ch13_15_5e_spe - Practice Exam, Chapters 13-15 Practice...

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Practice Exam, Chapters 13-15 Practice Exam, Chapters 13-15 Solutions Problem I 1. Prepare the journal entry for the issuance of the note by Shea Industries. Cash . ............................................. 480,000 Notes payable. ........................... 480,000 2. Prepare the appropriate adjusting entry for the note by Shea Industries on December 31, 2009. Interest expense ($480,000 x 12% x 3 / 12 ) 14,400 Interest payable. ....................... 14,400 3. Prepare the journal entry for the payment of the note by Shea at maturity. Interest expense ($480,000 x 12% x 4 / 12 ) 19,200 Interest payable (from adjusting entry) 14,400 Notes payable (face amount). ........... 480,000 Cash (total). ................................ 513,600
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Problem II 1. Determine the price of the bonds at January 1, 2009. Interest $5,500,000 x 11.46992 (from Table 2) = $63,084,560 n=20, i=6% Principal $100,000,000 x 0.31180 (from Table 4) = 31,180,000 n=20, i=6% Present value (price) of the bonds $94,264,560 2. Prepare the journal entry to record their issuance by Kelly
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ch13_15_5e_spe - Practice Exam, Chapters 13-15 Practice...

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