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Financial & Managerial Accounting 3rd Edition by Charles Horngren,Harrison, Walter,Suzanne Oliver
Edition 3ISBN: 978-0132962339Financial & Managerial Accounting 3rd Edition by Charles Horngren,Harrison, Walter,Suzanne Oliver
Edition 3ISBN: 978-0132962339 Exercise 35
Calculating and recording bonds when stated rate and market rate are different
TVX, Inc., issued $800,000 of 5%, 10-year bonds payable at a price of 92.595 on March 31, 2012. The market interest rate at the date of issuance was 6%, and the bonds pay interest semiannually.
Requirements
1. How much cash did the company receive upon issuance of the bonds payable
2. Prepare an effective-interest amortization table for the bond discount through the first two interest payments. Use Exhibit 11A-1 as a guide, and round amounts to the nearest dollar.
3. Journalize the issuance of the bonds on March 31, 2012, and on September 30, 2012, payment of the first semiannual interest amount and amortization of the bond discount. Explanations are not required.
TVX, Inc., issued $800,000 of 5%, 10-year bonds payable at a price of 92.595 on March 31, 2012. The market interest rate at the date of issuance was 6%, and the bonds pay interest semiannually.
Requirements
1. How much cash did the company receive upon issuance of the bonds payable
2. Prepare an effective-interest amortization table for the bond discount through the first two interest payments. Use Exhibit 11A-1 as a guide, and round amounts to the nearest dollar.
3. Journalize the issuance of the bonds on March 31, 2012, and on September 30, 2012, payment of the first semiannual interest amount and amortization of the bond discount. Explanations are not required.
Explanation
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Financial & Managerial Accounting 3rd Edition by Charles Horngren,Harrison, Walter,Suzanne Oliver
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