User Account

All Pages

Discuss bonds have an annual interest rate

Assignment Help Accounting Basics
Reference no: EM131754661

On March 1, 2017, Taft Corporation issues 10-year bonds, dated January 1, 2017, at  102% of a par value of $800,000 (premium). These bonds have an annual interest rate of 6 percent, payable semiannually on January 1 and July 1. 

Its March 1 entry would be:

Cash [($800,000 × 1.02) + ($800,000 × .06 × 2/12)] 824,000  
Bonds Payable   800,000
Premium on Bonds Payable ($800,000 × .02)   16,000
Interest Expense  

8,000

Taft would amortize the premium from the date of sale (March 1, 2017), not from the date of the bonds (January 1, 2017). As a result, the premium amortization at July 1, 2017, is $542.37 [($16,000÷$118)×4].

My question is regarding the final sentence which discusses the premium amortization at july 1. Im not sure how the formula was created to find the amount at 543.37. More specifically, I dont know how the book came up with the number $118 in the formula. Some clarification would be nice.

Reference no: EM131754661

Questions Cloud

What is her cash flow under the current capital structure : What is her cash flow under the current capital structure, assuming the firm has a dividend payout rate of 100%
Was the community experience better or worse than expected : Newgroveton is a community of 445,000. In the most recent year, there were 750 new cases of disease A in the community.
Company makes variety of chocolate candies : The Good Chocolate Company makes a variety of chocolate candies, including a 12-ounce chocolate bar (340 grams) and a box of six 1-ounce chocolate bars.
Analyze data using median run test and up-down run test : Analyze the data using a median run test and an up/down run test. What can you conclude? Test Conclusion Median Up/Down.
Discuss bonds have an annual interest rate : These bonds have an annual interest rate of 6 percent, payable semiannually
Company per day for the original scrap rate : how much is it costing the company per day for the original scrap rate?
What is the profit maximizing number of gizmo widgets : What is the profit maximizing number of Gizmo Widgets that should be introduced? Be sure to account for the fact that Gizmo Widgets displace other types
Test the hypothesis that new machine should be introduced : An efficiency expert claims that by introducing a new type of machinery into a production process he can decrease substantially the time required.
Perception of price to make product price more attractive : Psychological pricing that attempts to influence a customer's perception of price to make a product's price more attractive.

Reviews

Write a Review

Accounting Basics Questions & Answers

  For lodes company the relevant range of production is

for lodes company the relevant range of production is 40-80 of cppacity. at 40 of capacity a variable cost is 4000 and

  Review financial statement reported for given years ended

Access EDGAR online (www.sec.gov) and locate the 2009 year 10-K report of Amazon.com (ticker AMZN) filed on January 29, 2010.

  The journal entry to accrue interest earned at year-end

seamark buys 300000 of eiders 8 five-year bonds payable at par value on september 1. interest payments are made

  Suppose the speedy boat requires 2500 machine hours 97

lakeside inc. manufactures four lines of remote control boats and uses activity-based costing to calculate product

  Which is not a characteristic of a management control system

Identify which of the following is not a characteristic of a management control system. _____ is the logical integration of management accounting tools to gather and report data and to evaluate performance.

  Gross pay for that week

Determine his gross pay for that week if the company uses the one-half average rate method.

  Hauser corporation wholesales bathroom fixtures

Determine for each note (a) the due date and (b) the amount of interest due at maturity, identifying each note by number.

  Purchase price in the consolidated financial statement

How should you account for the difference between the carrying value and the purchase price in the consolidated financial statements for 2011?

  Journalize the four entries required to close the accounts

After the account have been adjusted at November 30, the end of the fiscal year, the following balances were taken from the ledger of Pond Landscaping Co.:

  Prepare a schedule of cash receipts for august

Bill Anderson owns The Eatery in Miami, Florida. The Eatery is an affordable restaurant located near tourist attractions. Bill accepts cash and checks.

  At the initial stage of the project there were idle funds

during its accounting year ending on december 31 2007 the zeal pakcompany had the cash sales rs. 280000 the cost of

  Shawn needs to record journal entries for various inventory

shawn needs to record journal entries for various inventory purchases on account and subsequent payments. record the

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd