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 $700,000 8.0% 6/12 | (B) Period Interest Expense (E) 7.0% 6/12 | (C) Amort. (A) (B) | (D) Unamortized Balance | (E) Carrying Value $700,000 + (D) | ||||||||||||||||||||
June 1/23 | $ | 46,164 | $ | 746,164 | |||||||||||||||||||||
Dec. 1/23 | $ | 28,000 | $ | 26,116 | $ | 1,884 | 44,280 | 744,280 | |||||||||||||||||
Dec. 1/29 | 28,000 | 25,153 | 2,847 | 15,805 | 715,805 | ||||||||||||||||||||
June 1/30 | 28,000 | 25,053 | 2,947 | 12,858 | 712,858 | ||||||||||||||||||||
Dec. 1/30 | 28,000 | 24,950 | 3,050 | 9,808 | 709,808 | ||||||||||||||||||||
June 1/31 | 28,000 | 24,843 | 3,157 | 6,651 | 706,651 | ||||||||||||||||||||
Dec. 1/31 | 28,000 | 24,733 | 3,267 | 3,384 | 703,384 | ||||||||||||||||||||
June 1/32 | 28,000 | 24,616 | 3,384 | 0 | 700,000 | ||||||||||||||||||||
Totals | $ | 504,000 | $ | 457,836 | $ | 46,164 | |||||||||||||||||||
*Adjusted for rounding (For all requirements, do not round intermediate calculations. Round the final answers to the nearest whole dollar.)
Required:
Bond Issue B
Period Ending | (A) Cash Interest Paid $560,000.0 8.0% 3/12 | (B) Period Interest Expense (E) 8.5% 3/12 | (C) Amort. (A) (B) | (D) Unamortized Balance | (E) Carrying Value $560,000 (D) | ||||||||||||||||||||
Apr. 1/21 | $ | 18,736 | $ | 541,264 | |||||||||||||||||||||
Jul. 1/21 | $ | 11,200 | $ | 11,502 | $ | 302 | 18,434 | 541,566 | |||||||||||||||||
Apr. 1/29 | 11,200 | 11,779 | 579 | 5,102 | 554,898 | ||||||||||||||||||||
Jul. 1/29 | 11,200 | 11,792 | 592 | 4,510 | 555,490 | ||||||||||||||||||||
Oct. 1/29 | 11,200 | 11,804 | 604 | 3,906 | 556,094 | ||||||||||||||||||||
Jan. 1/30 | 11,200 | 11,817 | 617 | 3,289 | 556,711 | ||||||||||||||||||||
Apr. 1/30 | 11,200 | 11,830 | 630 | 2,659 | 557,341 | ||||||||||||||||||||
Jul. 1/30 | 11,200 | 11,843 | 643 | 2,016 | 557,984 | ||||||||||||||||||||
Oct. 1/30 | 11,200 | 11,857 | 657 | 1,359 | 558,641 | ||||||||||||||||||||
Jan. 1/31 | 11,200 | 11,871 | 671 | 688 | 559,312 | ||||||||||||||||||||
Apr. 1/31 | 11,200 | 11,888 | * | 688 | 0 | 560,000 | |||||||||||||||||||
Totals | $ | 448,000 | $ | 466,736 | $ | 18,736 | |||||||||||||||||||
*Adjusted for rounding
Bond Issue B a. Were the bond B issued at a premium and/or discount?
multiple choice 2
Issued at discount
Issued at premium
Issued at premium & discount
b. Journalize the issuance of bond B on April 1, 2021.
c. What is the contract interest rate for the issue bond B?
d. Interest of how much is paid how often for bond B issued?
e. What is the term of bond B issue?
f. Show how bond B would appear on the balance sheet under non-current liabilities at July 31, 2029.
g. Calculate the bond B interest expense that would appear on the income statement for the year ended July 31, 2030.
h. Independent of (a) through (g), assume that bond B issues was retired on December 1, 2030, at 97. Record the entries.
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