# S12.docx - S12-1 Requirement 1 Date 2016 Jan 1 Accounts and...

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S12-1 Requirement 1 Date Accounts and Explanation Debit Credit 2016 Jan. 1 Cash 200,000 Notes Payable 200,000 Received cash in exchange for a 10-year, 13% note. Requirement 2 Date Accounts and Explanation Debit Credit 2016 Dec. 31 Notes Payable 20,000 Interest Expense (\$200,000 × 0.13 × 1 year) 26,000 Cash 46,000 Paid principal and interest payment. S12-2 Requirement 1 Date Accounts and Explanation Debit Credit 2016 Jan. 1 Building 335,000 Land 55,000 Mortgages Payable 380,000 Cash 10,000 Purchased building and land with a mortgages payable and cash payment. Requirement 2 Date Accounts and Explanation Debit Credit 2016 Jan. 31 Mortgages Payable (\$4,561 − \$3,800) 761 Interest Expense (380,000 × .12 × 1/12) 3,800 Cash 4,561 Paid principal and interest payment.

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S12-3 a. discount b. premium c. face value d. discount S12-4 Requirement 1 Face Value × Issue Price = Market Price a. \$500,000 × 0.7550 = \$377,500 b. \$500,000 × 1.0275 = \$513,750 c. \$500,000 × 0.9650 = \$482,500 d. \$500,000 × 1.0250 = \$512,500 Requirement 2 Allied Telecom will have to pay \$500,000 at maturity for all four of the bonds. They all have the same maturity value. S12-5 Requirement 1 Face value × Issue price = Cash received \$4,000,000 × 0.965 = \$3,860,000 Requirement 2 Quick will have to pay back \$4,000,000 at maturity. Requirement 3 Quick will pay \$80,000 in interest payments every six months. Face value × Interest rate × Time period = Interest payment \$4,000,000 × 0.04 × 6/12 = \$80,000
S12-6 Requirement 1 Date Accounts and Explanation Debit Credit 2016 Jan. 1 Cash 800,000 Bonds Payable 800,000 Issued bonds at face value. Requirement 2 Date Accounts and Explanation Debit Credit 2016 Jul. 1 Interest Expense 32,000 Cash (\$800,000 × 0.08 × 6/12) 32,000 Paid semiannual interest. S12-7 Requirement 1 Date Accounts and Explanation Debit Credit 2016 Jan. 1 Cash (\$70,000 × 0.90) 63,000 Discount on Bonds Payable (\$70,000 – \$63,000) 7,000 Bonds Payable 70,000 Issued bonds at a discount. Requirement 2 Date Accounts and Explanation Debit Credit 2016 Jul. 1 Interest Expense (\$4,200 + \$350) 4,550 Discount on Bonds Payable (\$7,000 × 1/20) 350 Cash (\$70,000 × 0.12 × 6/12) 4,200 Paid semiannual interest and amortized discount.

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S12-8 Requirement 1 Date Accounts and Explanation Debit Credit 2016 Jan. 1 Cash (\$65,000 × 1.09) 70,850 Premium on Bonds Payable (\$70,850 – \$65,000) 5,850 Bonds Payable 65,000 Issued bonds at a premium. Requirement 2 Date Accounts and Explanation Debit Credit 2016 Jul. 1 Interest Expense (\$3,575 − \$293) 3,282 Premium on Bonds Payable (\$5,850 × 1/20) 293 Cash (\$65,000 × 0.11 × 6/12) 3,575 Paid semiannual interest and amortized premium. S12-9 Date Accounts and Explanation Debit Credit 2016 a. Jan. 1 Cash 125,000 Bonds Payable 125,000 Issued bonds at par. b. July 1 Interest Expense 3,750 Cash (\$125,000 × 0.06 × 6/12) 3,750 Paid semi-annual interest payment. 2031 c. Jan. 1 Bonds Payable 125,000 Cash 125,000 Retired bonds payable at maturity.
S12-10 Requirement 1 Face value × Issue price Market price or Cash received Premium on bond \$400,000 × 1.09 \$436,000 \$36,000 Amortization of bond premium \$36,000 / 10 periods = 3,600 per interest payment Face value of the bonds being retired \$ 400,000 Plus: Premium (\$36,000 – (\$3,600 × 2)) 28,800 Carrying amount of bonds payable on the retirement date 428,800 Requirement 2 Market price paid to retire the bonds (\$400,000 × 0.95) 380,000 Requirement 3 Carrying amount of bonds payable 428,800 Market price paid to retire the bonds (\$400,000 × 0.95) 380,000 Gain on retirement of bonds payable \$48,800 S12-11 MASTER SUITES HOTELS Balance Sheet (Partial) December 31, 2016 Liabilities Current Liabilities

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