Module 8 Homework - 6 Bonds Payable 2,000,00 0 Part 2. Cash...

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Denysia Lewis Module 8 Accounting Homework 10-1A 1. Market rate at the date of issuance is 8%. (a) bonds’ issue price on January 1, 2011 The formula is $20,000(pv1, 4%, 20) + 5%($20,000)(pva, 4%, 20) = $20,000(0.45639) + 5%($20,000)(13.59033) = $9,127.80 + $13,590.33 = $22,718.13 (b) Cash $22,718.13 Bond Premium 2,718.13 Bonds Payable 20,000 2. Market rate at the date of issuance is 10%. (a) bonds’ issue price on January 1, 2011 Since the market rate is the coupon rate, the bonds will be issued at face value, $20,000. (b) Cash 20,000 Bonds payable 20,000 3. Market rate at the date of issuance is 12%. (a) bonds’ issue price on January 1, 2011 The formula is $20,000(pv1, 6%, 20) + 5%($20,000)(pva, 6%, 20) = $20,000(0.31180) + 5%($20,000)(11.46992) = $6,236 + $11,469.92 = $17,705.92 (b) Cash 17,705.92 Bond Discount 2,294.08 20,000 10-2A HEATHROW
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General Journal Part 1. Trans. Date Account Titles no. Debit Credit 2004 Jan 1 Cash 1,728,22 4 Discount on Bonds Payable 271,77
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Unformatted text preview: 6 Bonds Payable 2,000,00 0 Part 2. Cash payment $ 60,000 Straight-line discount amortization 9,059 Bond interest expense 69,059 Part 3. Thirty payments of $60,000 $2,000,000 Par value at maturity 2,000,000 Total repaid $4,000,000 Less amount borrowed 1,728,224 Total bond interest expense $2,271,776 or: Thirty payments of $60,000 $2,000,000 Plus discount 271,776 Total bond interest expense $2,271,776 Part 4. HEATHROW Unamortized Carrying Semiannual Interest Period Discount Value 1/1/2004 271,776 1,728,22 4 6/30/2004 262,717 1,737,28 3 12/31/2004 253,658 1,746,34 2 6/30/2005 244,599 1,755,40 1 12/31/2005 235,540 1,764,46 0 HEATHROW General Journal Part 5. Trans. Date Account Titles no. Debit Credit 2004 Jun 30 Bond Interest Expense 2,271,77 6 Discount on Bonds Payable 9,059 Cash 60,00 0 Dec 31 Bond Interest Expense 2,271,77 6 Discount on Bonds Payable 9,059 Cash 60,00 0...
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This note was uploaded on 04/06/2012 for the course ACCOUNTING 101 taught by Professor White during the Spring '12 term at Everest University.

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Module 8 Homework - 6 Bonds Payable 2,000,00 0 Part 2. Cash...

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