue price included accrued interest.Interest is paid semiannually on December 31 and June 30.
(a)Prepare the issuer's journal entry to record the issuance of the bonds.
(b)Prepare the issuer's journal entry to record the semiannual interest payment on December 31,2010.

Accepted Answer

(a)
 11ea8a0c_3523_0726_8b44_31e1da9036b5_TB6314_00
 (b)
 11ea8a0c_3523_0727_8b44_7fa95916d491_TB6314_00
 Interest Payment: $1,000,000 x 9% x ½ year = $45,000

Question 6

A company issued 10%,10-year bonds with a par value of $1,000,000 on January 1,2010,at a selling price of $885,295,to yield the buyers a 12% return.The company uses the effective interest amortization method.Interest is paid semiannually each June 30 and December 31.
(1)Prepare an amortization table for the first two payment periods using the format shown below:
 $\begin{array}{|c|c|c|c|c|c|}
\hline \begin{array}{c}
\text { Semiannual } \
\text { Interest }
\end{array} & \begin{array}{c}
\text { Cash Interest } \
\text { Period }
\end{array} & \begin{array}{c}
\text { Bond Interest } \
\text { Expense }
\end{array} & \begin{array}{c}
\text { Discount } \
\text { Amortization }
\end{array} & \begin{array}{c}
\text { Unamortized } \
\text { Discount }
\end{array} & \begin{array}{c}
\text { Carrying } \
\text { Value }
\end{array} \
\hline
\end{array}$
 
(2)Prepare the journal entry to record the first semiannual interest payment.

Accepted Answer

The answer of A company issued 10%,10-year bonds with a...

Question 7

Martin Corporation issued $3,000,000 of 8%,20-year bonds payable at par value on January 1,2010.Interest is payable each June 30 and December 31.
(a)Prepare the general journal entry to record the issuance of the bonds on January 1,2010.
(b)Prepare the general journal entry to record the first interest payment on June 30,2010.

Accepted Answer

The answer of Martin Corporation issued $3,000,000 of 8%,20-year bonds...

Question 8

On October 1 of the current year a corporation sold,at par plus accrued interest,$1,000,000 of its 12% bonds,which were dated July 1 of this year.What amount of bond interest expense should the company report on its current year income statement?

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Question 9

Explain how a bond premium is amortized.Identify and describe the amortization methods available.

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Question 10

A company enters into an agreement to make 5 annual year-end payments of $3,000 each,which will being one year from now.The annual interest rate is 6%.The present value of an annuity factor for 5 periods,6% is 4.2124.What is the present value of these five payments?

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Question 11

What methods can a company use to retire its bonds?

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Question 12

On June 1,a company issued $200,000 of 12% bonds at their par value plus accrued interest.The interest on these bonds is payable semiannually on January 1 and July 1.Prepare the issuer's journal entry to record the bond issuance of June 1.

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Question 13

A company issued 10-year,9% bonds,with a par value of $500,000 when the market rate was 9.5%.The issuer received $484,087 in cash proceeds.Prepare the issuer's journal entry to record the issuance of the bonds.

Accepted Answer

The answer of A company issued 10-year,9% bonds,with a par...

Question 14

Shin Company has a loan agreement that provides it with cash today.The company must repay this loan in 4 years with $25,000.Shin agrees to a 6% interest rate.The present value factor for 4 periods,6% is 0.7921.What is the amount of cash that Shin Company receives today?

Accepted Answer

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Question 15

On January 1,2010,a company issued 10-year,10% bonds payable with a par value of $500,000 and received $442,647 in cash proceeds.The market rate of interest at the date of issuance was 12%.The bonds pay interest semiannually on July 1 and January 1.The issuer uses the straight-line method for amortization.Prepare the issuer's general journal entry to record the first semiannual interest payment on July 1,2010.

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Question 16

On March 1,a company issues bonds with a par value of $300,000.The bonds mature in 10 years and pay 6% annual interest,payable each June 30 and December 31.The bonds sell at par value plus interest accrued since January 1.Prepare the general journal entry to record the issuance of the bonds on March 1.

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Question 17

On January 1,2010,Leyden Corporation leased a truck,agreeing to pay $15,252 every December 31 for the entire 6-years of the lease.The present value of the lease payments,at 6% interest is $75,000.The lease is considered a capital lease.
(a)Prepare the general journal entry to record the acquisition of the truck based on a capital lease.
(b)Prepare the general journal entry to record the first lease payment on December 31,2010.
(c)Record straight-line depreciation on the truck on 12/31/10,assuming a 6-year life and no salvage value.

Accepted Answer

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Question 18

A company issued 9.2%,10-year bonds with a par value of $100,000.Interest is paid semiannually.The market interest rate on the issue date was 10% and the issuer received $95,016 cash for the bonds.The issuer uses the effective interest method for amortization.On the first semiannual interest date,what amount of discount should issuer amortize?

Accepted Answer

The answer of A company issued 9.2%,10-year bonds with a...

Question 19

On January 1,2010,Silver issues $300,000 of 12%,20-year bonds at a price of 96½.What is the total bond interest expense that will be recognized over the life of the bond?

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Question 20

On January 1,a company issues bonds with a par value of $300,000.The bonds mature in 5 years and pay 8% annual interest,payable each June 30 and December 31.On the issue date,the market rate of interest for the bonds is 10%.Compute the price of the bonds on their issue date.The following information is taken from present value tables:
 $\begin{array}{|l|l|}
\hline \text { Present value of an annuity for } 10 \text { periods at } 4 \% & 8.1109 \
\hline \text { Present value of an annuity for } 10 \text { periods at } 5 \% & 7.7217 \
\hline \text { Present value of } 1 \text { for } 10 \text { periods at } 4 \% & 0.6756 \
\hline \text { Present value of } 1 \text { for } 10 \text { periods at } 5 \% & 0.6139 \
\hline
\end{array}$

Accepted Answer

The answer of On January 1,a company issues bonds with...

Quiz 10: Reporting and Analyzing Long-Term Liabilities

On January 1,2010,the Plimpton Corporation leased some equipment on a 2-year lease,paying $15,000 per year each December 31.The lease is considered to be an operating lease.Prepare the general journal entry to record the first lease payment on December 31,2010.

Describe the recording procedures for the issuance,retirement and paying of interest for notes.

On October 1 of the current year a corporation sold,at par plus accrued interest,$1,000,000 of its 12% bonds,which were dated July 1 of this year.What amount of bond interest expense should the company report on its current year income statement?

Explain how a bond premium is amortized.Identify and describe the amortization methods available.

A company enters into an agreement to make 5 annual year-end payments of $3,000 each,which will being one year from now.The annual interest rate is 6%.The present value of an annuity factor for 5 periods,6% is 4.2124.What is the present value of these five payments?

What methods can a company use to retire its bonds?

On June 1,a company issued $200,000 of 12% bonds at their par value plus accrued interest.The interest on these bonds is payable semiannually on January 1 and July 1.Prepare the issuer's journal entry to record the bond issuance of June 1.

A company issued 10-year,9% bonds,with a par value of $500,000 when the market rate was 9.5%.The issuer received $484,087 in cash proceeds.Prepare the issuer's journal entry to record the issuance of the bonds.

Shin Company has a loan agreement that provides it with cash today.The company must repay this loan in 4 years with $25,000.Shin agrees to a 6% interest rate.The present value factor for 4 periods,6% is 0.7921.What is the amount of cash that Shin Company receives today?

On January 1,2010,Silver issues $300,000 of 12%,20-year bonds at a price of 96½.What is the total bond interest expense that will be recognized over the life of the bond?