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Solution Graded Assignment _2 - Chap 14

Solution Graded Assignment _2 - Chap 14 - 3,333(40,000/10...

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Click to edit Master subtitle style Bond Problem BUSACC1205 Chapter 14 Spring 2010

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Cash Proceeds \$5,000,000 x .55368 = \$2,768,400 (n=20, i=3%) \$ 175,000* x 14.87747= 2,603,557 (n=20, i=3%) Cash Proceeds \$5,371,957 *Periodic interest = \$5,000,000 x 7% x 1/2
Amortization Chart Cash Interest Premium Carrying Date Interest Expense Amort Value 3/1/2008 5,371,957 9/1/2008 175,000 161,159 13,841 5,358,116 3/1/2009 175,000 160,743 14,257 5,343,859 9/1/2009 175,000 160,316 14,684 5,329,175 3/1/2010 175,000 159,875 15,125 5,314,050

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3/1/08 Cash (5,371,957-40,000) 5,331,957 Bond Issuance Costs 40,000 Premium on Bonds Payable 371,957 Bonds Payable 5,000,000
9/1/08 Interest expense 161,159 Premium on Bds Payable 13,841 Cash 175,000 12/31/08 Interest Exp (160,743 x 4/6) 107,162 Premium on Bds Pay (14,257 x 4/6 ) 9,505 Interest Payable (175,000 x 4/6) 116,667

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12/31/08 Bond Issuance Expense 3,333 Bond Issuance Costs

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Unformatted text preview: 3,333 (40,000/10 yrs) x (10/12) 3/1/09 Interest Expense(160,743 x 2/6) 53,581 Premium on Bds Pay (14,257 x 2/6) 4,752 Interest payable 116,667 Cash 175,000 9/1/09 Interest expense 160,316 Premium on Bds Payable 14,684 Cash 175,000 12/31/09 Interest Expense ( 159,875 x 4/6) 106,584 Premium on Bds Pay (15,125x 4/6) 10,083 Interest Payable (175,000 x 4/6) 116,667 12/31/09 Bond Issuance expense (40,000/10) 4,000 Bond issuance costs 4,000 Carrying Value @ 12/31/09 Bonds Payable @9/1/09 \$5,329,175 Less: Premium (9/1-12/31) (10,083) Carrying Value @ 12/31/09 \$5,319,092 This amount is shown in long term liabilities. Cash if Issued on April 1, 2008 Accrued Interest \$5,000,000 x .07 x 1/12 = \$ 29,167 Total Cash Proceeds: Bonds \$ 5,371,957 Plus: Int 29,167 Less: Costs (40,000 ) Net cash \$ 5,361,124...
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Solution Graded Assignment _2 - Chap 14 - 3,333(40,000/10...

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