On July 1, 2017, Sugarland Company issued $2,000,000 face value of 10%, 10-year bonds at $1,770,602, a yield of 12%. Sugarland uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. Show the proper balance sheet presentation for the liability for bonds payable on the December 31, 2018, balance sheet.

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Bunny GreenfelderLv2

28 Sep 2019

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Related questions

On July 1, 2014, Sugarland Company issued $2,000,000 face valueof 10%, 10-year bonds at $1,770,602, a yield of 12%. Sugarland usesthe effectiveinterest method to amortize bond premium or discount.The bonds pay semiannual interest on June 30 and December 31.

Instructions

(a) Prepare the journal entries to record the followingtransactions. (1) The issuance of the bonds on July 1, 2014. (2)The payment of interest and the amortization of the premium onDecember 31, 2014. (3) The payment of interest and the amortizationof the premium on June 30, 2015. (4) The payment of interest andthe amortization of the premium on December 31, 2015. (b) Show theproper balance sheet presentation for the liability for bondspayable on the December 31, 2015, balance sheet. (c) Provide theanswers to the following questions. (1) What amount of interestexpense is reported for 2015? (2) Will the bond interest expensereported in 2015 be the same as, greater than, or less than theamount that would be reported if the straight-line method ofamortization were used? (3) Determine the total cost of borrowingover the life of the bond. (4) Will the total bond interest expensefor the life of the bond be greater than, the same as, or less thanthe total interest expense if the straight-line method ofamortization were used?

amaranthcrocodile471

On January 1, 2001, Robben Corporation issued $500,000 of 12% 15-year bonds (interest is paid semi-annually on June 30 and December 31). The effective yield is 8%. Robben uses the effective interest method to amortize bond premium/discount. On June 30, 2002, the adjusted bond premium balance should be:

$169,838

$166,631

$164,021

$163,297

yellowgiraffe126

PART A

Gupta Corporation issued four-year, 11% bonds with a total face value of $850,000 on January 1, 2016. Interest is paid semi-annually on June 30 and December 31. The market rate of interest on this date was 9.5%. Gupta uses the effective interest rate method.

1. Show how the balance sheet would report the bond liability and related premium/discount on June 30, 2017.

erinleopard662

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