Chapter%2014%20Homework%20Solutions

# Chapter%2014%20Homework%20Solutions - ACCT4050 1429. 1....

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ACCT 4050 Chapter 14 Solutions 14–29. 1. Investment in Held-to-Maturity Securities . ............................ 598,970 Cash 598,970 To record the purchase of the debt security whose value is computed as follows: Using present value tables: \$ 25,000 19.7928 = \$ 494,820 500,000 0.2083 = 104,150 \$ 598,970 Using a business calculator: PMT = \$25,000, FV = \$500,000, N = 40, I = 4% \$598,964 Note that the amount in this entry would be the same regardless of whether this security was classified as trading, available for sale, or held to maturity. 2. Cash ........................................................................... 25,000 Investment in Held-to-Maturity Securities . ............................ 1,041* Interest Revenue . ...................................................................... 23,959* To record the cash received for the first interest payment and to recognize interest revenue. *\$598,970 0.04 = \$23,959; \$25,000 – \$23,959 = \$1,041 Cash ........................................................................... 25,000 Investment in Held-to-Maturity Securities . ............................ 1,083* Interest Revenue . ...................................................................... 23,917* To record the cash received for the second interest payment and to recognize interest revenue. *(\$598,970 – \$1,041) 0.04 = \$23,917; \$25,000 – \$23,917 = \$1,083

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ACCT 4050 Chapter 14 Solutions 14–30. 1. Amortization Schedule: Interest Interest Received Revenue (0.05 Bond Interest (0.04 Carrying Discount Unamortized Carrying Payment \$100,000) Value) Amortization Discount Value \$7,723 \$ 92,277 1 \$4,000 \$4,614 \$614 7,109 92,891 2 4,000 4,645 645 6,464 93,536 3 4,000 4,677 677 5,787 94,213 4 4,000 4,711 711 5,076 94,924 5 4,000 4,746 746 4,330 95,670 6 4,000 4,784 784 3,546 96,454 7 4,000 4,823 823 2,723 97,277 8 4,000
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## This note was uploaded on 04/06/2011 for the course ACCT 4050 taught by Professor Rodney during the Spring '11 term at UGA.

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Chapter%2014%20Homework%20Solutions - ACCT4050 1429. 1....

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