Question
Mahalo Boat Adventure Inc. has a July 31 year-end. It showed the following partial amortization schedules regarding two bond issues: Bond Issue A Period Ending
Mahalo Boat Adventure Inc. has a July 31 year-end. It showed the following partial amortization schedules regarding two bond issues: Bond Issue A
Period Ending | (A) Cash Interest Paid $640,000 6.0% 6/12 | (B) Period Interest Expense (E) 5.0% 6/12 | (C) Amort. (A) (B) | (D) Unamortized Balance | (E) Carrying Value $640,000 + (D) | ||||||||||||||||||||
June 1/20 | $ | 45,931 | $ | 685,931 | |||||||||||||||||||||
Dec. 1/20 | $ | 19,200 | $ | 17,148 | $ | 2,052 | 43,879 | 683,879 | |||||||||||||||||
Dec. 1/26 | 19,200 | 16,441 | 2,759 | 14,867 | 654,867 | ||||||||||||||||||||
June 1/27 | 19,200 | 16,372 | 2,828 | 12,039 | 652,039 | ||||||||||||||||||||
Dec. 1/27 | 19,200 | 16,301 | 2,899 | 9,140 | 649,140 | ||||||||||||||||||||
June 1/28 | 19,200 | 16,228 | 2,972 | 6,168 | 646,168 | ||||||||||||||||||||
Dec. 1/28 | 19,200 | 16,154 | 3,046 | 3,122 | 643,122 | ||||||||||||||||||||
June 1/29 | 19,200 | 16,078 | 3,122 | 0 | 640,000 | ||||||||||||||||||||
Totals | $ | 345,600 | $ | 299,669 | $ | 45,931 | |||||||||||||||||||
*Adjusted for rounding (For all requirements, do not round intermediate calculations. Round the final answers to the nearest whole dollar.)
Required: 1. Bond Issue A a. Were the bond A issued at a premium and/or discount?
multiple choice 1
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Issued at discount
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Issued at premium
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Issued at premium & discount
b. Journalize the issuance of bond A on June 1, 2020.
- Record the sale of bonds at a premium on the original issue date.
Note: Enter debits before credits.
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c. What is the contract interest rate for the issue bond A?
d. Interest of how much is paid how often for bond A issued?
e. What is the term of bond A issue?
f. Show how bond A would appear on the balance sheet under non-current liabilities at July 31, 2026. (Enter all amounts as positive values.)
g. Calculate the total bond A interest expense that would appear on the income statement for the year ended July 31, 2027.
h. Independent of (a) through (g), assume bond A issues were retired on December 1, 2027, at 97. Record the entries
1.Record the payment of interest on bonds.
2.Record the retired bonds.
Note: Enter debits before credits.
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