Question

On January 1, Year 1, Jones Company issued bonds with a $190,000 face value, a stated...

On January 1, Year 1, Jones Company issued bonds with a $190,000 face value, a stated rate of interest of 8.0%, and a 5-year term to maturity. The bonds were issued at 97. Interest is payable in cash on December 31st of each year. The company amortizes bond discounts and premiums using the straight-line method.

What is the total amount of liabilities shown on Jones' balance sheet at December 31, Year 1?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer:

Book value of bond on 1 Jan = 184300

(190000 face value - 5700 discount)

Calculation of Discount = 190000 * 3% (as bond issed at 97 out of 100)

= 5700

Amortization Of discount per year = 5700 / 5

=1140 per year

Book value of Bond on 31 dec = 184300 + 1140

= 185440

(as Jones company have to paid 190000 on maturity, discount given at the time of issue amortized per year)

Hope this meet your purpose.

Kindly like the answer if it was helpful.

And feel free to comment in case of any concern.

Thanks!

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 1, Year 1, Victor Company issued bonds with a $450,000 face value, a stated...
On January 1, Year 1, Victor Company issued bonds with a $450,000 face value, a stated rate of interest of 6%, and a 5-year term to maturity. The bonds sold at 95. 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 interest expense appearing on the income statement for the year ending December 31, Year 3? Group of answer choices $31,500 $22,500...
On January 1, Year 1, Weller Company issued bonds with a $380,000 face value, a stated...
On January 1, Year 1, Weller Company issued bonds with a $380,000 face value, a stated rate of interest of 10.00%, and a 10-year term to maturity. Weller uses the effective interest method to amortize bond discounts and premiums. The market rate of interest on the date of issuance was 8.00%. Interest is paid annually on December 31. Assuming Weller issued the bonds for $410,240, what is the carrying value of the bonds on the December 31, Year 3? (Round...
On January 1, Year 1, Weller Company issued bonds with a $310,000 face value, a stated...
On January 1, Year 1, Weller Company issued bonds with a $310,000 face value, a stated rate of interest of 9.50%, and a 10-year term to maturity. Weller uses the effective interest method to amortize bond discounts and premiums. The market rate of interest on the date of issuance was 7.50%. Interest is paid annually on December 31. Assuming Weller issued the bonds for $333,090, what is the carrying value of the bonds on the December 31, Year 3? (Round...
On January​ 31, 2018​, Logo ​Logistics, Inc., issued ten​-year, 9​% bonds payable with a face value...
On January​ 31, 2018​, Logo ​Logistics, Inc., issued ten​-year, 9​% bonds payable with a face value of $7,000,000. The bonds were issued at 97 and pay interest on January 31 and July 31. Logo Logistics amortizes bond discounts using the​ straight-line method. Record​ (a) the issuance of the bonds on January​ 31, 2018​, ​(b) the semiannual interest payment and amortization of the bond discount on July​ 31, 2018​, and​ (c) the interest accrual and discount amortization on December​ 31, 2018.
Jacobs Company issued bonds with $158,000 face value on January 1, Year 1. The bonds were...
Jacobs Company issued bonds with $158,000 face value on January 1, Year 1. The bonds were issued at 105 and carried a 5-year term to maturity. They had a 8% stated rate of interest that was payable in cash on December 31st of each year. Jacobs uses the straight-line method of amortization. Based on this information alone, the recognition of interest expense on December 31, Year 1 would act to: a. Decrease both assets and stockholders’ equity by $11,060. b....
On January 1, Year 1, Sheffield Co. issued bonds with a face value of $400,000, a...
On January 1, Year 1, Sheffield Co. issued bonds with a face value of $400,000, a term of ten years, and a stated interest rate of 6%. The bonds were issued at 107, and interest is payable each December 31. Sheffield uses the straight-line method to amortize the bond discount. The carrying value of the bonds that would be reported on the December 31, Year 4 balance sheet is:
Diaz Company issued bonds with a $98,000 face value on January 1, Year 1. The bonds...
Diaz Company issued bonds with a $98,000 face value on January 1, Year 1. The bonds had a 6 percent stated rate of interest and a 10-year term. Interest is paid in cash annually, beginning December 31, Year 1. The bonds were issued at 97. The straight-line method is used for amortization. b. Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, Year 1. c. Determine the amount of interest...
On January 1, Year 1, Hart Company issued bonds with a face value of $130,000, a...
On January 1, Year 1, Hart Company issued bonds with a face value of $130,000, a stated rate of interest of 14 percent, and a five-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 13 percent at the time the bonds were issued. The bonds sold for $134,572. Hart used the effective interest rate method to amortize the bond premium. a) Prepare an amortization table. b) Carrying value...
Company issued a $100,000 face value bond on January 1, 2013.  The 10 year term bond was...
Company issued a $100,000 face value bond on January 1, 2013.  The 10 year term bond was issued at 102 and had a 3% stated rate of interest that is payable on December 31st of each year. What is the carrying value of the bond at the end of Year 3?
Diaz Company issued bonds with a $127,000 face value on January 1, Year 1. The bonds...
Diaz Company issued bonds with a $127,000 face value on January 1, Year 1. The bonds had a 7 percent stated rate of interest and a 10-year term. Interest is paid in cash annually, beginning December 31, Year 1. The bonds were issued at 97. The straight-line method is used for amortization. Requireda. Use a financial statements model like the one shown next to demonstrate how (1) the January 1, Year 1, bond issue and (2) the December 31, Year...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT