Question

Book Barn Inc. issued $600,000 of 9%, 10 – year bonds on June 30, 2015, for...

Book Barn Inc. issued $600,000 of 9%, 10 – year bonds on June 30, 2015, for $562,500. This price provided a yield of 10% on the bonds. Interest is payable semi annually on December 31 and June 30. Determine the amount of interest expense to record if financial statements are issued on October 31, 2015.
Show all working in Detail

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Book Bern Inc.
Issued Price $ 6,00,000.00
Coupon rate 9%
Period(Years) 10
Yield 10%
Carrying Amount of Bonds on June 30th,2015 $ 5,62,500.00
Carrying amount of Bonds $ 5,62,500.00
Effective Interest from June to October=(Carrying Amount*Market Yield* number of months)
Effective Interest from June to October(4 months)=($562500*10%*4/12) $     18,750.00
Amount of interest expense to record if financial statements are issued on October 31, 2015. $     18,750.00
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
(b) Brookfield Inc. issued $600,000 of 9%, 10 – year bonds on June 30, 2015, for...
(b) Brookfield Inc. issued $600,000 of 9%, 10 – year bonds on June 30, 2015, for $562,500. This price provided a yield of 10% on the bonds. Interest is payable semi annually on December 31 and June 30. Determine the amount of interest expense to record if financial statements are issued on October 31, 2015. (c) On October 1, 2015, Brimley Company sold 12% bonds having a maturity value of $800,000 for $853,382 plus accrued interest, which provides the bondholders...
Problem 1: On September 30, Jose’s Jalapenos Inc., issued $1,000,000 of 10-year 9% bonds sated September...
Problem 1: On September 30, Jose’s Jalapenos Inc., issued $1,000,000 of 10-year 9% bonds sated September 30, for $1,067,950 an effective (market) rate of 8%. Interest is payable semi-annually on October 1 and April 1. The bonds were purchased by Juan’s Junk and Basura Inc. Present the entries to record the following transactions for the current year on BOTH sets of books: (Issuing Corporation and Investor) a) Issuance of bonds b) Accrual of interest and amortization for the period ended...
On June 1, 2015, Perry Corp. issued $4,000,000, 9%, 5-year bonds at face value. The bonds...
On June 1, 2015, Perry Corp. issued $4,000,000, 9%, 5-year bonds at face value. The bonds were dated June 1, 2015, and pay interest semiannually on June 1 and December 1. Financial statements are prepared annually on December 31. Instructions (a) Prepare the journal entry to record the issuance of the bonds. (b) Prepare the adjusting entry to record the accrual of interest on 12/31/15. (c) Show the balance sheet presentation of all bond related accounts (bonds and interest) on...
Question Cupola Fan Corporation issued 10%, $530,000, 10-year bonds for $502,000 on June 30, 2018. Debt...
Question Cupola Fan Corporation issued 10%, $530,000, 10-year bonds for $502,000 on June 30, 2018. Debt issue costs were $2,800. 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 $512,000. 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,...
Agee Technology, Inc., issued 9% bonds, dated January 1, with a face amount of $1,900 million...
Agee Technology, Inc., issued 9% bonds, dated January 1, with a face amount of $1,900 million on July 1, 2021, at a price of $1,870 million. For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semi-annually on June 30 and December 31. Required: Prepare the journal entry to record interest at the effective interest rate at December 31. What would be the amount(s) related to the bonds that Agee would report in its statement...
(a) Metlock Co. sold $1,930,000 of 12%, 10-year bonds at 106 on January 1, 2020. The...
(a) Metlock Co. sold $1,930,000 of 12%, 10-year bonds at 106 on January 1, 2020. The bonds were dated January 1, 2020, and pay interest on July 1 and January 1. If Metlock uses the straight-line method to amortize bond premium or discount, determine the amount of interest expense to be reported on July 1, 2020, and December 31, 2020. (Round answer to 0 decimal places, e.g. 38,548.) Interest expense to be recorded $ (b) Bonita Inc. issued $610,000 of...
Bonds Payable Journal Entries; Effective Interest Amortization On December 31, 2014, Blair Company issued $600,000 of...
Bonds Payable Journal Entries; Effective Interest Amortization On December 31, 2014, Blair Company issued $600,000 of 20-year, 11 percent bonds payable for $480,015, yielding an effective interest rate of 14 percent. Interest is payable semiannually on June 30 and December 31. Prepare journal entries to reflect (a) the issuance of the bonds, (b) the semiannual interest payment and discount amortization (effective interest method) on June 30, 2015, and (c) the semiannual interest payment and discount amortization on December 31, 2015....
Presented below are three independent situations. (a) Vaughn Co. sold $ 2,180,000 of  12%,  10-year bonds at  106 on...
Presented below are three independent situations. (a) Vaughn Co. sold $ 2,180,000 of  12%,  10-year bonds at  106 on January 1, 2017. The bonds were dated January 1, 2017, and pay interest on July 1 and January 1. If Vaughn uses the straight-line method to amortize bond premium or discount, determine the amount of interest expense to be reported on July 1, 2017, and December 31, 2017. (Round answer to 0 decimal places, e.g. 38,548.) Interest expense to be recorded $ (b) Bramble...
Lorance Corporation issued $845,000, 9%, 10-year bonds on January 1, 2015, for $792,347. This price resulted...
Lorance Corporation issued $845,000, 9%, 10-year bonds on January 1, 2015, for $792,347. This price resulted in an effective-interest rate of 10% on the bonds. Interest is payable semiannually on July 1 and January 1. Lorance uses the effective-interest method to amortize bond premium or discount. 1)Prepare the journal entry to record the issuance of the bonds. 2)Prepare the journal entry to record the payment of interest and the discount amortization on July 1, 2015, assuming that interest was not...
    RPC Corporation issued $4,000,000 of two-year, 12% bonds at par value on September 30, 2015. The...
    RPC Corporation issued $4,000,000 of two-year, 12% bonds at par value on September 30, 2015. The interest is payable semi annually, starting on March 31st, 2015. Prepare the journal entries for the following: a.      Issuance of the bonds b.      Interest expense c.       Retirement of the bonds
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT