84 319416 casha 10000 madeleasepaymentfor2011

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Unformatted text preview: k value. Net income Unrealized holding gain on Bonds Payable Adjusted net income $38,500 _ 6,580 $45,080 The gain is not an increase in the wealth of the company if it intends to keep the bonds outstanding until maturity. However, if Cohort intends to retire this debt, the gain represents an increase in wealth because Cohort will acquire additional net assets of $6,580. d. Bonds payable Payable 200,000 Discount on Bonds 6,941 Cash 186,479 Extraordinary Realized 6,580 Gain on Retirement of Debt Once the repurchase has occurred, the loss has been realized because a reduction in net assets has occurred. Before this occurs, however, the loss is unrealized and may be misleading if the company intends to keep the bonds until maturity. E11–22 a. Lease Expense (E, –SE) 10,000 Cash (–A) 10,000 Incurred and paid lease expense for 2011. Lease Expense (E, –SE) 10,000 Cash (–A) 10,000 Incurred and paid lease expense for 2012. Lease Expense (E, –SE) 10,000 Cash (–A) 10,000 Incurred and paid lease expense for 2013. Lease Expense (E, –SE) 10,000 Cash (–A) 10,000 Incurred and paid lease expense for 2014. Lease Expense (E, –SE) 10,000 Cash (–A) 10,000 Incurred and paid lease expense for 2015. b. The effective interest rate on the lease is 8%. The following entries would be recorded on Q­Mart’s books. Facility (A) 39,927 Lease Liability (L) 39,927 Depreciation Expense (E, –SE) 7,985.40 Accumulated Record the capitalized lease. ($10,000*3.9927) Depreciation (–A) Record depreciation of capitalized asset for 2011. ($39,927/5) 7,985.40 Lease Liability (­L) Interest Expense (E, ­SE) 6,805.84 3,194.16 Cash (­A) 10,000 Made lease payment for 2011. Depreciation Expense (E, –SE) Depreciation (–A) 7,985.40 Accumulated 7,985.40 Record depreciation of capitalized asset for 2012. Lease Liability (­L) Interest Expense (E, ­SE) 7,350.32 2,649.68 Cash (­A) 10,000 Made lease payment for 2012. Depreciation Expense (E, –SE) Depreciation (–A) 7,985.40 Accumulated 7,985.40 Record depreciation of capitalized asset for 2013. Lease Liability (­L) ­SE) 7,938.32 Interest Expense (E, 2,061.68 Cash (­A) 10,000 Made lease payment for 2013. Depreciation Expense (E...
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This homework help was uploaded on 03/03/2014 for the course ACCT 5053 taught by Professor Staff during the Fall '08 term at Oklahoma State.

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