Question
43) Spearhead Specialties issued a 2-year, $150,000, 14% debenture on January 1, 20X3 dated as of that date. The bond will pay interest every June
43) Spearhead Specialties issued a 2-year, $150,000, 14% debenture on January 1, 20X3 dated as of that date. The bond will pay interest every June 30 and December 31, with the principal to be paid on December 31, 20X4. The effective interest rate on the bond is 10%, and the company uses effective-interest amortization.
Given this information and using the present value tables
a. determine the selling price for the bond.
b. provide the journal entry on January 1, 20X3.
44) Cola, Inc., issued a year, 10%, $1,500,000 bond on January 1, 20X9 dated as of January 1, 20X9. The bond pays interest every June 30 and December 31, with the principal to be paid at the end of 12 years. The effective interest rate on the bond is 12%. The company uses effective-interest amortization.
Given this information and using the present value tables
a. Prepare journal entries for Cola, Inc., on each of the following dates:
1) January 1, 20X9
2) June 30, 20X9
3) December 31, 20X9
b. What is the total interest expense for the year ended December 31, 20X9?
c. What is the balance sheet presentation of this bond for Cola, Inc., at December 31, 20X9?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started