Onerumor Inc. issued $10,030,000 of 3 percent, 20-year bonds at a premium. The bonds are retired prior to maturity at 104. The book value of the bonds is $10,466,000 at this time. Onerumor Inc. amortizes bond premiums using the effective-interest method. Required 1. Was the contract rate on the bonds at the time of issuance greater or less than the market rate of interest? Explain. 2. Prepare the journal entry to record the retirement of the bonds. 3. Assume that the bonds were redeemed at maturity. Would the total cash interest paid be different if the company used the straight-line method of amortization of premiums? Explain. Requirement 1. Was the contract rate on the bonds at the time of issuance greater or less than the market rate of interest? Explain. The contract rate on the bonds is Requirement 2. Prepare the jourr Accounts the market rate of interest at the time of issuance. This means that bond purchasers were willing to pay tirement of the bonds. (Record debits first, then credits. Exclude explanations from journal entries.) Debit Credit for the interest rate. greater than less than Requirement 3. Assume that the bonds were redeemed at maturity. Would the total cash interest paid be different if the company used the straight-line method of amortization of premiums? Explain. The straight-line method of amortizing the premium would the total cash paid for interest. Interest payments are paid at the over the life of the bond. Therefore, amount of interest is paid at each interest period. Onerumor Inc. issued $10,030,000 of 3 percent, 20-year bonds at a premium. The bonds are retired prior to maturity at 104. The book value of the bonds is $10,466,000 at this time. Onerumor Inc. amortizes bond premiums using the effective-interest method. Required 1. Was the contract rate on the bonds at the time of issuance greater or less than the market rate of interest? Explain. 2. Prepare the journal entry to record the retirement of the bonds. 3. Assume that the bonds were redeemed at maturity. Would the total cash interest paid be different if the company used the straight-line method of amortization of premiums? Explain. Requirement 1. Was the contract rate on the bonds at the time of issuance greater or less than the market rate of interest? Explain. The contract rate on the bonds is the market rate of interest at the time of issuance. This means that bond purchasers were willing to pay Requirement 2. Prepare the journal entry to record the retirement of the bonds. (Record debits first, then credits. Exclude explanations from journa Accounts Debit Credit for the interest rate. less more Requirement 3. Assume that the bonds were redeemed at maturity. Would the total cash interest paid be different if the company used the straight-line method of amortization of premiums? Explain. The straight-line method of amortizing the premium would the total cash paid for interest. Interest payments are paid at the over the life of the bond. Therefore, amount of interest is paid at each interest period. Onerumor Inc. issued $10,030,000 of 3 percent, 20-year bonds at a premium. The bonds are retired prior to maturity at 104. The book value of the bonds is $10,466,000 at this time. Onerumor Inc. amortizes bond premiums using the effective-interest method. Required 1. Was the contract rate on the bonds at the time of issuance greater or less than the market rate of interest? Explain. 2. Prepare the journal entry to record the retirement of the bonds. 3. Assume that the bonds were redeemed at maturity. Would the total cash interest paid be different if the company used the straight-line method of amortization of premiums? Explain. for the interest rate. Requirement 1. Was the contract rate on the bonds at the time of issuance greater or less than the market rate of interest? Explain. The contract rate on the bonds is the market rate of interest at the time of issuance. This means that bond purchasers were willing to pay Requirement 2. Prepare the journal entry to record the retirement of the bonds. (Record debits first, then credits. Exclude explanations from journal entries.) Accounts Debit Credit lower higher Requirement 3. Assume that the bonds were redeemed at maturity. Would the total cash interest paid be different if the company used the straight-line method of amortization of premiums? Explain. The straight-line method of amortizing the premium would the total cash paid for interest. Interest payments are paid at the over the life of the bond. Therefore, amount of interest is paid at each interest period. Onerumor Inc. issued $10,030,000 of 3 percent, 20-year bonds at a premium. The bonds are retired prior to maturity at 104. The book value of the bonds is $10,466,000 at this time. Onerumor Inc. amortiz bond premiums using the effective-interest method. Required 1. Was the contract rate on the bonds at the time of issuance greater or less than the market rate of interest? Explain. 2. Prepare the journal entry to record the retirement of the bonds. 3. Assume that the bonds were redeemed at maturity. Would the total cash interest paid be different if the company used the straight-line method of amortization of premiums? Explain. for the interest rate. Requirement 1. Was the contract rate on the bonds at the time of issuance greater or less than the market rate of interest? Explain. The contract rate on the bonds is the market rate of interest at the time of issuance. This means that bond purchasers were willing to pay Requirement 2. Prepare the journal entry to record the retirement of the bonds. (Record debits first, then credits. Exclude explanations from journal entries.) Accounts Debit Credit Bonds Payable Cash Common Shares Discount on Bonds Payable Gain on Retirement of Bonds Payable Interest Expense Interest Payable Loss on Retirement of Bonds Payable Premium on Bonds Payable d at maturity. Would the total cash interest paid be different if the company used the straight-line method of amortization of premiums? Explain. the total cash paid for interest. Interest payments are paid at the ald h interest period. over the life of the bond. Onerumor Inc. issued $10,030,000 of 3 percent, 20-year bonds at a premium. The bonds are retired prior to maturity at 104. The book value of the bonds is $10,466,000 at this time. Onerumor Inc. amortizes bond premiums using the effective-interest method. Required 1. Was the contract rate on the bonds at the time of issuance greater or less than the market rate of interest? Explain. 2. Prepare the journal entry to record the retirement of the bonds. 3. Assume that the bonds were redeemed at maturity. Would the total cash interest paid be different if the company used the straight-line method of amortization of premiums? Explain. for the interest rate. Requirement 1. Was the contract rate on the bonds at the time of issuance greater or less than the market rate of interest? Explain. The contract rate on the bonds is the market rate of interest at the time of issuance. This means that bond purchasers were willing to pay Requirement 2. Prepare the journal entry to record the retirement of the bonds. (Record debits first, then credits. Exclude explanations from journal entries.) Accounts Debit Credit Requirement 3. Assume that the bonds were redeemed at maturity. Would the total cash interest paid be different if the company used the straight-line method of amortization of premiums? Explain. The straight-line method of amortizing the premium would the total cash paid for interest. Interest payments are paid at the over the life of the bond. Therefore, amount of interest is paid at each in increase not change decrease Onerumor Inc. issued $10,030,000 of 3 percent, 20-year bonds at a premium. The bonds are retired prior to maturity at 104. The book value of the bonds is $10,466,000 at this time. Onerumor Inc. amortizes bond premiums using the effective-interest method. Required 1. Was the contract rate on the bonds at the time of issuance greater or less than the market rate of interest? Explain. 2. Prepare the journal entry to record the retirement of the bonds. 3. Assume that the bonds were redeemed at maturity. Would the total cash interest paid be different if the company used the straight-line method of amortization of premiums? Explain. for the interest rate. Requirement 1. Was the contract rate on the bonds at the time of issuance greater or less than the market rate of interest? Explain. The contract rate on the bonds is the market rate of interest at the time of issuance. This means that bond purchasers were willing to pay Requirement 2. Prepare the journal entry to record the retirement of the bonds. (Record debits first, then credits. Exclude explanations from journal entries.) Accounts Debit Credit Requirement 3. Assume that the bonds were redeemed at maturity. Would the total cash interest paid be different if the company used the straight-line method of amortization of premiums? Explain. The straight-line method of amortizing the premium would the total cash paid for interest. Interest payments are paid at the over the life of the bond. Therefore, amount of interest is paid at each interest period. current market rate predetermined rate stated on the bond current negotiated rate Onerumor Inc. issued $10,030,000 of 3 percent, 20-year bonds at a premium. The bonds are retired prior to maturity at 104. The book value of the bonds is $10,466,000 at this time. Onerumor Inc. amortizes bond premiums using the effective-interest method. Required 1. Was the contract rate on the bonds at the time of issuance greater or less than the market rate of interest? Explain. 2. Prepare the journal entry to record the retirement of the bonds. 3. Assume that the bonds were redeemed at maturity. Would the total cash interest paid be different if the company used the straight-line method of amortization of premiums? Explain. for the interest rate. Requirement 1. Was the contract rate on the bonds at the time of issuance greater or less than the market rate of interest? Explain. The contract rate on the bonds is the market rate of interest at the time of issuance. This means that bond purchasers were willing to pay Requirement 2. Prepare the journal entry to record the retirement of the bonds. (Record debits first, then credits. Exclude explanations from journal entries.) Accounts Debit Credit Requirement 3. Assume that the bonds were redeemed at maturity. Would the total cash interest paid be different if the company used the straight-line method of amortization of premiums? Explain. The straight-line method of amortizing the premium would the total cash paid for interest. Interest payments are paid at the over the life of the bond. Therefore, amount of interest is paid at each interest period. the same a lower a higher