Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Use the following to answer the next 5 questions: Your Company issued a $100,000 face value bond on January 1, 2017. The 20 year term
Use the following to answer the next 5 questions: Your Company issued a $100,000 face value bond on January 1, 2017. The 20 year term bond was issued at 95 and had a 2.5% stated rate of interest that is payable on December 31st of each year.
4. Select the entry that correctly records the issue of the bonds. Assets = Claims Income Statement Cash Flow FA Cash Bonds Payable Premium/ Discount Common Stock Retained Earnings Expense = Net Income Revenue Returns Discounts A FA 100,000 = 100,000 95,000 100,000 B FA 5,000 FA 95,000 100,000 -5,000 D FA 95,000 100,000 5,000 5,000 5,000 5. How much cash will the bond holders get on December 31, 2017? A. $2,375 B. $2,500 C. $2,750 D. $2,250 6. What is the annual amortization amount for the discount or premium related to the bond? A. $250 Debit B. $250 Credit C. $500 debit D. $500 credit 7. What is the annual interest expense? A. $2,375 B. $2,500 C. $2,750 D. $2,250 8. What is the carrying value of the bond after the third interest payment is made? A. $94,250 B. $100,000 C. $95,750 D. $95,000Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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