ch 10_Solutions

ch 10_Solutions - c Bonds payable 7 percent \$500,000...

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M10-2) \$ 800,000 M10-3) \$266,106 M10-4) Jan. 1 Cash 752,896 Discount on bonds payable 47,104 Bonds payable 800,000 Dec. 31 Bond interest expense 82,819 Discount on bonds payable 2,819 Cash 80,000 M10-5) Jan. 1 Cash 580,000 Discount on bonds payable 20,000 Bonds payable 600,000 Dec. 31 Bond interest expense 62,000 Discount on bonds payable 2,000 Cash 60,000 E10-2) AT&T’s bond has a coupon interest rate of 6.5%, currently provides a cash yield of 7.3%, and has a selling price of 89.5% of par. \$8,950 The decline in value would have no impact on the financial statements of AT&T. E10-11) 1) \$951 2) Discount of \$49 3) \$90 4) 2006 = \$105 2007 = \$106 2008 = \$108 5) Balance sheet: 2006 2007 2008 Long-Term Liabilities: Bonds payable \$966 \$982 \$1,000 P10-3) Case A Case B Case C (Par) (at 98) (at 102)

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a. Cash received at issue \$500,000 \$490,000 \$510,000 b. Bond interest expese, pretax for 2006 \$35,000 \$36,000 \$34,000
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Unformatted text preview: c. Bonds payable, 7 percent \$500,000 \$491,000 \$509,000 d. Unamortized discount \$0 \$456,000 \$0 e. Unamortized premium \$0 \$0 \$474,000 f. Net liability \$500,000 \$491,000 \$509,000 g. Stated interest rate 7% 7.2% 6.8% P10-12) 1) 2) \$6,000 3) \$6,101 4) Premium, \$101 5) Each period = \$450 Full life = \$1,800 6) Effective-interest amortization was used since the interest and amortization amounts changed each period. 7) 7.5% 8) 7% 9) 2006 = \$427 2007 = \$425 2008 = \$424 2009 = \$422 10) Balance sheet: 2006 2007 2008 2009 Long-Term Liabilities: Bonds payable \$6,078 \$6,053 \$6,027 \$6,000 Date Cash Interest Amortization Balance January 1, 2006 \$6,101 End of year 2006 \$450 \$427 \$23 6,078 End of year 2007 450 425 25 6,053 End of year 2008 450 424 26 6,027 End of year 2009 450 422 27 6,000...
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ch 10_Solutions - c Bonds payable 7 percent \$500,000...

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