Chapter 14 Self Study Solutions

# Chapter 14 Self Study Solutions - BRIEF EXERCISE 14-1...

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BRIEF EXERCISE 14-1 Present value of the principal \$500,000 X .37689 \$188,445 Present value of the interest payments \$22,500 X 12.46221 280,400 Issue price \$468,845 BRIEF EXERCISE 14-2 (a) Cash 300,000 Bonds Payable 300,000 (b) Interest Expense 15,000 Cash (\$300,000 X 10% X 6/12) 15,000 (c) Interest Expense 15,000 Interest Payable 15,000 BRIEF EXERCISE 14-3 (a) Cash (\$300,000 X 98%) 294,000 Discount on Bonds Payable 6,000 Bonds 300,000

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Payable (b) Interest Expense 15,600 Discount on Bonds Payable (\$6,000 X 1/10 = \$600) 600 Cash (\$300,000 X 10% X 6/12) 15,000 (c) Interest Expense 15,600 Discount on Bonds Payable (\$6,000 X 1/10 = \$600) 600 Interest Payable 15,000
BRIEF EXERCISE 14-4 (a) Cash (\$300,000 X 103%) 309,000 Bonds Payable 300,000 Premium on Bonds Payable 9,000 (b) Interest Expense 14,100 Premium on Bonds Payable (\$9,000 X 1/10 = \$900) 900 Cash (\$300,000 X 10% X 6/12) 15,000 (c) Interest Expense 14,100 Premium on Bonds Payable (\$9,000 X 1/10 = \$900) 900 Interest Payable 15,000 BRIEF EXERCISE 14-5 (a) Cash 408,000 Bonds Payable 400,000 Interest Expense 8,000

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(\$400,000 X 6% X 4/12 = \$8,000) (b) Interest Expense 12,000 Cash (\$400,000 X 6% X 6/12 = \$12,000) 12,000 (c) Interest Expense 12,000 Interest Payable 12,000 BRIEF EXERCISE 14-6 (a) Cash 559,224 Discount on Bonds Payable 40,776 Bonds Payable 600,000 (b) Interest Expense 22,369 Cash 21,000 Discount on Bonds Payable 1,369 (\$559,224 X 8% X 6/12 = \$22,369) (\$600,000 X 7% X 6/12 = \$21,000) (c) Interest 22,424
Expense Interest Payable 21,000 Discount on Bonds Payable (\$560,593 X 8% X 6/12 = \$22,424) 1,424 BRIEF EXERCISE 14-7 (a) Cash 644,636 Bonds Payable 600,000 Premium on Bonds Payable 44,636 (b) Interest Expense 19,339 Premium on Bonds Payable 1,661 Cash 21,000 (\$644,636 X 6% X 6/12 = \$19,339) (\$600,000 X 7% X 6/12 =

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\$21,000) (c) Interest Expense 19,289 Premium on Bonds Payable 1,711 Interest Payable (\$642,975 X 6% X 6/12 = \$19,289) 21,000 BRIEF EXERCISE 14-8 Interest Expense 6,446 Premium on Bonds Payable 554 Interest Payable 7,000 (\$644,636 X 6% X 2/12 = \$6,446) (\$600,000 X 7% X 2/12 = \$7,000)
BRIEF EXERCISE 14-9 Current liabilities Bond Interest Payable \$ 80,000 Long-term liabilities Bonds Payable, due January 1, 2019 \$2,000,000 Less: Discount on Bonds Payable 88,000 \$1,912,000 BRIEF EXERCISE 14-10 Bond Issue Expense 16,000 Unamortized Bond Issue Costs (\$160,000 X 1/10) 16,000 BRIEF EXERCISE 14-11 Bonds Payable 500,000 Premium on Bonds Payable 15,000 Unamortized Bond Issue Costs 5,250 Gain on Redemption of Bonds 14,750 Cash 495,000 BRIEF EXERCISE 14-12 (a) Cash 100,000

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Notes Payable 100,000 (b) Interest Expense 10,000 Cash (\$100,000 X 10% = \$10,000) 10,000 BRIEF EXERCISE 14-13 (a) Cash 47,664 Discount on Notes Payable 27,336 Notes Payable 75,000 (b) Interest Expense 5,720 Discount on Notes Payable (\$47,664 X 12%) 5,720 BRIEF EXERCISE 14-14 (a) Computer 31,495 Discount on Notes Payable 8,505 Notes Payable 40,000 (b) Interest 3,779
Expense Cash 2,000 Discount on Notes Payable 1,779 (\$31,495 X

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Chapter 14 Self Study Solutions - BRIEF EXERCISE 14-1...

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