On January 1, 2021, an investor paid OR291, 000 for bonds with a principal amount of OR300,000. The stated rate of interest is 8% while the current market rate of interest is 10%. Using the effective interest method, how much interest income is recognized by the investor in 2021 (assume ?annual interest payments and amortization)

On January 1, 2021, an investor paid OR291, 000 for bonds with a principal amount of OR300,000. The stated rate of interest is 8% while the current market rate of interest is 10%. Using the effective interest method, how much interest income is recognized by the investor in 2021 (assume ?annual interest payments and amortization)

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 9RE

See similar textbooks

Similar questions

Refer to the information in RE13-5. Assume that on December 31, 2019, the investment in Smith Corporation bonds has a market value of 12,500. Prepare the year-end journal entry to record the unrealized gain or loss.
On January 1, 2024, an investor paid $299,000 for bonds with a face amount of $360,000. The contract rate of interest is 8% while the current market rate of interest is 10%. Using the effective interest method, how much interest income is recognized by the investor in 2025 (assume annual interest payments and amortization)? rev: 02_26_2021_QC_CS-252921• $30,010.• $30,160.• $29,900.• $28,204.
On December 31, 2019, Potter Corporation issued €2,000,000, 6%, 5-year bonds for €1,837,750. The bonds were sold to yield an effective-interest rate of 8%. Interest is paid annually on December 31. The company uses the effective-interest method of amortization. Compute the December 31, 2020, amount of equity. Compute the debt to assets ratio at December 31, 2020. Compute times interest earned for 2020.
On July 01, 2019, SALUDO RAW SA'YO SI MAGELLAN SABI NI LOLA CO. received P1,032,880 for P1,000,000 face amount, 12% bonds, a price that yields 10%. Using the interest method of amortization, how much is the interest expense for the six months ended December 31, 2019? Use the same information in MC 18. What is the bond carrying value at December 31, 2019? a. P1,024,524 b. P1,031,236 c. P1,032,880 d. P1,041,236
On July 1, 2019, YYY Company paid P1,198,000 of 10% 20-year bonds with a face amount of P1,000,000. Interest is paid on June 30 and December 31. The bonds were purchased to yield 8%. The effective interest method is used to recognize interest income from this long-term investment. What is the carrying amount of the investment in bonds on December 31, 2019?
On January 1, 2021, Jackie Company issued at 76 (gross of issuance costs of P46,260), 6% bonds which required interest payments of P450,000 every December 31 for 5 years. 1 How much is the interest expense for 2021? 2 How much is the carrying amount of the bonds as of December 31, 2022? 3 How much is the discount amortization during 2023?
(C) On April 30,2020, ABC Corp. purchased bonds with a face value of P1,400,000 and interest rate of 9% to be paid annually every Dec. 31 until the end of 2024. It paid P1,360,000 plus accrued interest plus transaction fee of P10,000. What is the journal entry to record the purchase if ABC accounted it as a FA-FV-PL? Use Accrued Interest Receivable in your answer. You may use parenthetical solutions. In the google form, provide the total cash outflow relating to the acquisition. IDL On Jan. 1.2021 ARC.nurcbased bonds for then of both
(C) On April 30,2020, ABC Corp. purchased bonds with a face value of P1,400,000 and interest rate of 9% to be paid annually every Dec. 31 until the end of 2024. It paid P1,360,000 plus accrued interest plus transaction fee of P10,000. What is the journal entry to record the purchase if ABC accounted it as a FA-FV-PL? Use Accrued Interest Receivable in your answer. You may use parenthetical solutions. In the google form, provide the total cash outflow relating to the acquisition.
X2 issued callable bonds on January 1, 2021. The bonds pay interest annually on December 31 each year. X2's accountant has projected the following amortization schedule from issuance until maturity: Date Cash Paid InterestExpense Decrease inCarrying Value CarryingValue 01/01/2021 124,380 12/31/2021 15,000 14,304 696 123,684 12/31/2022 15,000 14,224 776 122,907 12/31/2023 15,000 14,134 866 122,042 12/31/2024 15,000 14,035 965 121,076 12/31/2025 15,000 13,924 1,076 120,000 What is the annual market interest rate on the bonds? Multiple Choice 5.8%. 6.3%. 11.5%. 12.5%.
Cookie Dough Corporation issued $850,000 in 9%, 10-year bonds (payable on December 31, 2030) on January 1, 2021, for $907,759. Interest is paid on June 30 and December 31. The market rate of interest is 8%. Required: Prepare the amortization table through December 31, 2023, using the effective interest rate method. If an amount box does not require an entry, leave it blank and if the answer is zero, enter "0". If required, round your answers to the nearest whole dollar
On January 1, 2020, Bobond issued a 3-year, 9% P1,000,000 at par. Interest is payable semi-annually every June 30 and December 31. On May 30, 2021 the bonds were retired for P1,030,000. How much is the gain or (loss) on extinguishment (Use negative sign if loss)?
Mcdonaugh Corporation issued $250,000 of 5%, 10-year bonds payable onJanuary 1, 2019. The market interest rate when the bonds were issued was 8%. Interest is paidsemiannually on January 1 and July 1. The first interest payment is July 1, 2019. Using theeffective-interest amortization method, how much interest expense will Mcdonaugh record onJuly 1, 2019? Use Excel to calculate the issue price.a. $4,976b. $7,961c. $1,711d. $10,000e. $6,250