CLASS_REVISION_PROBLEMS - PROBLEM 14-5 1. Sanford Co....

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PROBLEM 14-5 1. Sanford Co. 3/1/10 Cash. ........................................................................... ..................................................................................... 472,090 Discount on Bonds Payable. .................................... 27,910* Bonds Payable. ............................................... 500,000 *Maturity value of bonds payable. ............................................. $500,000 Present value of $500,000 due in 7 periods at 6% ($500,000 X .66506). ................................................................. $332,530 Present value of interest payable semiannually ($25,000 X 5.58238). ................................................................. 139,560 Proceeds from sale of bonds. ................................................... (472,090 ) Discount on bonds payable. ..................................................... $ 27,910 9/1/10 Interest Expense. ................................................... 28,325* Discount on Bonds Payable. ..................... 3,325 Cash. ............................................................ 25,000 (See amortization table on next page) 12/31/10 Interest Expense. ................................................... 19,017 Discount on Bonds Payable ($3,525 X 4/6). ........................................... 2,350 Interest Payable ($25,000 X 4/6). ............... 16,667 3/1/11 Interest Expense. ................................................... 9,508 Interest Payable. .................................................... 16,667 Discount on Bonds Payable ($3,525 X 2/6). ........................................... 1,175 Cash. ............................................................ 25,000 9/1/11 Interest Expense. ................................................... 28,736 Discount on Bonds Payable. ..................... 3,736 Cash. ............................................................ 25,000 12/31/11 Interest Expense. ................................................... 19,308 Discount on Bonds Payable ($3,961 X 4/6). ........................................... 2,641
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Interest Payable. ......................................... 16,667 Schedule of Bond Discount Amortization Effective-Interest Method 10% Bonds Sold to Yield 12% Date Cash Paid Interest Expense Discount Amortized Carrying Amount of Bonds 3/1/10 $472,090 9/1/10 $25,000 $28,325 $3,325 475,415 3/1/11 25,000 28,525 3,525 478,940 9/1/11 25,000 28,736 3,736 482,676 3/1/12 25,000 28,961 3,961 486,637 9/1/12 25,000 29,198 4,198 490,835 3/1/13 25,000 29,450 4,450 495,285 9/1/13 25,000 29,715* 4,715 500,000 *Rounded $2 2. Titania Co. 6/1/10 Cash. ........................................................................... ..................................................................................... 425,853
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This note was uploaded on 11/12/2011 for the course ACCT 2015 taught by Professor Dr,moore during the Spring '10 term at University of the West Indies at Mona.

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CLASS_REVISION_PROBLEMS - PROBLEM 14-5 1. Sanford Co....

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