Chapter_14_Class_Practice_Problems_Solutions_All

Chapter_14_Class_Practice_Problems_Solutions_All - Chapter...

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Chapter 14 Class Practice Problems 1. Grider Industries, Inc. issued \$6,000,000 of 8% debentures on May 1, 2010 and received cash totaling \$5,323,577. The bonds pay interest semiannually on May 1 and November 1. The maturity date on these bonds is November 1, 2018. The firm uses the effective-interest method of amortizing discounts and premiums. The bonds were sold to yield an effective- interest rate of 10%. Instructions Calculate the total dollar amount of discount or premium amortization during the first year (5/1/10 through 4/30/11) these bonds were outstanding. (Show computations and round to the nearest dollar.) Solution Interest Cash Discount Carrying Date Expense Interest Amortized Value of Bonds 5/1/10 \$5,323,577 11/1/10 \$266,179 \$240,000\$26,179 5,349,756 5/1/11 267,488 240,000 27,488 5,377,244 Total\$53,667

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2. Prepare journal entries to record the following retirement. (Show computations and round to the nearest dollar.) The December 31, 2010 balance sheet of Wolfe Co. included the following items:
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This note was uploaded on 09/29/2011 for the course ACCT 302 taught by Professor Staff during the Spring '11 term at S.F. State.

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Chapter_14_Class_Practice_Problems_Solutions_All - Chapter...

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