POA11e13 - CHAPTER 13Solutions LONG-TERM LIABILITIES...

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Ch13 SE1 to SE3 CHAPTER 13—Solutions LONG-TERM LIABILITIES Chapter 13, SE 1. 1. Advantage 2. Disadvantage 3. Disadvantage 4. Advantage 5. Advantage Chapter 13, SE 2. a. 4 b. 7 c. 1 d. 3 e. 2 f. 6 g. 5 Chapter 13, SE 3. Interest for 1 Monthly Month at 0.6667%* Reduction Unpaid Balance Month Payment on Unpaid Balance in Debt at End of Period 0 $150,000 1 $1,200 $1,000 $200 149,800 2 1,200 999 ** 201 149,599 3 1,200 997 ** 203 149,396 * 8% ÷ 12 = 0.006667 **Rounded.
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Ch13 SE4 Chapter 13, SE 4. Choice A Present value of 40 periodic payments at 6% (from Table 2*) $32,000 × 15.046 #VALUE! Present value of a single payment at the end of 40 periods at 6% (from Table 1*) $600,000 × 0.097 58,200 Total present value of Choice A #VALUE! Choice B Present value of 30 periodic payments at 6% (from Table 2*) $30,000 × 13.765 #VALUE! Present value of a single payment at the end of 30 periods at 6% (from Table 1*) $600,000 × 0.174 #VALUE! Total present value of Choice B #VALUE! Total present value of both bonds #VALUE! *From the appendix on present value tables.
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Ch13 SE5 Chapter 13, SE 5. 2010 Apr. 1 Cash 7,840,000 Unamortized Bond Discount 160,000 Bonds Payable 8,000,000 Issued 8%, 5-year bonds at 98 $8,000,000 × 0.98 = $7,840,000 Oct. 1 Bond Interest Expense 336,000 Unamortized Bond Discount 16,000 Cash 320,000 To pay semiannual interest and amortize the discount $160,000 ÷ ( 5 years × 2 ) = $16,000 $8,000,000 × 0.08 × 6 / 12 = $320,000 2011 Apr. 1 Bond Interest Expense 336,000 Unamortized Bond Discount 16,000 Cash 320,000 To pay semiannual interest and amortize the discount $160,000 ÷ ( 5 years × 2) = $16,000 $8,000,000 × 0.08 × 6 / 12 = $320,000
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Ch13 SE6 Chapter 13, SE 6. 2011 Mar. 1 Cash 439,600 Unamortized Bond Premium 39,600 Bonds Payable 400,000 Sold 9%, 20-year bonds at 109.9 Aug. 31 Bond Interest Expense 17,584 Unamortized Bond Premium 416 Bond Interest Payable 18,000 To record accrued semiannual interest and amortize premium on 9%, 20-year bonds ( $400,000 × 0.09 × 6 / 12 ) – ( $439,600 × 0.08 × 6 / 12 ) = $18,000 $17,584 = $416 Sept. 1 Bond Interest Payable 18,000 Cash 18,000 Paid semiannual interest
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Ch13 SE7 to SE8 Chapter 13, SE 7. Dec. 1 Bonds Payable 120,000 Loss on Retirement of Bonds #VALUE! Unamortized Bond Discount 3,150 Cash #VALUE! Retired 8% bonds at call price of 104 $120,000 × 1.04 = #VALUE! $120,000 × $5,250 = $3,150 $200,000 Chapter 13, SE 8. 2011 Mar. 1 Bonds Payable 1,200,000 Unamortized Bond Discount 24,000 Common Stock 240,000 Additional Paid-in Capital 936,000 Converted $1,200,000 of 6% bonds into common stock at the rate of 20 shares for each $1,000 bond 1,200 × 20 shares = 24,000 shares 24,000 shares × $10 = $240,000 $1,200,000 × $40,000 = $24,000 $2,000,000 $1,200,000 ( $24,000 + $240,000 ) = $936,000
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Ch13 SE9 Chapter 13, SE 9. 1.
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POA11e13 - CHAPTER 13Solutions LONG-TERM LIABILITIES...

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