Saturn Corporation issued $300,000 par value 10-year bonds at 107 on January 1, 20X3, which Star Corporation purchased. On July 1, 20X7, Pluto Corporation purchased $120,000 face value of Saturn bonds from Star. The bonds pay 12 percent interest annually on December 31. The preparation of consolidated financial statements for Saturn and Pluto at December 31, 20X9, required the following consolidation entry: Bonds Payable Premium on Bonds Payable Interest Income Investment in Saturn Corporation Bonds Interest Expense Investment in Saturn Corporation Stock NCT in NA of Saturn Corp. 120,000 2,520 14,760 118,920 13,560 3,120 1,680 Based on the information given above, what amount of gain or loss on bond retirement is included in the 20X7 consolidated income-

Saturn Corporation issued $300,000 par value 10-year bonds at 107 on January 1, 20X3, which Star Corporation purchased. On July 1, 20X7, Pluto Corporation purchased $120,000 face value of Saturn bonds from Star. The bonds pay 12 percent interest annually on December 31. The preparation of consolidated financial statements for Saturn and Pluto at December 31, 20X9, required the following consolidation entry: Bonds Payable Premium on Bonds Payable Interest Income Investment in Saturn Corporation Bonds Interest Expense Investment in Saturn Corporation Stock NCT in NA of Saturn Corp. 120,000 2,520 14,760 118,920 13,560 3,120 1,680 Based on the information given above, what amount of gain or loss on bond retirement is included in the 20X7 consolidated income-

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 7MCQ

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Satum Corporation issued $300,000 par value 10-year bonds at 107 on January 1, 20X3, which Star Corporation purchased On July 1, 20X7, Pluto Corporation purchased $120,000 face value of Saturn bonds from Star. The bonds pay 12 percent interest annually on December 31 The preparation of consolidated financial statements for Saturn and Pluto at December 31, 20X9, required the following consolidation entry Prentum on Bonds Payable Interest Income Investment in Saturn Corporation Bonds Interest Expense Investment in Saturn Corporation Stock MCI in Net Assets of Saturn Corporation 120,000 2,520 14,760 118,920 13,560 3,120 1,680 on the information given above, what percentage of the subsidiary's ownership does the parent company hold?
On May 1, 20X1, Starlight Company purchased $750,000 of Gazing Corp's 12% bonds at 100 plus accrued interest. On December 31, 20X1, Starlight Co. received its annual interest. On March 31, 20X3, Starlight decided to sell half the bonds to Twinkly Inc. at 99 plus accrued interest. Prepare the journal entries for the following transactions: a. The purchase of the bonds b. The receipt of all interest c. The sale of the bonds to Twinkly Inc.
Gonzalez Company acquired $183,600 of Walker Co., 4% bonds on May 1 at their face amount. Interest is paid semiannually on May 1 and November 1. On November 1, Gonzalez Company sold $43,800 of the bonds for 97. Journalize entries to record the following in Year 1 (refer to the Chart of Accounts for exact wording of account titles): a. The initial acquisition of the bonds on May 1. b. The semiannual interest received on November 1. c. The sale of the bonds on November 1. d. The accrual of $932 interest on December 31.
Soap Company issued $200,000 of 8%, 5-year bonds on January 1, 20X6. The discount on issuance was $12,000. Bond interest is paid annually on December 31. On December 31, 20X8, Pumice Company purchased one-half of the outstanding bonds for $96,000. Both companies use the straight-line method of amortization. How much interest expense will appear on the December 31, 20X9, consolidated income statement? a. $18,400 b. $16,000 c. $9,200 d. $8,000
Pat Inc. purchased the $100.000 face value outstanding bonds of Slinger Company, its 80%-owned subsidiary, fo $101.300 (to yield 7.5% annual interest) on January 1, 20X3. The bonds have a stated nominal interest rate of 8°. The bonds were sold on January 1, 20X1, for $101,005 to yield 7.75% annual interest. The bonds mature on Janu 20X6. The bonds pay interest each January 1. Amortizations of premiums are done using the effective interest "amortization method. Instructions: 1. Prepare the 5-year amortization schedule for the bonds issued by Slinger. 7.75% Interest 2. 3. 4. Date 1/1/X1 1/1/X2 1/1/X3 1/1/X4 1/1/X5 1/1/X6 Payment 8,000 8,000 8,000 8,000 8,000 Prepare the 3-year amortization schedule for the bonds purchased by Pat Inc. Date Payment 7.5% Interest 1/1/X3 1/1/X4 Amortization 1/1/X5 1/1/X6 Amortization 8,000 8,000 8,000 Record the entries made by Slinger in 20X3 relative to the bonds. Record the entries made by Pat Inc. in 20X3 relative to the bonds. Balance 101,005 Balance…
At the beginning of the current year, ABC Corporation issued 6,000, 5-year bonds, face value 1,000 each at 105. The bonds has a conversion privilege that provides for an exchange of a 1,000 bond for 20 shares of capital, par 50. Without such conversion privilege, the bonds would only sell at 98. Prepare the entries in connection with the issuance of the bonds and the conversion of the bonds at the end of the current year. U :=
Gonzalez Company acquired $200,000 of Walker Co., 6% bonds on May 1 at their face amount. Interest is paid semiannually on May 1 and November 1. On November 1,Gonzalez Company sold $70,000 of the bonds for 97.Journalize entries to record the following in Year 1:a. The initial acquisition of the bonds on May 1.b. The semiannual interest received on November 1.c. The sale of the bonds on November 1.d. The accrual of $1,300 interest on December 31.
3. On October 1, Dennis Company purchased P200,000 face value 12% bonds for 98 plus accrued interest and brokerage fees and classified them as held-to-maturity securities. Interest is paid semiannually on January 1 and July 1. Brokerage fees for this transaction were P700. At what amount should this acquisition of bonds be recorded? a. P196,000 b. P196,700 c. P202,000 d. P202,700
On January 1, 20x1, an entity issues bonds with face amount of P5,000,000 for P4,800,000. The bonds mature on December 31, 20x3 and pay annual interest of 10% every December 31. The entity incurs bond issue costs of P473,767. The effective interest rate adjusted for bond issue costs is 16%. Requirement: a. Compute for the initial carrying amount of the bonds. b. Compute for net discount or a net premium (including the effect of the bond issue cost) from the issuance on initial recognition.
On January 1, 2021, STUDY HARDER Company purchased 9% bonds with face amount of P6,000,000. The bonds mature on January 1, 2026 and were purchased for P5,550,000 to yeild 11%. The entity classified the bondss as held for trading and interest is payable annually every December 31. The entity provided the following information about fair value of the bonds and effective rate: >December 31, 2021; Fair value of P5,450,000; Effective rate of 12% > December 31,2022; Fair value of P6,150,000; Effective rate of 8% On December 31, 2022, the entity changed the business mmodel for this investment to collect contractual cash flows composed of principal and interest. On January 1, 2023, the fair value of bonds did not change. At the reclassification date, how much is the premium or discount?
Metro Company purchased $100,000, 10%, 5-year bonds on January 1, 20x1, with interest payable on July 1 and January 1. The bonds sold for $108,111, which results in an effective interest rate of 8%. The market value on December 31, 20x1 was $105,000 and all bonds were sold for $107,500 on January 1, 20x2 before the scheduled payment is made.Required: assuming that the bond investment is classified as available-for-sale security, prepare journal entries on the following dates: January 1, 20x1:July 1, 20x1:December 31, 20x1:January 1, 20x2:
On January 1, 20x1, an entity issues bonds with face amount of P5,000,000 for P5,773,129. The bonds mature on December 31, 20x3 and pay annual interest of 14%. The effective interest rate is 8%, On December 31, 20x2, after paying the annual interest, the entity retires the bonds at a call premium of P400,000. Requirement: Provide the entry on December 31, 20x2 to record the retirement of the bonds.