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# Week 5 - Suggested solutions to homework questions Week 5...

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Suggested solutions to homework questions – Week 5 Problem 10.13 1. (1) Discount = \$2.50 x 10 000 = \$25 000. (2) DR Cash \$975 000 DR Bond discount (contra liability) \$25 000. CR Bonded debt liability \$1 000 000 (3) Higher, as the discount is amortised. 2. (1) Discount = \$85 000. (2) DR Cash \$915 000 DR Bond discount (contra liability) \$85 000. CR Bonded debt liability \$1 000 000 (3) Higher, as the discount is amortised. 3. (1) Premium = \$50 000 (5% of \$1 million). (2) DR Cash \$1 050 000 CR Bonded debt liability \$1 000 000 CR Bond premium (liability) \$50 000 (3) Lower, as the premium is amortised. Problem 10.18 1 As the employees of Macquarie Bank render their services they earn annual leave, Macquarie Bank recognises an annual leave expense (debit) and a provision for annual leave (credit). When the employee take annual leave, Macquarie Bank will debit the provision for annual leave and credit wages payable/cash. If the employee does not take annual leave, the provision stays on the balance sheet. 2 The expense is greater than the holiday leave paid.

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Week 5 - Suggested solutions to homework questions Week 5...

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