MBA541 project 3

MBA541 project 3 - $2,45.60 Cash $16,0 0.0 3 April 1 201 Int Expense $36,91.20 Amortization of Disc $4,91.20 Cash $32,0 0.0 4 Oct 1 201 Int Expense

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a. Bond Amortization Table Per Period Per Year Data provided: Periods 10 5 Stated rate 0.04 8 Market rate 0.05 10 Face value $800,000 $800,000 Present value $738,224 Date Period October 1, 2010 0 $738,224.00 April 1, 201 1 $32,000 $36,91 .20 $4,91 .20 $743,135.20 October 1, 201 2 $32,000 $37,156.76 $5,156.76 $748,291.96 April 1, 2012 3 $32,000 $37,414.60 $5,414.60 $753,706.56 October 1, 2012 4 $32,000 $37,685.33 $5,685.33 $759,391.89 April 1, 2013 5 $32,000 $37,969.59 $5,969.59 $765,361.48 October 1, 2013 6 $32,000 $38,268.07 $6,268.07 $771,629.55 April 1, 2014 7 $32,000 $38,581.48 $6,581.48 $778,21 .03 October 1, 2014 8 $32,000 $38,910.55 $6,910.55 $785,121.58 April 1, 2015 9 $32,000 $39,256.08 $7,256.08 $792,377.66 October 1, 2015 10 $832,000 $39,622.34 $7,622.34 $800,000.00 b. Journal Entries 1. Oct. 1, 2010 Cash $738,2 4.0 Disc. on Bond Payable $61,7 6.0 Bond Payable $80 ,0 0.0 2. Dec. 31, 2010 Int. Expense $18,45 .60 Amortization of Disc.
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Unformatted text preview: $2,45 .60 Cash $16,0 0.0 3. April 1, 201 Int. Expense $36,91 .20 Amortization of Disc. $4,91 .20 Cash $32,0 0.0 4. Oct. 1, 201 Int. Expense $37,156.76 Amortization of Disc. $5,156.76 Cash $32,0 0.0 5. Dec. 31, 201 Int. Expense $18,707.30 Amortization of Disc. $2,707.30 Cash $16,0 0.0 c. Interest expense Compute interest expense to be reported in the income statement for year ended Dec 31, 2010 and Dec 31, 201 Formula: Interest Expense = cash interest paid + amortization of discount Dec. 31, 2010 Interest Expense =: $16,0 0 (cash interest paid) + $2,45 .60 (amortization of discount) Dec. 31, 2010 Interest Expense = $18,45 .60 Dec. 31, 201 Interest Expense =: $16,0 0 (cash interest paid) + $2,707.30 (amortization of discount) Dec. 31, 201 Interest Expense = $18,707.30 Cash Payment Interest Expense Amortization of Discount Bond Car ying Value...
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This note was uploaded on 11/13/2011 for the course MBA 541 taught by Professor Debrakeith during the Spring '09 term at Bellevue.

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