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EXERCISE 14-9 - EXERCISE 14-9(2030 minutes(a 1 Cash...

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EXERCISE 14-9 (20–30 minutes) (a) 1. June 30, 2010 Cash ................................................... ............................................................ 5,376,150.00 Bonds Payable ........................ 5,000,000.00 Premium on Bonds Payable. . 376,150.00 2. December 31, 2010 Interest Expense ($5,376,150.00 X 12% X 6/12) ........ 322,569.00 Premium on Bonds Payable ............ 2,431.00 Cash ($5,000,000 X 13% X 6/12) .... 325,000.00 3. June 30, 2011 Interest Expense [($5,376,150.00 – $2,431.00) X 12% X 6/12] ............................... 322,423.14 Premium on Bonds Payable ............ 2,576.86 Cash .......................................... 325,000.00 4. December 31, 2011 Interest Expense [($5,376,150.00 – $2,431.00 – $2,576.86) X 12% X 6/12] ............. 322,268.53 Premium on Bonds Payable ............ 2,731.47 Cash .......................................... 325,000.00 (b) Long-term Liabilities: Bonds payable, 13% (due on June 30, 2030) ...... $5,000,000.00 Premium on Bonds Payable* ............................... 368,410.67 Book value of bonds payable .............................. $5,368,410.67
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*($376,150) – ($2,431.00 + $2,576.86 + $2,731.47) = $368,410.67 (c) 1. Interest expense for the period from
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