Excercise 16-6 - EXERCISE 16-6(2535 minutes(a Bond Interest...

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EXERCISE 16-6 (25–35 minutes) (a) December 31, 2010 Bond Interest Expense ............................................ 117,000 Premium on Bonds Payable ($60,000 X 1/20) .................................................... 3,000 Cash ($3,000,000 X 8% X 6/12) ........................ 120,000 (b) January 1, 2011 Bonds Payable .......................................................... 600,000 Premium on Bonds Payable .................................... 9,600 Common Stock [8 X $100 X ($600,000/$1,000)] .................... 480,000 Paid-in Capital in Excess of Par ...................... 129,600 Total premium ($3,000,000 X .02) $60,000 Premium amortized ($60,000 X 2/10) 12,000 Balance $48,000 Bonds converted ($600,000 ÷ $3,000,000) 20% Related premium ($48,000 X 20%) 9,600
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EXERCISE 16-6 (Continued) (c) March 31, 2011 Bond Interest Expense ............................................ 11,700 Premium on Bonds Payable ($9,600 ÷ 8 years) X 3/12 ..................................... 300 Bond Interest Payable ($600,000 X 8% X 3/12) ................................. 12,000 March 31, 2011 Bonds Payable .......................................................... 600,000 Premium on Bonds Payable ....................................
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