Notea noteb notec 37566 50000 45027 50000

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Unformatted text preview: 7 (from Table 5 in Appendix A)] = $8,332 + $39,586 = $47,918 If Manheim Corporation issues these bonds, its long­term debt/equity ratio would be .879 [($40,000 + $47,918) ÷ $100,000]. P11–4 a. Note A Face value $ 20,000 Present value (i = 10%, n = 5) PV of face value ($20,000 .6209 from Table $ 12,418 4 in Appendix A) PV of interest receipts ($0 3.7908 from Table 5 in 0 Appendix A) Total present value (i.e., proceeds) 12,418 Discount $ 7,582 Note B Face value $ 35,000 Present value (i = 10%, n = 8) PV of face value ($35,000 .4665 from Table $ 16,328 4 in Appendix A) PV of interest receipts ($2,800 5.3349 from Table 14,938 5 in Appendix A) Total present value (i.e., proceeds) 31,266 Discount $ 3,734 P11–4 Concluded Note C Face value $ 50,000 Present value (i = 4%, n = 20) PV of face value ($50,000 .4564 from Table $ 22,820 4 in Appendix A) PV of interest receipts ($2,000 Table 5 in Appendix A) Total present value (i.e., proceeds) 13.5903 from 27,181 50,000 Discount/premium $ 0 b. Note A Cash (+A) Discount on Notes Payable (–L) 12,418.00 7,582.00 Notes Payable (+L) 20,000.00 Issued notes payable for cash. Note B Cash (+A) Discount on Notes Payable (–L) 31,266.00 3,734.00 Notes Payable (+L) 35,000.00 Issued notes payable for cash. Note C Cash (+A) 50,000.00 Notes Payable (+L) 50,000.00 Issued notes payable for cash. c. Interest Expense (E, –SE) 2,000.00 Cash (–A) 2,000.00 Incurred and paid interest. d. Note B Interest Expense (E, –SE) Payable (+L) 3,126.60a Discount on Notes 326.60b Cash (–A) 2,800.00c Incurred and paid interest. a $3,126.60 b $326.60 c $2,800.00 P11–4 = Book Value Effective Rate per Period = ($35,000 – $3,734) 10% = Interest Expense – Interest Payment = Face Value Stated Rate per Period = $35,000 8% Continued Note C Interest Expense (E, –SE) 2,000.00 Cash (–A) 2,000.00 Incurred and paid interest. e. Interest Expense (E, –SE) Payable (+L) 1,241.80* Discount on Notes 1,241.80 Amortized discount on notes payable. _________________ * $1,241.80 = Book Value Effective Rate per Period = ($20,000 – $7,582) 10% P11–5 a. The effective interest rate can be calculated in two ways. The first way is by solving for i in each of the fo...
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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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