Bonds Issued at Par - Basic Concepts

question 4

Essay

Bonds issued at par - basic concepts
On March 1, Year 1, Hubbard Co. issued at a price of 100 $20 million of 8%, 25-year bonds payable. Interest is payable semiannually each March 1 and September 1.
(a) What is the amount of cash paid to bondholders for interest during Year 1?
$_______________
(b) Give the adjusting entry necessary at December 31, year 1 (if any), regarding this bond issue.
(c) Interest expense on this bond issue reported in Hubbard's Year 1 income statement is:
$_______________
(d) With respect to this bond issue, Hubbard's balance sheet at December 31, Year 1, includes bonds payable of $_______________ and interest payable of $_______________. (indicate $0 or "none" if the item is not reported.)
(e) Give the journal entry made by Hubbard on March 1, Year 2, to record the semiannual payment of interest to bondholders.

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Definitions:

F Statistic

A value calculated in ANOVA that compares the ratio of variance between groups to the variance within groups to test significance.

ANOVA Model

A statistical method used to analyze the differences among group means in a sample by comparing the variability within groups to the variability between groups.

Unbiased Estimator

A statistical estimator whose expected value exactly equals the parameter being estimated, showing no systematic error.

Degrees of Freedom

The number of independent values or quantities that can vary in the analysis of statistical data, often important in determining the significance of a test statistic.