for Jun 30th??? dr. interest expense 9,193 cr. cash 7,500 cr. discount on B/P 1,693
@DariusClarki75
4 жыл бұрын
Very good Samantha, what about the journal entry on December 31?
@samanthapender2155
4 жыл бұрын
@@DariusClarki75 dr. interest expense 9,261 cr. cash 7,500 cr. discount on B/P 1,761
@richardtesta1607
3 жыл бұрын
How do you get the 9,193? I can’t figure it out.
@jrock6417
3 жыл бұрын
@@richardtesta1607 It is the PV of the bond principal and interest calculated of $229,825, multiplied by the effective interest rate. Which is the annual market rate of 8% divided by 2 since payments are semi-annual (aka 4%). $229,825 multiplied by 4% is $9,193. Cash will always be $7,500 and the bond discount will be the remainder to make the entry balance.
@jrock6417
3 жыл бұрын
You can also calculate the future entries by taking the $229,825 and adding the amortization of the bond discount from the previous payment ($1,693 in this case) and then multiplying by the same 4% effective rate to get the interest expense for the next period (in this case 12/31). Hope this helps!
@aaroacademy
Жыл бұрын
Thank you, So, much for your content.
@rushrider2332
4 жыл бұрын
Pls make a video on likely sims might be asked in BEC
@guruguruprasath7980
4 ай бұрын
Hi Darius, in which will get more Simulation questions
@cloudcircusgaming5153
Жыл бұрын
I tried amortizing the numbers in the example and it didn't balance out to 250,000
@KSU0404
11 ай бұрын
it is because the the PV table rounded the factors. For the pv of 1 you could do 1/(1+.04)^10 and it would fix the rounding issue.
@edgarkim7487
2 жыл бұрын
Why is the principal with 4% 10 period one? Isn't it .680 (for 8% 5 period)?
@HGooner94
2 жыл бұрын
semi annually = 8%/2 = 4% since it's semi annual payment for 5 years = 10 total payments (periods) there's a special place in hell for bonds, F bonds
@waxjohn5603
4 жыл бұрын
Good work 👌👌👍
@DariusClarki75
4 жыл бұрын
Much appreciated John, Did you apply for an i-75 Scholarship?
@abdulmalikalnoaman7427
4 жыл бұрын
@@DariusClarki75 I am taking the FAR exam in Aug, do you have a list of topics that you expect to show up as SIMs? - I am so stressed about this exam
@DariusClarki75
4 жыл бұрын
Keep watching for the next You Tube Video in the series of "Best Bet" FAR Topics for a Simulation. Hint, Think Investments!
@LuxxomannLU
2 ай бұрын
June 30th interest payment Interest expense (229,825*8%/2) $9,193 (Dr) Amortization of discount on bonds (plug). $1,693 (Cr) Cash. $7,500 (Cr) Next period the carrying value will be 231,518 Interest expense $9260,72 (Dr) Discount on bonds. (Plug) $1,760,72 (Cr) Cash $7,500 (cr)
@hetvipatel4451
3 жыл бұрын
why would you not use the 8.58 instead of 8.11 for PV of payments?
@kanoehooper5559
3 жыл бұрын
Because you are working on the market rate not the stated rate semi-annually.
@anthonylarocco573
Жыл бұрын
The stated interest rate is also the coupon rate which is the payment of the bond.
@Tom-nn5wd
Жыл бұрын
You discount with the market rate
@Lee-qu4ce
3 жыл бұрын
I had bonds and it was nothing like this. Bonds are not that hard and they made it somehow impossible.
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