Show the proper balance sheet presentation for the liability for bonds payable on the December 31, 2021, balance sheet
Posted: Sat Feb 19, 2022 2:34 pm
Show the proper balance sheet presentation for the liability for
bonds payable on the December 31, 2021, balance sheet E14.8B (L0
1) (Determine Proper Amounts in Account Balances) Presented below
are three independent situations.
(a) Snider Corporation incurred the following costs in
connection with the issuance of bonds: (1) printing and engraving
costs $40,000; (2) legal fees $120,000, and (3) commissions paid to
underwriter $320,000. What amount should be reported as Unamortized
Bond Issue Costs, and where should this amount be reported on the
balance sheet?\
(b) Banks Co. sold $5,000,000 of 6%, 10-year bonds at 104 on
January 1, 2020. The bonds were dated January 1, 2020, and pay
interest on July 1 and January 1. If Banks uses the straight-line
method to amortize bond premium or discount, determine the amount
of interest expense to be reported on July 1, 2020, and December
31, 2020.
(c) Cey Inc. issued $1,000,000 of 10%, 10-year bonds on June 30,
2020, for $885,296. This price provided a yield of 12% on the
bonds. Interest is payable semiannually on December 31 and June 30.
If Cey uses the effective-interest method, determine the amount of
interest expense to record if financial statements are issued on
October 31, 2020
bonds payable on the December 31, 2021, balance sheet E14.8B (L0
1) (Determine Proper Amounts in Account Balances) Presented below
are three independent situations.
(a) Snider Corporation incurred the following costs in
connection with the issuance of bonds: (1) printing and engraving
costs $40,000; (2) legal fees $120,000, and (3) commissions paid to
underwriter $320,000. What amount should be reported as Unamortized
Bond Issue Costs, and where should this amount be reported on the
balance sheet?\
(b) Banks Co. sold $5,000,000 of 6%, 10-year bonds at 104 on
January 1, 2020. The bonds were dated January 1, 2020, and pay
interest on July 1 and January 1. If Banks uses the straight-line
method to amortize bond premium or discount, determine the amount
of interest expense to be reported on July 1, 2020, and December
31, 2020.
(c) Cey Inc. issued $1,000,000 of 10%, 10-year bonds on June 30,
2020, for $885,296. This price provided a yield of 12% on the
bonds. Interest is payable semiannually on December 31 and June 30.
If Cey uses the effective-interest method, determine the amount of
interest expense to record if financial statements are issued on
October 31, 2020