Homework Session 19 Spring 2010

# Homework Session 19 Spring 2010 - Bonds payable \$937,743...

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Homework Session 19 Spring 2010 AP10–2. (000’s): At End of 2009 At End of 2010 At End of 2011 At End of 2012 Case A: Sold at Par Interest expense on the income statement 10 10 10 10 Net liability on balance sheet 100 100 100 100 Case B: Sold at a discount Interest expense on the income statement 11 11 11 11 Net liability on balance sheet 96 97 98 99 Case C: Sold at a premium Interest expense on the income statement 8 8 8 8 Net liability on balance sheet 108 106 104 102

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AP10–3. Req. 1 Computations: Interest: \$1,000,000 x 7% = \$ 70,000 Present value \$ 1,000,000 x 0.6499 = 649,900 70,000 x 3.8897 = 272,279 \$922,179 Req. 2 2009 2010 Interest expense. ..................................... \$85,564 * \$85,564 * *\$1,000,000 - \$922,179 = \$77,821 ÷ 5 years = \$15,564 + \$70,000 = \$85,564 Req. 3 2009 2010 Cash paid. ................................................ \$70,000 \$70,000 Req. 4 2009 2010
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Unformatted text preview: Bonds payable. ........................................ \$937,743* \$953,307** *\$922,179 + \$15,564 = \$937,743 **\$937,743+ \$15,564 = \$953,307 P10–7. Req. 1 Computations: Interest: \$1,000,000 x 10% x 1/2 = \$ 50,000 Present value \$ 1,000,000 x 0.3118 = 311,800 \$ 50,000 x 11.4699 = 573,495 \$885,295 Req. 2 June 30 December 31 Interest expense. ..................................... \$53,118* \$53,305** \$885,295 x 12% x ½ = \$53,118 **[\$885,295+ (\$53,118 - \$50,000)] x 12% x ½= \$53,305 Req. 3 June 30 December 31 Cash paid. ................................................ \$50,000 \$50,000 Req. 4 June 30 December 31 Bonds payable. ........................................ \$888,413* \$891,718** *\$885,295 + \$3,118 = \$888,413 **\$888,413+ \$3,305 = \$891,718...
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Homework Session 19 Spring 2010 - Bonds payable \$937,743...

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