chapter 10 ex 16

chapter 10 ex 16 - been less than the face value of the...

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1. $300,000* × 0.614 (Table 9-2, n = 10, i = 5%) = $184,200 $ 15,000** × 7.722 (Table 9-4, n = 10, i = 5%) = 115,830 Issuance price $300,030 *** *300 × $1,000 = $300,000. **$300,000 × 10% × 1/2 year = $15,000. ***Should equal $300,000; difference due to rounding in present value factors. 2007 Jan. 1 Cash 300,000 Bonds payable 300,000 To record issuance of bond. Assets = Liabilities + Owners’ Equity +300,000 +300,000 2. If the market rate of interest had been higher than 10%, the issue price would have
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Unformatted text preview: been less than the face value of the bonds. The bonds would have been issued at a discount. 3. July 1 Interest Expense 15,000 Cash 15,000 To record payment of interest. Assets = Liabilities + Owners Equity 15,000 15,000 4. Dec. 31 Interest Expense 15,000 Interest Payable 15,000 To record accrual of interest. Assets = Liabilities + Owners Equity +15,000 15,000...
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chapter 10 ex 16 - been less than the face value of the...

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