Kirpalani Limited wants to expand its furniture line. The board of directors have agreed thatthe fastest way to raise these funds is to issue bonds. The company proceeds to issue $600,000, 10% bonds on March 1st, 2020. The bonds pay interest on September 1 and March1. The due date of the bonds is September 1, 2023. The bonds yield 12%. The companycloses its books on December 31. Requirements: (Show all workings) I. Calculate theproceeds from the sale of the bond. Clearly show the amount of the premium or discount andstate two reasons which support the premium or discount calculated. II. Prepare a bondamortization schedule for the bond's life III. Prepare all the journal entries for 2020 & 2021

Governments, corporations, and other organizations issue bonds for raising capital. When bonds are…

Answered: Kirpalani Limited wants to expand its…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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a) Kirpalani Limited wants to expand its furniture line. The board of directors have agreed that the fastest way to raise these funds is to issue bonds. The company proceeds to issue $600,000, 10% bonds on March 1st, 2020. The bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2023. The bonds yield 12%. The company closes its books on December 31. Requirements: (Show all workings) I. Calculate the proceeds from the sale of the bond. Clearly show the amount of the premium or discount and state two reasons which support the premium or discount calculated. II. Prepare a bond amortization schedule for the bond’s life III. Prepare all the journal entries for 2020 & 2021
Please answer the following in detail : (a) Kirpalani Limited wants to expand its furniture line. The board of directors have agreed that the fastest way to raise these funds is to issue bonds. The company proceeds to issue $600,000, 10% bonds on March 1st, 2020. The bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2023. The bonds yield 12%. The company closes its books on December 31. Requirements: (Show all workings) I. Calculate the proceeds from the sale of the bond. Clearly show the amount of the premium or discount and state two reasons which support the premium or discount calculated. II. Prepare a bond amortization schedule for the bond’s life III. Prepare all the journal entries for 2020 & 2021 (b) Gassy Stores sells $400,000 of 12% bonds on June 1, 2022. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2026. The market rate of similar investments is 10%. On December 1, 2024, Gassy Stores…
Kirpalani Limited wants to expand its furniture line. The board of directors have agreed that the fastest way to raise these funds is to issue bonds. The company proceeds to issue $600,000, 10% bonds on March 1st, 2020. The bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2023. The bonds yield 12%. The company closes its books on December 31.1. Calculate the proceeds from the sale of the bond. Clearly show the amount of the premium or discount and state two reasons which support the premium or discount calculated. 2. Prepare a bond amortization schedule for the bond’s life3. Prepare all the journal entries for 2020 & 2021 (b) Gassy Stores sells $400,000 of 12% bonds on June 1, 2022. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2026. The market rate of similar investments is 10%. On December 1, 2024, Gassy Stores retired the bond for $400,000. The company closes its books on December 31.I. Calculate the…
ABC Company wants to expand its furniture line.. The company issued $600,000, 10% bonds on March 1st, 2020. The bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2023. The bonds yield 12%. The company closes its books on December 31. Calculate the proceeds from the sale of the bond, prepare a bond amortization schedule for the bond’s life, and prepare all the journal entries
Kirpalani Limited wants to expand its furniture line. The board of directors have agreed that the fastest way to raise these funds is to issue bonds. The company proceeds to issue $600,000, 10% bonds on March 1st, 2020. The bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2023. The bonds yield 12%. The company closes its books on December 31. Calculate the proceeds from the sale of the bond. Clearly show the amount of the premium or discount and state two reasons which support the premium or discount calculated. Prepare a bond amortization schedule for the bond's life Prepare all the journal entries for 2020 & 2021
On January 1, 2024, the Proctor's Restaurant decides to invest in Lake Myrth bonds. The bonds mature on December 31, 2031, and pay interest on June 30 and December 31 at 6% annually. The market rate of interest was 6% on January 1, 2024, so the $50,000 maturity value bonds sold for face value. Proctor's intends to hold the bonds until December 31,2031. Requirements 1. Journalize the transactions related to Proctor's investment in Lake Myrth bonds during 2024. 2. In what category would Proctor's report the investment on the December 31, 2024, balance sheet?
On January 1, 2024, the Steward's Restaurant decides to invest in Lake Redburgh bonds. The bonds mature on December 31, 2027, and pay interest on June 30 and December 31 at 5% annually. The market rate of interest was 5% on January 1, 2024, so the $120,000 maturity value bonds sold for face value. Steward's intends to hold the bonds until December 31, 2027. Requirements 1. Journalize the transactions related to Steward's investment in Lake Redburgh bonds during 2024. In what category would Steward's report the investment on the December 31, 2024, balance sheet? 2. Requirement 1. Journalize the transactions related to Steward's investment in Lake Redburgh bonds during 2024. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Begin by journalizing Steward's investment in Lake Redburgh bonds on January 1, 2024. Accounts and Explanation Debit Date 2024 Jan. 1 Credit
Mi-T-M Corporation is a leading designer and manufacturer of high quality industrial equipment. Mi-T- M Corporation issues $500,000 of 7% bonds on January 1, 2021 to finance operations. The bonds are due in 20 years. Interest is paid semiannually on June 30 and December 31. Required: 1. If the market interest rate is 7%, the bonds will issue at $500,000. Record the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet < 1 2 3 Record the second semiannual interest payment. Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2021
E-Tech Initiatives Limited plans to issue $650,000, 10-year, 7.00 percent bonds. Interest is payable annually on December 31. All of the bonds will be issued on January 1, 2019. Show how the bonds would be reported on the January 2, 2019, balance sheet if they are issued at 105. How would I create a partial balance sheet with the carrying vaule for the problem above?
On December 1, 2024, Loki's Restaurant decides to invest excess cash of $56,000 from the tourist season by purchasing a Robin, Inc. bond at face value. At year-end, December 31, 2024, Robin's bond had a market value of $52,800. The investment is categorized as an available-for-sale debt investment and will be held for the short-term. Read the requirements. Requirement 1. Journalize the transactions for Loki's investment in Robin, Inc. for 2024. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. If no entry is required, select "No entry required" on the first line of the Accounts and Explanation column and leave the remaining cells blank.) Begin by journalizing Loki's investment in the Robin, Inc., bond on December 1, 2024. Date Accounts and Explanation Dec. 1 Debit C Credit Requirements 1. Journalize the transactions for Loki's investment in Robin, Inc. for 2024. 2. In what category and at what value would Loki report the asset on…
(b) Gassy Stores sells $400,000 of 12% bonds on June 1, 2022. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2026. The market rate of similar investments is 10%. On December 1, 2024, Gassy Stores retired the bond for $400,000. The company closes its books on December 31. Requirements: (Show all workings) I. Calculate the proceeds from the sale of the bond. Clearly show the amount of the premium or discount and state two reasons which support the premium or discount calculated. II. Prepare a bond amortization schedule for the bond’s life III. Prepare all the journal entries for 2022, 2023 & 2024
Frozen Company issues $33,600 of ten year bonds on January 1, 2020 at 108. It uses the straight line method of amortization and prepares annual financial statements on December 31st. (Keep two decimal places in all your intermediate calculations). Required 1: What is the carrying value of the bonds on 2020 Financial Statements? $ Required 2: What is the carrying value of the bonds on 2021 Financial Statements? $ Required 3: What is the carrying value of the bonds on 2024 Financial Statements? $

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