Accy 510 Fall 2011 TDR exercise 1

Accy 510 Fall 2011 TDR exercise 1 - Issue Date Maturity...

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Amortization Schedule for Sinkhole Company Note Payable to Mayo Inc. Borrower and Lender Financial Statement Representations for the Duration of the Note Issue Date 1/1/2006 Year Sinkhole Mayo Maturity Date 12/31/2015 B/S (1/1) I/S SCF B/S (12/31) B/S (1/1) I/S SCF B/S (12/31) Duration (yrs) 10 2006 $887,000 $106,440 $100,000 $6,440 $893,440 ($887,000) ($106,440) ($100,000) ($893,440) $887,000 $106,440 $100,000 $893,440 Cash int rate 10% 2007 $893,440 $107,213 $100,000 $7,213 $900,653 ($893,440) ($107,213) ($100,000) ($900,653) $893,440 $107,213 $100,000 $900,653 Effect int rate 12% 2008 $900,653 $108,078 $100,000 $8,078 $908,731 ($900,653) ($108,078) ($100,000) ($908,731) $900,653 $108,078 $100,000 $908,731 Face value $1,000,000 2009 $908,731 $109,048 $100,000 $9,048 $917,779 ($908,731) ($109,048) ($100,000) ($917,779) $908,731 $109,048 $100,000 $917,779 Issue price $887,000 2010 $917,779 $110,133 $100,000 $10,133 $927,912 ($917,779) ($110,133) ($100,000) ($927,912) $917,779 $110,133 $100,000 $927,912 2011 $927,912 $111,349 $100,000 $11,349 $939,262 ($927,912) ($111,349) ($100,000) ($939,262) $927,912 $111,349 $100,000 $939,262 2012 $939,262 $112,711 $100,000 $12,711 $951,973 ($939,262) ($112,711) ($100,000) ($951,973) $939,262 $112,711 $100,000 $951,973 2013 $951,973 $114,237 $100,000 $14,237 $966,210 ($951,973) ($114,237) ($100,000) ($966,210) $951,973 $114,237 $100,000 $966,210 2014 $966,210 $115,945 $100,000 $15,945 $982,155 ($966,210) ($115,945) ($100,000) ($982,155) $966,210 $115,945 $100,000 $982,155 2015 $982,155 $117,845 $100,000 $17,845 $1,000,000 ($982,155) ($117,845) ($100,000) ($1,000,000) $982,155 $117,845 $100,000 $1,000,000 When we say 'B/S' here, we are only referring to the net effect (and to the accounts directly related to the bond itself). Beginning Balance Effective Interest Cash Interest Eff Interest Amortized Ending Balance For your convenience we attach this analysis of the original contract. Note the following features: (1) The formulas in Column B show how you can use Excel to measure the present value of the cash flows from the contract. (2) The amortization schedule arranges the information about the contract in the usual way it is presented
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Accy 510 Fall 2011 TDR exercise 1 - Issue Date Maturity...

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