Chapter 14 Day 2-2 - Balance Reduction 4,000,000 2016...

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Brief Exercise 14–11 $300,000 ÷ 2.72325 = $110,162 amount (from Table 4) of loan n = 3, i = 5% payment Helpful, but not required: Cash Effective Decrease in Outstanding Payment Interest Balance Balance 5% x Outstanding Balance Balance Reduction 300,000 1 110,162 .05 (300,000) = 15,000 95,162 204,838 2 110,162 .05 (204,838) = 10,242 99,920 104,918 3 110,162 .05 (104,918) = 5,246 104,918* * rounded Interest expense (5% x ($300,000 – [$110,162 – 5% x $300,000])) 10,242 Notes payable (difference) .............................................. 99,920 Cash (payment determined above) .................................. 110,162 Brief Exercise 14–12 ($ in millions) Bonds payable (face amount) ...................................... 60.0 Loss on early extinguishment (to balance) ................. 3.2 Discount on bonds payable (given) ........................ 2.0 Cash ($60,000,000 x 102%) ...................................... 61.2
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Exercise 14–20 1. January 1, 2016 Machinery .......................................................................... 4,000,000 Notes payable .................................................................. 4,000,000 2. Amortization schedule $4,000,000 ÷ 3.16987 = $1,261,881 amount (from Table 4) of loan n = 4, i = 10% Cash Effective Decrease inOutstanding Dec.31 Payment Interest Balance Balance 10% x Outstanding Balance
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Unformatted text preview: Balance Reduction 4,000,000 2016 1,261,881 .10 (4,000,000) = 400,000 861,881 3,138,119 2017 1,261,881 .10 (3,138,119) = 313,812 948,069 2,190,050 2018 1,261,881 .10 (2,190,050) = 219,005 1,042,876 1,147,174 2019 1,261,881 .10 (1,147,174) = 114,707* 1,147,174 5,047,524 1,047,524 4,000,000 * rounded. 3. December 31, 2016 Interest expense (10% x outstanding balance). ............................. 400,000 Notes payable (difference). ................................................... 861,881 Cash (payment determined above). ....................................... 1,261,881 4. December 31, 2018 Interest expense (10% x outstanding balance). ............................. 219,005 Notes payable (difference). ................................................... 1,042,876 Cash (payment determined above). ....................................... 1,261,881 Exercise 14–23 Bonds payable (face amount). ..................................... 90,000,000 Loss on early extinguishment (to balance). ................ 4,800,000 Discount on bonds payable (given). ....................... 3,000,000 Cash ($90,000,000 x 102%). ..................................... 91,800,000...
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