Imai Company issued a $1 million bond that matures in five years. The bond has a...

Transcribed Image Text:

Imai Company issued a $1 million bond that matures in five years. The bond has a 9 percent coupon rate. When the bond was i the market interest rate was 8 percent. The bond pays interest twice per year, on June 30 and December 31. Use Table 8C.1, Ta 8C.2. Required: 1. Record the issuance of the bond on June 30. (Round time value factor to 4 decimal places. Enter your answer in dollars nc millions. Round intermediate and final answers to the nearest whole dollar. If no entry is required for a transaction/event, s "No journal entry required" in the first account field.) 2. Was the bond issued at a discount or at a premium? Discount Premium View transaction list Journal entry worksheet 1 Record the issuance of bond on June 30th. Note: Enter debits before credits. Date Jun 30 General Journal Debit Credit Cash Assessment Tool iFrame Income tax expense Sales revenue Trade receivable de Wages payable No journal entry required Assessment Tool iFrame Bonds payavie Bonds premium Record entry Clear entry View general journal Cash Income tax expense Alimentex Inc. develops, manufactures, and markets a wide range of fruit and vegetable juices and drinks as well as specialty food products, such as fondue broths and sauces, soups, gravies, pestos, and sauces for pasta and pizza. Use Table 8C.1, Table 8C.2. (Round time value factor to 4 decimal places.) The company's long-term debt includes the following obligations: 4. Assume that the obligation under the lease was signed on July 1, 2021 and that the first semi-annual instalment was made on December 30, 2021. Verify that the carrying amount reported by the company as of December 31, 2022 represents the present value of the remaining semi-annual payments. Use a calculator or Microsoft Excel to compute the present value of future payments. (Enter your answer in dollars not in thousands of dollars rounded to the nearest whole dollar.) Long-Term Debt 1. Obligation related to the acquisition of equipment, 5.5%, payable starting in December 2020 in eight equal annual blended instalments of $262,212 through 2027. 2. Obligation under a lease for distribution equipment, 9.7%, payable starting in December 2021 in 11 equal semi-annual blended instalments of $44,998, through December 2026. As of Dec. As of Dec. 31, 2022 31, 2021 (In thousands of dollars) $1,120 $1,310 293 350 Carrying amount Required: 1. Assume that the equipment related to the first obligation was acquired on January 1, 2020 and that the first payment of $262,212 was made on December 31, 2020. Verify that the carrying amount reported by the company as of December 31, 2022 represents the present value of the remaining annual payments. (Note: Tables 8C.1 and 8C.2 do not include the 5.5 percent interest rate. Use Microsoft Excel or a calculator to compute the present value of future payments.) (Enter your answer in dollars not in thousands of dollars rounded to the nearest whole dollar.) Carrying amount Berj Corporation issued bonds and received cash in full for the issue price. The bonds were dated and issued on January 1, year 1. Interest is payable at the end of each year. The bonds mature at the end of four years. The following schedule has been partially completed (amounts in thousands): Interest Carrying Cash Paid Expense Amortization Amount January 1, year 1 $3,665 December 31, year 1 December 31, year 2 December 31, year 3 December 31, year 4. $162 $147 $15 3,650 162 ? ? 3,634 162 ? ? ? 162 ? ? 3,600 2. How much interest will the company pay as part of the five remaining instalments on the 5.5 percent obligation? (Hint: You may find it helpful to prepare a schedule similar to Exhibit 9.3, option 3.) (Enter your answer in dollars not in thousands of dollars rounded to the nearest whole dollar.) Interest paid Required: 1. Complete the amortization schedule. (Make sure that the unamortized discount/premium equals to '0' and the Net Liability equals to face value of the bond in the last period. Enter your answers in thousands of dollars. Round intermediate calculations and final answers to the nearest whole dollars. Enter all amounts as positive values.) Date Cash Paid Interest Expense Amortization Carrying Amount January 1, year 1 $ 3,665 December 31, year 1 December 31, year 2 December 31, year 3 December 31, year 4 $ 162 $ 147 $ 15 3,650 162 3,634 162 162 3,600 3. Prepare the journal entry to record payment of the instalment on December 31, 2023. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in dollars not in thousands of dollars rounded to the nearest whole dollar.) Assessment Tool iFrame 4. What was the amount of discount or premium on the bond? (Enter your answer in thousands of dollars.) Premium View transaction list Journal entry worksheet < 1 Record entry for payment of annual instalment. Note: Enter debits before credits. Date December 31, 2023 No journal entry required Assessment Tool iFrame Accounts payable Accounts receivable Bond interest expense Bonds payable 5. How much cash will be disbursed for interest each period and in total for the full life of the bond issue? (Enter your answer in thousands of dollars.) Cash disbursed General Journal Debit Credit Assessment Tool Frame expense Record entry Clear entry View general journal Bonds payable Cash Interest expense Notes payable 4. What was the amount of discount or premium on the bond? (Enter your answer in thousands of dollars.) Premium 6. What method of amortization is being used? O Effective-interest method Straight-line method Deferred interest method 7. What is the coupon rate? (Round percentage answer to 1 decimal place (i.e., 0.124 should be entered as 12.4).) Coupon rate of interest 8. What is the market interest rate on the date of issuance of the bonds? (Round percentage answer to the nearest whole number.) Effective rate of interest 5. How much cash will be disbursed for interest each period and in total for the full life of the bond issue? (Enter your answer in thousands of dollars.) Cash disbursed 9. What amount of interest expense should be reported on the statement of earnings each year? (Enter your answers in thousands of dollars.) Interest Year Expense Year 1 Year 2 Year 3 6. What method of amortization is being used? O Effective-interest method O Straight-line method O Deferred interest method 7. What is the coupon rate? (Round percentage answer to 1 decimal place (i.e., 0.124 should be entered as 12.4).) Coupon rate of interest Year 4 10. Show how the bonds should be reported on the statement of financial position at the end of each year (show the last year immediately before repayment of the bonds). (Enter your answers in thousands of dollars.) Net liability Year 1 Year 2 Year 3 Year 4 Imai Company issued a $1 million bond that matures in five years. The bond has a 9 percent coupon rate. When the bond was i the market interest rate was 8 percent. The bond pays interest twice per year, on June 30 and December 31. Use Table 8C.1, Ta 8C.2. Required: 1. Record the issuance of the bond on June 30. (Round time value factor to 4 decimal places. Enter your answer in dollars nc millions. Round intermediate and final answers to the nearest whole dollar. If no entry is required for a transaction/event, s "No journal entry required" in the first account field.) 2. Was the bond issued at a discount or at a premium? Discount Premium View transaction list Journal entry worksheet 1 Record the issuance of bond on June 30th. Note: Enter debits before credits. Date Jun 30 General Journal Debit Credit Cash Assessment Tool iFrame Income tax expense Sales revenue Trade receivable de Wages payable No journal entry required Assessment Tool iFrame Bonds payavie Bonds premium Record entry Clear entry View general journal Cash Income tax expense Alimentex Inc. develops, manufactures, and markets a wide range of fruit and vegetable juices and drinks as well as specialty food products, such as fondue broths and sauces, soups, gravies, pestos, and sauces for pasta and pizza. Use Table 8C.1, Table 8C.2. (Round time value factor to 4 decimal places.) The company's long-term debt includes the following obligations: 4. Assume that the obligation under the lease was signed on July 1, 2021 and that the first semi-annual instalment was made on December 30, 2021. Verify that the carrying amount reported by the company as of December 31, 2022 represents the present value of the remaining semi-annual payments. Use a calculator or Microsoft Excel to compute the present value of future payments. (Enter your answer in dollars not in thousands of dollars rounded to the nearest whole dollar.) Long-Term Debt 1. Obligation related to the acquisition of equipment, 5.5%, payable starting in December 2020 in eight equal annual blended instalments of $262,212 through 2027. 2. Obligation under a lease for distribution equipment, 9.7%, payable starting in December 2021 in 11 equal semi-annual blended instalments of $44,998, through December 2026. As of Dec. As of Dec. 31, 2022 31, 2021 (In thousands of dollars) $1,120 $1,310 293 350 Carrying amount Required: 1. Assume that the equipment related to the first obligation was acquired on January 1, 2020 and that the first payment of $262,212 was made on December 31, 2020. Verify that the carrying amount reported by the company as of December 31, 2022 represents the present value of the remaining annual payments. (Note: Tables 8C.1 and 8C.2 do not include the 5.5 percent interest rate. Use Microsoft Excel or a calculator to compute the present value of future payments.) (Enter your answer in dollars not in thousands of dollars rounded to the nearest whole dollar.) Carrying amount Berj Corporation issued bonds and received cash in full for the issue price. The bonds were dated and issued on January 1, year 1. Interest is payable at the end of each year. The bonds mature at the end of four years. The following schedule has been partially completed (amounts in thousands): Interest Carrying Cash Paid Expense Amortization Amount January 1, year 1 $3,665 December 31, year 1 December 31, year 2 December 31, year 3 December 31, year 4. $162 $147 $15 3,650 162 ? ? 3,634 162 ? ? ? 162 ? ? 3,600 2. How much interest will the company pay as part of the five remaining instalments on the 5.5 percent obligation? (Hint: You may find it helpful to prepare a schedule similar to Exhibit 9.3, option 3.) (Enter your answer in dollars not in thousands of dollars rounded to the nearest whole dollar.) Interest paid Required: 1. Complete the amortization schedule. (Make sure that the unamortized discount/premium equals to '0' and the Net Liability equals to face value of the bond in the last period. Enter your answers in thousands of dollars. Round intermediate calculations and final answers to the nearest whole dollars. Enter all amounts as positive values.) Date Cash Paid Interest Expense Amortization Carrying Amount January 1, year 1 $ 3,665 December 31, year 1 December 31, year 2 December 31, year 3 December 31, year 4 $ 162 $ 147 $ 15 3,650 162 3,634 162 162 3,600 3. Prepare the journal entry to record payment of the instalment on December 31, 2023. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in dollars not in thousands of dollars rounded to the nearest whole dollar.) Assessment Tool iFrame 4. What was the amount of discount or premium on the bond? (Enter your answer in thousands of dollars.) Premium View transaction list Journal entry worksheet < 1 Record entry for payment of annual instalment. Note: Enter debits before credits. Date December 31, 2023 No journal entry required Assessment Tool iFrame Accounts payable Accounts receivable Bond interest expense Bonds payable 5. How much cash will be disbursed for interest each period and in total for the full life of the bond issue? (Enter your answer in thousands of dollars.) Cash disbursed General Journal Debit Credit Assessment Tool Frame expense Record entry Clear entry View general journal Bonds payable Cash Interest expense Notes payable 4. What was the amount of discount or premium on the bond? (Enter your answer in thousands of dollars.) Premium 6. What method of amortization is being used? O Effective-interest method Straight-line method Deferred interest method 7. What is the coupon rate? (Round percentage answer to 1 decimal place (i.e., 0.124 should be entered as 12.4).) Coupon rate of interest 8. What is the market interest rate on the date of issuance of the bonds? (Round percentage answer to the nearest whole number.) Effective rate of interest 5. How much cash will be disbursed for interest each period and in total for the full life of the bond issue? (Enter your answer in thousands of dollars.) Cash disbursed 9. What amount of interest expense should be reported on the statement of earnings each year? (Enter your answers in thousands of dollars.) Interest Year Expense Year 1 Year 2 Year 3 6. What method of amortization is being used? O Effective-interest method O Straight-line method O Deferred interest method 7. What is the coupon rate? (Round percentage answer to 1 decimal place (i.e., 0.124 should be entered as 12.4).) Coupon rate of interest Year 4 10. Show how the bonds should be reported on the statement of financial position at the end of each year (show the last year immediately before repayment of the bonds). (Enter your answers in thousands of dollars.) Net liability Year 1 Year 2 Year 3 Year 4