Reference no: EM131782514

Exercise 10-1 Recording bond issuance and interest LO P1

On January 1, 2015, Boston Enterprises issues bonds that have a $1,800,000 par value, mature in 20 years, and pay 8% interest semiannually on June 30 and December 31. The bonds are sold at par.

1. How much interest will Boston pay (in cash) to the bondholders every six months?

2. Prepare journal entries to record (a) the issuance of bonds on January 1, 2015; (b) the first interest payment on June 30, 2015; and (c) the second interest payment on December 31, 2015.

Exercise 10-2 Straight-Line: Amortization of bond discount LO P2

Tano issues bonds with a par value of $99,000 on January 1, 2015. The bonds' annual contract rate is 6%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 8%, and the bonds are sold for $93,809.

1. What is the amount of the discount on these bonds at issuance?

Exercise 10-3 Computing bond interest and price; recording bond issuance LO P2

Bringham Company issues bonds with a par value of $510,000 on their stated issue date. The bonds mature in 9 years and pay 7% annual interest in semiannual payments. On the issue date, the annual market rate for the bonds is 10%. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided.)

1. What is the amount of each semiannual interest payment for these bonds?

Exercise 10-10 Installment note with equal total payments LO C1

On January 1, 2015, Eagle borrows $15,000 cash by signing a four-year, 7% installment note. The note requires four equal total payments of accrued interest and principal on December 31 of each year from 2015 through 2018. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided.)

1. Compute the amount of each of the four equal total payments.

MC Qu. 85 All of the following statements regarding le...

All of the following statements regarding leases are trueexcept:

For a capital lease the lessee records the leased item as its own asset.For a capital lease the lessee depreciates the asset acquired under the lease, but for an operating lease the lessee does not.Capital leases create a long-term liability on the balance sheet, but operating leases do not.Capital leases do not transfer ownership of the asset under the lease, but operating leases often do.For an operating lease the lessee reports the lease payments as rental expense.