This preview shows pages 1–3. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: E81a.Investment in Lamar bonds156,000 1/1 Cash156,000 Cash4,500 7/1 Interest revenue4,200 Investment in Lamar bonds300 12/31 Interest receivable4,500 Interest revenue4,200 Investment in Lamar bonds300 b.Cash156,000 1/1 Bonds payable150,000 Premium on bonds payable6,000 7/1 Interest expense4,200 Premium on bonds payable300 Cash4,500 12/31 Interest expense4,200 Premium on bonds payable300 Interest payable4,500 c.Interest revenue8,400 Bonds payable150,000 Premium on bonds payable5,400 Interest expense8,400 Investment in Lamar bonds155,400 Interest payable4,500 Interest receivable4,500 E82[Not assigned]Since the entry shown decreases the value of the bond, it must have been bought at a premium.Since it's amortizing $250 over 20 periods, the original premium must have been $5,000. Thepurchase price was $105,000. After six semiannual payments, amortixing $250 each time, theremaining investment balance is $103,500 ($105,000  [6 x $250]).Interest revenue11,500 Bonds payable100,000 Premium on bonds payable3,500 Interest expense11,500 Investment in Nettle bonds103,500 Interest payable6,000 Interest receivable6,000 E83a. The consolidated entit should only report expense for bonds issued to outsiders. $200,000 x8% + $4,000 (discount) x 1/5 = $16,800.b. Remember, this is the second year of ownership, so there should already be an interestreceivable on the books.)1/1 Cash16,000 [400,000 x 8% x 1/2]Interest receivable16,000 7/1 Cash16,000 Investment in Carter bonds800 [400,000 x 2% / (5 x 2)]Interest revenue16,800 12/31 Interest receivable16,000 Investment in Carter bonds800 Interest revenue16,800 c.Interest revenue33,600 Bonds payable400,000 Discount on bonds payable4,800 Interest expense33,600 Investment in Carter bonds395,200 Interest payable16,000 Interest receivable16,000 E84[Not assigned]a. Losses are debits and gains are credits, so if the eliminating entry has to be of thea....
View
Full
Document
This note was uploaded on 04/12/2011 for the course ACC 5120 taught by Professor Weimer during the Fall '10 term at Wayne State University.
 Fall '10
 WEIMER
 Accounting, Revenue

Click to edit the document details