Mgmt_200_Spring_2008_solutions_3-31-08(4,2)

Mgmt_200_Spring_2008_solutions_3-31-08(4,2) - Management...

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Krannert School of Management - Purdue University Solutions to class assignment for March 31, 2008 E10–9. Computations: Interest: \$800,000 x 8% = \$ 64,000 Present value: \$800,000 x 0.4224 = 337,920 \$ 64,000 x 6.4177 = 410,733 Issue price = \$748,653 1 January 1: Cash (+A). ........................................................................................ 748,653 Discount on Bonds Payable (+XL, -L). ........................................... 51,347 Bonds Payable (+L). .................................................................... 800,000 2 December 31: Bond Interest Expense (+E, -SE) (\$748,653 x 9%) . ....................... 67,379 Discount on Bonds Payable (-XL, +L). ....................................... 3,379 Cash (-A). ..................................................................................... 64,000 3 December 31, 2006: Income statement: Bond interest expense \$ 67,379 Balance sheet: Long-term Liabilities

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This note was uploaded on 11/22/2009 for the course MGMT 200 taught by Professor Greigg during the Spring '08 term at Purdue.

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Mgmt_200_Spring_2008_solutions_3-31-08(4,2) - Management...

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