Course Hero Logo

Week 2 Ch 14-15 Discussion.xlsx - E14-4, E14-7, E14-12,...

Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e.g., in search results, to enrich docs, and more. This preview shows page 1 - 6 out of 21 pages.

E14-4, E14-7, E14-12, E14-13, E15-2, E15-6, E15-11, E15-18.InstructionsPrepare the journal entries to record the following (round to the nearest dollar):1. The issuance of the bonds2. The payment of interest and the related amortization on July 1, 20203. The accrual of interest and the related amortization on December 31, 2020E14.4 (LO 2)(Entries for Bond Transactions—Effective Interest)Foreman Inc. issued $800,000 of 10%, 20-yearbonds on January 1, 2020, at 102. Interest is payable semi-annually on July 1 and January 1. ForemanInc. uses the effective interest method of amortization for any bond premium or discount. Assume aneffective yield of 9.75%. (With a market rate of 9.75%, the issue price would be slightly higher. Forsimplicity, ignore this.)
Cash816000Bond Payable816000Interest Expense39780Bond Payable220Cash40000Interest Expense39769Bond Payable231Interest Payable40000
Instructions1. On January 1, 2020, Spartan Inc. bought land that had an assessed value of $390,000 at the time ofpurchase. A $600,000, non–interest-bearing note due on January 1, 2023, was given in exchange. Therewas no established exchange price for the land, and no ready market value for the note. The interest ratethat is normally charged on a note of this type is 12%.2. On January 1, 2020, Geimer Furniture Ltd. borrowed $4 million (face value) from Aurora Inc., a majorcustomer, through a non–interest-bearing note due in four years. Because the note was non–interest-bearing, Geimer Furniture agreed to sell furniture to this customer at lower than market price. A 10% rateof interest is normally charged on this type of loan.a.For situation 1, using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, determine atwhat amount the land should be recorded at January 1, 2020. Round to the nearest dollar. (Hint:Refer toChapter 3 for tips on calculating.) Determine the interest expense to be reported in 2020 related to thistransaction. Round to the nearest dollar. Discuss how the assessed value of the land could be used in thissituation.b.For situation 2, using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, calculate theamount that the note would be recorded at on January 1, 2020. Round to the nearest dollar. (Hint:Refer toChapter 3 for tips on calculating.)E14.7 (LO 2) (Imputation of Interest) Two independent situations follow.
PV of 6000042720PV of 40000002732000
InstructionsSet up a schedule of interest expense and discount amortization under the straight-line method.

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 21 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Fall
Professor
N/A
Tags
Dividend, kao

Newly uploaded documents

Show More

Newly uploaded documents

Show More

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture