Question

On January 1, 2018, "ABC" Company issued $200,000, 10%, 4 years callable bonds at 105, which...

On January 1, 2018, "ABC" Company issued $200,000, 10%, 4 years callable bonds at 105, which pay interest semi-annually on June 30, and December 31. The bonds were sold for $187,580.41, since the market was 12%. In addition, On July 1, 2019, the company issued ad- ditional bonds with a face value of $400,000 that mature on June 30, 2029 for $427,355.48, since the market rate was 8%. The new bonds are non-callable bonds that has a stated rate of 9% payable every 3 months on March 31, June 30, September 30, and December 31. Moreover, on July 1, 2020, "ABC" Company called 30% of its outstanding bonds.
١: What is the amount of interest expense that must be presented on "ABC" Company income statement for the year ended December, 31, 2018?
٢: What is the amount of interest expense that must be presented on "ABC" Company income statement for the year ended December, 31, 2019
٣: What is the amount of interest expense that must be presented on "ABC" Company income statement for the year ended December, 31, 2020?
٤: In the space below, show the presentation on the current and non-current liability on the statement of financial position as on 31/12/2020

Homework Answers

Answer #1
Interest Expense for the year ended December, 31, 2018
= $200000*10%
= $20000
Interest Expense for the year ended December, 31, 2019
= $200000*10% + $400000*9%*1/2
= 20000 + 18000
= 38000
Interest Expense for the year ended December, 31, 2020
= $200000*10%*1/2 + $140000*10%*1/2 + $400000*9%
= 10000 + 7000 + 36000
= 53000
Financial position as on 31/12/2020
Current Laibilities :
10% Bonds 140000
Non Current Laibilities :
9% Bonds 400000
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Which Pay Interest Semi-annually On June 30, And December 31. The Bonds Were Sold For $187,580.41,...
Which Pay Interest Semi-annually On June 30, And December 31. The Bonds Were Sold For $187,580.41, Since The Market Was 12%. In Addition, On July 1, 2019, The Company Issued Ad- Ditional Bonds With A Face Value Of $400,000 That Mature On June 30, 2029 For $427,355.48, ... This problem has been solved! See the answer On January 1, 2018, "ABC" Company issued $200,000, 10%, 4 years callable bonds at 105, which pay interest semi-annually on June 30, and December...
On January 1, 2018, Baddour, Inc., issued 10% bonds with a face amount of $178 million....
On January 1, 2018, Baddour, Inc., issued 10% bonds with a face amount of $178 million. The bonds were priced at $156.2 million to yield 12%. Interest is paid semiannually on June 30 and December 31. Baddour’s fiscal year ends September 30. Required: 1. What amount(s) related to the bonds would Baddour report in its balance sheet at September 30, 2018? 2. What amount(s) related to the bonds would Baddour report in its income statement for the year ended September...
Part 1: On January 1 2018, Louis Company issued bonds with a Par Value of $400,000....
Part 1: On January 1 2018, Louis Company issued bonds with a Par Value of $400,000. The coupon interest rate on the bond is 10%, and it has a maturity of 3 years. Interest is paid semiannually on June 30th and December 31 of each year. Value of Bond @ 8%= Value of Bond @10%= Part 2: From part 1, using the effective interest method, show how the bond premium would be amortized over the life of the bond. Fill...
The Square Foot Grill, Inc. issued $167,000 of 10-year, 8 percent bonds on January 1, 2018,...
The Square Foot Grill, Inc. issued $167,000 of 10-year, 8 percent bonds on January 1, 2018, at 102. interest is payable in cash annually on December 31. The straight-line method is used for amortization. a. Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, 2018. b. Determine the amount of interest expense reported on the 2018 income statement. c. Determine the carrying value of the bond liability as of December...
On January 1, 2018, for $18.1 million, Marker Company issued 10% bonds, dated January 1, 2018,...
On January 1, 2018, for $18.1 million, Marker Company issued 10% bonds, dated January 1, 2018, with a face amount of $20.1 million. For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31. Required: 1. Prepare the journal entry to record interest on June 30, 2018, using the effective interest method. 2. Prepare the journal entry to record interest on December 31, 2018, using the effective interest method.
On January 1, 2018, Jahi Company issued $400,000, 10-year, 10% coupon rate bonds for $354,200. The...
On January 1, 2018, Jahi Company issued $400,000, 10-year, 10% coupon rate bonds for $354,200. The bonds pay interest on June 30 and December 31. Using straight line amortization, the interest expense on the bonds on June 30, 2018, is A. $20,000 B. $24,000 C. $22,290 D. $17,710 Why C?
On January 1, 2018, Baddour, Inc., issued 10% bonds with a face amount of $173 million....
On January 1, 2018, Baddour, Inc., issued 10% bonds with a face amount of $173 million. The bonds were priced at $151.7 million to yield 12%. Interest is paid semiannually on June 30 and December 31. Baddour’s fiscal year ends September 30. Required: 1. What amount(s) related to the bonds would Baddour report in its balance sheet at September 30, 2018? 2. What amount(s) related to the bonds would Baddour report in its income statement for the year ended September...
On January 1, 2018, Baddour, Inc., issued 12% bonds with a face amount of $170 million....
On January 1, 2018, Baddour, Inc., issued 12% bonds with a face amount of $170 million. The bonds were priced at $149.0 million to yield 14%. Interest is paid semiannually on June 30 and December 31. Baddour’s fiscal year ends September 30. Required: 1. What amount(s) related to the bonds would Baddour report in its balance sheet at September 30, 2018? 2. What amount(s) related to the bonds would Baddour report in its income statement for the year ended September...
Diaz Company issued $180,000 face value bonds on January 1, 2018. The bonds had a 7%...
Diaz Company issued $180,000 face value bonds on January 1, 2018. The bonds had a 7% stated rate of interest and a five-year term. Interest paid in cash annually, beginning December 31, 2018. The bonds were at 98. The straight-line method is used for amortization. a). Use a financial statements model like the one shown below to demonstrate how (1) January 1, 2018, bond issue and (2) December 31, 2018, recognition of interest expense, including the amortization of the discount,...
Cupola Fan Corporation issued 8%, $560,000, 10-year bonds for $534,000 on June 30, 2018. Debt issue...
Cupola Fan Corporation issued 8%, $560,000, 10-year bonds for $534,000 on June 30, 2018. Debt issue costs were $3,100. Interest is paid semiannually on December 31 and June 30. One year from the issue date (July 1, 2019), the corporation exercised its call privilege and retired the bonds for $540,000. The corporation uses the straight-line method both to determine interest expense and to amortize debt issue costs. Required: Prepare the journal entry to record the issuance of the bonds, the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT