Mgmt_200_Spring_2008_solutions(4,4)

# Mgmt_200_Spring_2008_solutions(4,4) - 2,000,000 2 December...

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Management 200 – Introductory Financial Accounting– Spring 2008 Krannert School of Management - Purdue University Solutions to class assignment for April 2, 2008 E10–16. Computations: Interest: \$2,000,000 x 10% = \$ 200,000 Present value: \$2,000,000 x 0.4224 = 844,800 \$ 200,000 x 6.4177 = 1,283,540 Issue price = \$2,128,340 1 January 1: Cash (+A). ........................................................................................ 2,128,340 Premium on Bonds Payable (+L). ................................................ 128,340 Bonds Payable (+L). ...................................................................
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Unformatted text preview: 2,000,000 2 December 31: Bond Interest Expense (+E, -SE) (\$2,128,340 x 9%) . .................... 191,551 Premium on Bonds Payable (-L). ..................................................... 8,449 Cash (-A). ..................................................................................... 200,000 3 December 31, 2006: Income statement: Bond interest expense \$ 191,551 Balance sheet: Long-term Liabilities Bonds payable \$2,000,000 Plus: Unamortized premium (\$128,340 – \$8,449) 119,891 \$2,119,891...
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