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Shuttle Company issued $1,000,000, three-year, 10 percent bonds on January 1, year 1. The bond interest is paid each December 31 he end of the company's fiscal year. The bond was sold to yield 9 percent. Use Table 9C.1, Table 9C.2. (Round time value factor to decimal places.) Required: . Complete a bond payment schedule. Use the effective-interest amortization method. (Make sure that the unamortized discount/premium equals to 'O' and the Net Liability equals to face value of the bond in the last period. Interest expense in the period should be calculated as Cash Interest (+) discount / (-) premium amortized. Round intermediate and final answers to the hearest whole dollar.) Date 1/1/year 1 12/31/year 1 12/31/year 2 12/31/year 3 Interest expense Bonds payable Interest payment Bond Payment Schedule Interest Expense Cash Payment $ 100,000 100,000 100,000 Amortization of Premium 2. What amounts will be reported on the financial statements (statement of financial position, statement of earnings, and statement cash flows) for year 1, year 2, and year 3? (Round intermediate and final answers to the nearest whole dollar.) Year 1 Carrying Amount Year 2 Year 3

Shuttle Company issued $1,000,000, three-year, 10 percent bonds on January 1, year 1. The bond interest is paid each December 31 he end of the company's fiscal year. The bond was sold to yield 9 percent. Use Table 9C.1, Table 9C.2. (Round time value factor to decimal places.) Required: . Complete a bond payment schedule. Use the effective-interest amortization method. (Make sure that the unamortized discount/premium equals to 'O' and the Net Liability equals to face value of the bond in the last period. Interest expense in the period should be calculated as Cash Interest (+) discount / (-) premium amortized. Round intermediate and final answers to the hearest whole dollar.) Date 1/1/year 1 12/31/year 1 12/31/year 2 12/31/year 3 Interest expense Bonds payable Interest payment Bond Payment Schedule Interest Expense Cash Payment $ 100,000 100,000 100,000 Amortization of Premium 2. What amounts will be reported on the financial statements (statement of financial position, statement of earnings, and statement cash flows) for year 1, year 2, and year 3? (Round intermediate and final answers to the nearest whole dollar.) Year 1 Carrying Amount Year 2 Year 3

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 15MCQ
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Shuttle Company issued $1,000,000, three-year, 10 percent bonds on January 1, year 1. The bond interest is paid each December 31, the end of the company's fiscal year. The bond was sold to yield 9 percent. Use Table 9C.1, Table 9C.2. (Round time value factor to 4 decimal places.) Required: 1. Complete a bond payment schedule. Use the effective-interest amortization method. (Make sure that the unamortized discount/premium equals to '0' and the Net Liability equals to face value of the bond in the last period. Interest expense in the last period should be calculated as Cash Interest (+) discount / (−) premium amortized. Round intermediate and final answers to the nearest whole dollar.) Date 1/1/year 1 12/31/year 1 12/31/year 2 12/31/year 3 Interest expense Bonds payable Interest payment Issuance of bonds Payment of bonds Bond Payment Schedule Interest Expense Cash Payment $ 100,000 100,000 100,000 Amortization of Premium 2. What amounts will be reported on the financial statements (statement of financial position, statement of earnings, and statement of cash flows) for year 1, year 2, and year 3? (Round intermediate and final answers to the nearest whole dollar.) Year 1 Carrying Amount Year 2 Year 3
Transcribed Image Text:Shuttle Company issued $1,000,000, three-year, 10 percent bonds on January 1, year 1. The bond interest is paid each December 31, the end of the company's fiscal year. The bond was sold to yield 9 percent. Use Table 9C.1, Table 9C.2. (Round time value factor to 4 decimal places.) Required: 1. Complete a bond payment schedule. Use the effective-interest amortization method. (Make sure that the unamortized discount/premium equals to '0' and the Net Liability equals to face value of the bond in the last period. Interest expense in the last period should be calculated as Cash Interest (+) discount / (−) premium amortized. Round intermediate and final answers to the nearest whole dollar.) Date 1/1/year 1 12/31/year 1 12/31/year 2 12/31/year 3 Interest expense Bonds payable Interest payment Issuance of bonds Payment of bonds Bond Payment Schedule Interest Expense Cash Payment $ 100,000 100,000 100,000 Amortization of Premium 2. What amounts will be reported on the financial statements (statement of financial position, statement of earnings, and statement of cash flows) for year 1, year 2, and year 3? (Round intermediate and final answers to the nearest whole dollar.) Year 1 Carrying Amount Year 2 Year 3
TABLE 9C.1 Present Value of $1, p = 1/(1+i)n Periods 1.5% 1.75% 2% 2.25% 2.5% 2.75% 3% 3.25% 3.5% 1 0.9662 0.9732 0.9709 0.9685 0.9472 0.9472 0.9426 0.9380 2 0.9335 0.9852 0.9828 0.9804 0.9780 0.9756 0.9707 0.9659 0.9612 0.9565 0.9518 3 0.9563 0.9493 0.9423 0.9354 0.9286 0.9422 0.9330 0.9238 0.9148 0.9218 0.9151 0.9151 0.9085 0.9019 4 0.9060 0.8972 0.8885 0.8799 0.8714 5 0.9283 0.9169 0.9057 0.8947 0.8839 0.8839 6 0.9145 0.9011 0.8880 0.8880 0.8750 0.8750 0.8623 0.8498 0.8623 0.8498 0.8375 0.8254 0.8135 7 0.9010 0.8856 0.8706 0.8558 0.8413 0.8270 0.8131 0.8131 0.7994 0.7994 0.7860 8 0.8877 0.8704 0.8535 0.8369 0.8207 0.8049 0.7894 0.7742 0.7594 9 0.8746 0.8554 0.8368 0.8185 0.7834 0.8007 0.7834 0.8007 0.7664 0.7499 0.7664 0.7499 0.7337 10 0.8617 0.8407 0.8203 0.8005 0.7812 0.7624 0.7441 0.7263 0.7089 11 12 13 14 15 0.8732 0.8732 0.8626 1 2 3 4 5 6 7 0.8522 0.8626 0.8522 0.8420 0.8489 0.8263 0.8043 0.7829 0.7621 0.8043 0.7829 0.7621 0.7420 0.7420 0.7224 0.7034 0.6849 0.8364 0.8121 0.7885 0.7657 0.7436 0.7221 0.7014 0.6813 0.6618 0.6810 0.6598 0.6394 0.7488 0.7254 0.6611 0.6611 0.6391 0.6178 0.8240 0.7981 0.7730 0.7028 0.8118 0.7844 0.7579 0.7323 0.7077 0.6840 0.7999 0.7709 0.7430 0.6905 0.6657 0.7880 0.7576 0.7284 0.7005 0.7162 0.6419 0.6189 0.5969 16 0.6736 0.6479 0.6232 0.5995 0.5767 17 0.6572 0.6305 0.6050 0.5806 0.5572 0.7764 0.7446 0.7142 0.6851 0.6700 0.6412 18 0.6137 0.5874 0.5623 0.5384 19 0.7649 0.7318 0.7002 0.7536 0.7192 0.6864 0.6552 0.7425 0.7068 0.6730 0.6408 0.6255 0.5972 0.5703 0.5703 0.5446 0.5202 20 30 40 0.6103 0.5813 0.5537 0.5275 0.5026 0.6398 0.5942 0.5521 0.5130 0.4767 0.4431 0.5130 0.4767 0.4431 0.4120 0.3831 0.3563 0.5513 0.4996 0.4529 0.4106 0.3724 0.3379 0.3066 0.2782 0.2526 50 0.4750 0.4200 0.3715 0.3287 0.2909 0.2576 0.2281 0.2021 0.1791 Periods 3.75% 4% 4.5% 5% 6% 7% 8% 9% 10% 0.9639 0.9615 0.9569 0.9524 0.9434 0.9346 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9290 0.9246 0.9157 0.9070 0.8900 0.8954 0.8890 0.8763 0.8638 0.8396 0.8386 0.8227 0.7921 0.8025 0.7835 0.7473 0.8734 0.8573 0.8417 0.8264 0.8163 0.7938 0.7722 0.7513 0.7629 0.8631 0.8548 0.7350 0.7084 0.6830 0.8319 0.8219 0.7130 0.6806 0.6499 0.6209 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.8018 0.7903 0.7679 0.7728 0.7599 0.7348 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 8 0.6768 0.6274 0.5820 0.5403 0.5403 0.5019 0.5019 0.4665 0.7449 0.7307 0.7032 0.7180 0.7026 0.6729 0.6446 9 0.5919 0.5439 0.5002 0.4604 0.4241 10 0.5083 0.4632 0.4224 0.3855 11 0.4751 0.4289 0.3875 0.3505 12 0.3971 0.3555 0.3186 13 0.6197 0.6006 0.5643 0.5303 14 0.5973 0.5775 0.5400 0.5051 15 0.6920 0.6756 0.6439 0.6139 0.5584 0.6670 0.6496 0.6162 0.5847 0.5268 0.6429 0.6246 0.5897 0.5568 0.4970 0.4440 0.4688 0.4150 0.3677 0.3677 0.3262 0.2897 0.4423 0.3878 0.4423 0.3878 0.3405 0.2992 0.2633 0.5757 0.5553 0.5167 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.5549 0.5339 0.4945 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.5348 0.5134 0.4732 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.5155 0.4936 0.4528 0.4155 0.3503 0.2959 0.4969 0.4746 0.4333 0.3957 0.3305 0.4789 0.4564 0.4146 0.3769 0.3118 0.2584 0.3118 0.3314 0.3083 0.2670 0.2314 16 17 18 0.2959 0.2502 0.2120 0.1799 19 0.2765 0.2317 0.1945 0.1635 0.2765 20 0.2584 0.2145 0.1784 0.1486 0.1741 0.1314 0.0994 0.0754 0.0573 30 40 0.2293 0.2083 0.1719 0.1420 0.0972 0.0668 0.0972 0.0668 0.0460 0.0318 0.0221 50 0.1587 0.1407 0.1107 0.0872 0.0213 0.0134 0.0085 0.0543 0.0339 0.0543 0.0339
Transcribed Image Text:TABLE 9C.1 Present Value of $1, p = 1/(1+i)n Periods 1.5% 1.75% 2% 2.25% 2.5% 2.75% 3% 3.25% 3.5% 1 0.9662 0.9732 0.9709 0.9685 0.9472 0.9472 0.9426 0.9380 2 0.9335 0.9852 0.9828 0.9804 0.9780 0.9756 0.9707 0.9659 0.9612 0.9565 0.9518 3 0.9563 0.9493 0.9423 0.9354 0.9286 0.9422 0.9330 0.9238 0.9148 0.9218 0.9151 0.9151 0.9085 0.9019 4 0.9060 0.8972 0.8885 0.8799 0.8714 5 0.9283 0.9169 0.9057 0.8947 0.8839 0.8839 6 0.9145 0.9011 0.8880 0.8880 0.8750 0.8750 0.8623 0.8498 0.8623 0.8498 0.8375 0.8254 0.8135 7 0.9010 0.8856 0.8706 0.8558 0.8413 0.8270 0.8131 0.8131 0.7994 0.7994 0.7860 8 0.8877 0.8704 0.8535 0.8369 0.8207 0.8049 0.7894 0.7742 0.7594 9 0.8746 0.8554 0.8368 0.8185 0.7834 0.8007 0.7834 0.8007 0.7664 0.7499 0.7664 0.7499 0.7337 10 0.8617 0.8407 0.8203 0.8005 0.7812 0.7624 0.7441 0.7263 0.7089 11 12 13 14 15 0.8732 0.8732 0.8626 1 2 3 4 5 6 7 0.8522 0.8626 0.8522 0.8420 0.8489 0.8263 0.8043 0.7829 0.7621 0.8043 0.7829 0.7621 0.7420 0.7420 0.7224 0.7034 0.6849 0.8364 0.8121 0.7885 0.7657 0.7436 0.7221 0.7014 0.6813 0.6618 0.6810 0.6598 0.6394 0.7488 0.7254 0.6611 0.6611 0.6391 0.6178 0.8240 0.7981 0.7730 0.7028 0.8118 0.7844 0.7579 0.7323 0.7077 0.6840 0.7999 0.7709 0.7430 0.6905 0.6657 0.7880 0.7576 0.7284 0.7005 0.7162 0.6419 0.6189 0.5969 16 0.6736 0.6479 0.6232 0.5995 0.5767 17 0.6572 0.6305 0.6050 0.5806 0.5572 0.7764 0.7446 0.7142 0.6851 0.6700 0.6412 18 0.6137 0.5874 0.5623 0.5384 19 0.7649 0.7318 0.7002 0.7536 0.7192 0.6864 0.6552 0.7425 0.7068 0.6730 0.6408 0.6255 0.5972 0.5703 0.5703 0.5446 0.5202 20 30 40 0.6103 0.5813 0.5537 0.5275 0.5026 0.6398 0.5942 0.5521 0.5130 0.4767 0.4431 0.5130 0.4767 0.4431 0.4120 0.3831 0.3563 0.5513 0.4996 0.4529 0.4106 0.3724 0.3379 0.3066 0.2782 0.2526 50 0.4750 0.4200 0.3715 0.3287 0.2909 0.2576 0.2281 0.2021 0.1791 Periods 3.75% 4% 4.5% 5% 6% 7% 8% 9% 10% 0.9639 0.9615 0.9569 0.9524 0.9434 0.9346 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9290 0.9246 0.9157 0.9070 0.8900 0.8954 0.8890 0.8763 0.8638 0.8396 0.8386 0.8227 0.7921 0.8025 0.7835 0.7473 0.8734 0.8573 0.8417 0.8264 0.8163 0.7938 0.7722 0.7513 0.7629 0.8631 0.8548 0.7350 0.7084 0.6830 0.8319 0.8219 0.7130 0.6806 0.6499 0.6209 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.8018 0.7903 0.7679 0.7728 0.7599 0.7348 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 8 0.6768 0.6274 0.5820 0.5403 0.5403 0.5019 0.5019 0.4665 0.7449 0.7307 0.7032 0.7180 0.7026 0.6729 0.6446 9 0.5919 0.5439 0.5002 0.4604 0.4241 10 0.5083 0.4632 0.4224 0.3855 11 0.4751 0.4289 0.3875 0.3505 12 0.3971 0.3555 0.3186 13 0.6197 0.6006 0.5643 0.5303 14 0.5973 0.5775 0.5400 0.5051 15 0.6920 0.6756 0.6439 0.6139 0.5584 0.6670 0.6496 0.6162 0.5847 0.5268 0.6429 0.6246 0.5897 0.5568 0.4970 0.4440 0.4688 0.4150 0.3677 0.3677 0.3262 0.2897 0.4423 0.3878 0.4423 0.3878 0.3405 0.2992 0.2633 0.5757 0.5553 0.5167 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.5549 0.5339 0.4945 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.5348 0.5134 0.4732 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.5155 0.4936 0.4528 0.4155 0.3503 0.2959 0.4969 0.4746 0.4333 0.3957 0.3305 0.4789 0.4564 0.4146 0.3769 0.3118 0.2584 0.3118 0.3314 0.3083 0.2670 0.2314 16 17 18 0.2959 0.2502 0.2120 0.1799 19 0.2765 0.2317 0.1945 0.1635 0.2765 20 0.2584 0.2145 0.1784 0.1486 0.1741 0.1314 0.0994 0.0754 0.0573 30 40 0.2293 0.2083 0.1719 0.1420 0.0972 0.0668 0.0972 0.0668 0.0460 0.0318 0.0221 50 0.1587 0.1407 0.1107 0.0872 0.0213 0.0134 0.0085 0.0543 0.0339 0.0543 0.0339
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