Chapter%2014%20-%20In-Class%20Exercises%20-%20Solution%20#1

Chapter%2014%20-%20In-Class%20Exercises%20-%20Solution%20#1...

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In‐Class Exercises Chapter 14 ACCT 4050 Page 3 of 6 Chapter 14 In Class Exercises Solutions: Exercise #1: A ssuming bonds will be held as Trading securities: Present value of bonds (FV=200,000, PMT= 8000, I=5%, N=6) 189,849 $ Accrued Interest: (200,000 x 4% ÷ 6 months x 3 months) 4,000 $ Purchase of bonds on 4/1/2009 Investment in Universal Bonds 189,849 Interest Receivable 4,000 Cash 193,849 Interest payment on 6/30/2009 Cash 8,000 Interest Receivable 4,000 Interest Revenue 4,000 Interest payment on 12/31/2011 Cash 8,000 Interest revenue 8,000
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In‐Class Exercises Chapter 14 ACCT 4050 Page 4 of 6 Chapter 14 In Class Exercises A ssuming bonds will be held as Held-to-Maturity securities: Present value of bonds (FV=200,000, PMT= 8000, I=5%, N=6) 189,849 $ Accrued Interest: (200,000 x 4% ÷ 6 months x 3 months)
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Unformatted text preview: 4,000 $ Date C ash Received Interest Revenue Amortization Investment Balance Discount Balance Carrying Amount 200,000 10,151 189,849 6/30/2009 8,000 9,492 1,492 200,000 8,659 191,341 12/31/2009 8,000 9,567 1,567 200,000 7,092 192,908 6/30/2010 8,000 9,645 1,645 200,000 5,446 194,554 12/31/2010 8,000 9,728 1,728 200,000 3,719 196,281 6/30/2011 8,000 9,814 1,814 200,000 1,905 198,095 12/31/2011 8,000 9,905 1,905 200,000-200,000 Purchase of bonds on 4/1/2009 Investment in Universal Bonds 189,849 Interest Revenue 4,000 Cash 193,849 Interest payment on 6/30/2009 Cash 8,000 Investment in Universal Bonds 1,492 Interest revenue 9,492 Interest payment on 12/31/2011 Cash 8,000 Investment in Universal Bonds 1,905 Interest revenue 9,905...
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Chapter%2014%20-%20In-Class%20Exercises%20-%20Solution%20#1...

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