Chap008_Classproblems_solu

# Chap008_Classproblems_solu - Solutions to Chapter 8 Inclass...

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Solutions to Chapter 8 In‐class Problems E8-3 Bond Sale at Discount a. \$16,800 = [(\$600,000 x .08) + (\$12,000 / 5 years)] x 1/3 b. Journal entries recorded by Wood Corporation: January 1, 20X4 Cash 16,000 Interest Receivable 16,000 July 1, 20X4 Cash 16,000 Investment in Carter Company Bonds 800 Interest Income 16,800 \$800 = (\$400,000 - \$392,000)/(5 x 2) December 31, 20X4 Interest Receivable 16,000 Investment in Carter Company Bonds 800 Interest Income 16,800 c. Eliminating entries, December 31, 20X4: E(1) Bonds Payable 400,000 Interest Income 33,600 Investment in Carter Company Bonds 395,200 Bond Discount 4,800 Interest Expense 33,600 \$33,600 = \$16,000 + \$16,000 + \$800 + \$800 \$395,000 = \$392,000 + (\$800 x 4) \$4,800 = \$8,000 - (\$800 x 4) E(2) Interest Payable 16,000 Interest Receivable 16,000

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Solutions to Chapter 8 In‐class Problems E8-7 Constructive Retirement at End of Year a. Eliminating entries, December 31, 20X5: E(1) Bonds Payable 400,000 Premium on Bonds Payable 9,000 Investment in Able Corporation Bonds
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Chap008_Classproblems_solu - Solutions to Chapter 8 Inclass...

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