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15-Class Exercises - 3 What is the present value of $16,990...

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ACC212 NVCC - Annandale Mitchell Chapter 15 - Class Exercises 1) E15-3B On January 1, Halle Company issued $500,000, 8%, 5-year bonds at face value. Interest is payable semiannually on July 1 and January 1. Instructions Prepare journal entries to record the following events. (a) The issuance of the bonds. (b) The payment of interest on July 1, assuming no previous accrual of interest. (c) The accrual of interest on December 31. 2) E15-6B Baer Company issued $400,000 of 5-year, 8% bonds at 97 on January 1, 2010. The bonds pay interest twice a year. Instructions (a) (1) Prepare the journal entry to record the issuance of the bonds. (2) Compute the total cost of borrowing for these bonds. (b) Repeat the requirements from part (a), assuming the bonds were issued at 105.
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Unformatted text preview: 3) What is the present value of $16,990 due 8 periods from now, discounted at 11%? 4) What is the present value of $33,480 to be received at the end of each of 8 periods, discounted at 8%? Semiannual Interest Periods Interest to be Paid Interest expense to be recorded Discount Amortization Unamortized Discount Bond Carrying Value Issue Date $84,930 $1,278,070 1 $61,335 $63,904 $2,569 82,361 1,280,639 2 61,335 64,032 2,697 79,664 1,283,336 Prepare the journal entry to record the payment of interest and the discount amortization at the end of period 1. 5) Presented below is the partial bond discount amortization schedule for Morales Corp. Morales uses the effective-interest method of amortization. Cash...
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