chapter14answers - Chapter 14 Financing with Debt EXERCISES...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 14 Financing with Debt EXERCISES E 14-2 Determining Current Liability Amounts a. The amount of the note payable is $14,400 ($18,000 × 0.80). This note is a current liability because it will be paid within the next year. A liability for interest on the note also exists for $1,440 ($14,400 × 0.12 × 10/12). The interest payable is also a current liability. b. An account payable of $60,000 was created by the purchase of inventory. c. An account payable of $15,000 was created by the purchase of office equipment. d. The account payable in (c) was paid off. e. Sales transactions create an account receivable but not a current liability. f. When the money was received, an unearned revenue account was created for $9,600. By the end of the year, the company has earned three months’ worth of rent. Earned revenue is $2,400 ($9,600 × d 3/12). At year-end, the balance in the unearned revenue account is $7,200 ($9,600 – $2,400). The current liabilities as of December 31, 2006 are as follows: Note payable $14,400 Interest payable 1,440 Accounts payable 60,000 Unearned revenue 7,200 Total $83,040 E 14-4 Mortgage Amortization Schedule 1. Monthly Principal Interest Outstanding Month Payment Paid Paid Balance $100,000 July $1,075 $ 242 $ 833 99,758 August 1,075 244 831 99,514 September 1,075 246 829 99,268 October 1,075 248 827 99,020 November 1,075 250 825 98,770 December 1,075 252 823 98,518 Totals $6,450 $1,482 $4,968 2. Interest of $4,968 will be paid during the last six months of 2006. 3. By the end of 2006 the balance of the mortgage will have been reduced by $1,482 to $98,518. Chapter 14 – 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
E 14-6 Issuing Bonds at Par, Premium, or Discount a. The bonds were issued at a discount because the stated rate of interest was less than the market rate of interest. b. The bonds were issued at a premium because the stated rate of interest was higher than the market rate of interest. c. The bonds were issued at a discount because the stated rate of interest was less than the market rate of interest. d. The bonds were issued at par because the stated rate of interest and market rate of interest rate were the same on the date of issuance. E 14-12 Accounting for Leases
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This document was uploaded on 12/11/2009.

Page1 / 4

chapter14answers - Chapter 14 Financing with Debt EXERCISES...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online