Ch. 12 study guide

Ch. 12 study guide - Ch. 12 Study Guide Kawasaki Corp...

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Unformatted text preview: Ch. 12 Study Guide Kawasaki Corp borrowed $50,000 on Nov. 1, 2008 by signing a $51,125, 3 month zero interest bearing note. Prepare entries 11/1/08 Cash ..................................................................50,000 Discount on Notes Payable................................ 1,125 Notes Payable .............................................. 51,125 12/31/08 Interest Expense ....................................................750 Discount on Notes Payable ..................... 750 ($1,125 X 2/3) 2/1/09 Interest Expense ................................................ 375 Discount on Notes Payable ..................... 375 Notes Payable ...................................................51,125 Cash................................................................. 51,125 Ghostbusters Cop issues $300,000 of 9% bonds, due in 10 years, with interest payable semi-annually. At the time of issue, the market rate for such bonds is 10%. Compute the issue price of bonds. Use Market Rate and # of years for table: Market Rate 10% and period is 10 Semiannual payments Market Rate 5% and period is 20 Present value of the principal $300,000 X .37689 ................................................................... $113,067 Present value of the interest payments $13,500* X 12.46221 ............................................................... 168,240 Issue price ......................................................................... $281,307Issue price ....
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Ch. 12 study guide - Ch. 12 Study Guide Kawasaki Corp...

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