Ch14-H - AC551IntermediateAccounting2...

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AC551 Intermediate Accounting 2 Instructur: Wendy Williams Student: Maira Bissembayeva E14-10 (a) 1-Jan-10 Debit Credit Cash  $860,651.79  Bonds Payable  $800,000.00  Premium on Bonds Payable  $60,651.79  (b) Schedule of Interest Expense and Bon Effective-Interest Method 12% Bonds Sold to Yield 10% Date Cash Paid Interest Expense 1-Jan-10 31-Dec-10  $96,000.00   $86,065.18  31-Dec-11  $96,000.00   $85,071.70  31-Dec-12  $96,000.00   $83,978.87  © 31-Dec-10 Debit Credit Cash  $96,000.00  Interest Expense  $86,065.18  Premium on Bonds Payable  $9,934.82  (d) 31-Dec-12 Debit Credit Cash  $96,000.00  Interest Expense  $83,978.87  Premium on Bonds Payable  $12,021.13 
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nd  Amortization Premium Amortized Carrying Amount of Bonds  $860,651.79   $9,934.82   $850,716.97   $10,928.30   $839,788.67   $12,021.13   $827,767.53 
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AC551 Intermediate Accounting 2 Instructur: Wendy Williams Student: Maira Bissembayeva E 14-13 Debit Cash  $6,860,000.00  Discount on Bonds Payable(7mlnX0.02)  $140,000.00  Bonds Payable Bonds Payable  $5,000,000.00  Loss on Redemption of Bonds  $250,000.00  Cash ($5,000,000 X 1.02) Discount on Bonds Payable Unamortized Bond Issue Costs (To record retirement of 11% bonds) Reacquisition price  Less: Net carrying amount of bonds redeemed: Par value  $5,000,000.00  Unamortized bond discount  $(120,000.00) Unamortized bond issue costs  $(30,000.00) Loss on redemption
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Credit  $7,000,000.00   $5,100,000.00   $120,000.00   $30,000.00   $5,100,000.00   $4,850,000.00   $250,000.00 
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Instructur: Wendy Williams Student: Maira Bissembayeva E14-26 $270,000 > $242,000= gain  or  loss (a)   Vargo Corp.’s entries on December 31, 2010, 2011, 2012 should be:   2010 Note Payable   $28,000.00   Gain on Restructuring   $28,000.00   2011 Note Payable    $11,000.00   Cash (5% X $220,000)   $11,000.00   2012 Note Payable   $231,000.00  Cash  $231,000.00  ($220,000 + ($220,000X5%))  (b)  First Trust’s entry on December 31, 2010: Bad Debt Expense  $76,027.65  Allowance for Doubtful Accounts  $76,027.65  Pre-restructure carrying amount   $270,000.00  Present value of restructured cash flows: Present value of $220,000 due in 2 years at 12%, interest payable annually (Table 6-2); (220,000 X .79719)  $175,381.80  Present value of $11,000 interest payable annually for 2 years at 12% (Table 6-4); ($11,000 X 1.69005)  $18,590.55   $193,972.35  Creditor’s loss on restructure  $76,027.65  Date Cash Paid Interest effective 31-Dec-10 31-Dec-11  $11,000.00   $23,276.76  31-Dec-12  $11,000.00   $24,749.97  $11,000 = $220,000 X .05 $23,227 = $193,973 X 12% $12,277 = $23,277 – $11,000 31-Dec-11 Cash  $11,000.00  Allowance for Doubtful Accounts
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Ch14-H - AC551IntermediateAccounting2...

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