Homework Session 19 Spring 2010 - Bonds payable.

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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 P107. 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 = $53,118 **[$885,295+ ($53,118 - $50,000)] x 12% x = $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.

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