ACC 371 Chapter 6 Homework Assignments

# ACC 371 Chapter 6 Homework Assignments - ACC 371 Chapter 6...

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ACC 371 Chapter 6 Homework Assignments Exercise 6-1 Determine the combined present value as of December 31, 2011, of the following four payments to be received at the end of each of the designated years, assuming an annual interest rate of 8%. Payment Year Received \$ 5,000 2012 6,000 2013 8,000 2014 9,000 2015 Exercise 6-2 The Boyd Company sold merchandise to the Tucker Company on June 30, 2011. Payment was made in the form of a noninterest-bearing note requiring Tucker to pay \$85,000 on June 30, 2013. Assume that a 10% interest rate properly reflects the time value of money in this situation. The inventory related to this transaction had cost Boyd Company \$40,000. Required: Prepare the journal entry that should be recorded by Boyd Company on June 30, 2011. 1

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Exercise 6-3 Using the appropriate present value table and assuming a 12% annual interest rate, determine the present value on December 31, 2011, of a five-period annual annuity of \$5,000 under each of the following situations: 1. The first payment is received on December 31, 2012, and interest is compounded annually. 2. The first payment is received on December 31, 2011, and interest is compounded annually. Exercise 6-4 Lincoln Company purchased merchandise from Grandville Corp. on September 30, 2011. Payment was made in the form of a noninterest-bearing note requiring Lincoln to make six annual payments of \$5,000 on each September 30, beginning on September 30, 2011. The effective rate of interest for notes of this type is 10%. Required: Prepare the journal entries that should be recorded by Lincoln Company related to this transaction on September 30, 2011. 2
Exercise 6-5 On January 1, 2011, the San Fillipo Corporation issued 8% stated rate bonds with a face value of \$10 million. The bonds mature on January 1, 2031 (20 years). The market (effective) rate of interest for similar bonds was 10% on the date of issuance. Interest is paid semiannually on January 1 and July 1. Required:

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ACC 371 Chapter 6 Homework Assignments - ACC 371 Chapter 6...

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