At what amounts should Company A and Company B record the equipment purchased

# At what amounts should company a and company b record

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1. At what amounts should Company A and Company B record the equipment purchased? 2. Develop and amortization table for each company. Company A: 01/01/05 \$102,087 12/31/05 \$ \$ 8,167 \$ 8,167 110,254 12/31/06 8,820 8,820 119,074 12/31/07 9,526 9,526 128,600 12/31/08 10,288 10,288 138,888 12/31/09 11,111 11,111 149,999 *Does not equal \$150,000 due to rounding. Company B: Date Cash Interest Expense Discount Amortized Present Value Date Cash Interest Expense Discount Amortized Present Value *
01/01/05 \$ 83,609 12/31/05 \$2,400 \$ 8,361 \$ 5,961 89,570 12/31/06 2,400 8,957 6,557 96,127 12/31/07 2,400 9,613 7,213 103,340 12/31/08 2,400 10,334 7,934 111,274 12/31/09 2,400 11,127 8,727 120,001 *Does not equal \$120,000 due to rounding. 3. Prepare the necessary journal entries for Company A and Company B for December 31, 2005. Company A: DATE DESCRIPTION DEBIT CREDIT 12/31/05 Equipment 102,087 Discount on Notes Payable 47,913 Notes Payable 150,000 *Rounded. Company B: DATE DESCRIPTION DEBIT CREDIT 12/31/05 Equipment 83,609 Discount on Notes Payable 36,392 Notes Payable 120,001 4. SKIP * *
Exercise 13-14 Bond Retirement Ricarder Company reported the following in its December 31, 2005 and 2004, balance sheet: December 31 2005 2004 Long Term Debt Bonds, net of discount of \$4,700 and \$6,500 respectively \$163,300 \$204,500 Bonds with a face amount of \$800,000 were called during 2005 and retired at 102. During the year, new bonds were issued at 94 for cash. Bond discount totaling \$1,300 was amortized during 2005. 1. Calculate the face amount of the bonds issued during 2005. At what discount were the newbonds isued? 2. Prepare the entry to record the new issuance of bonds during 2005. DESCRIPTION DEBIT CREDIT Cash 34,780 Discount on Bonds 2,220 Bonds Payable 37,000 3. Prepare the entry to record the bond retirement during 2005. DESCRIPTION DEBIT CREDIT Bonds Payable 80,000 Loss on Bond Redemption 4,320 Discount on Bonds* 2,720 Cash (\$80,000 × 1.02) 81,600 *Discount on Bonds Retired = \$6,500 + \$2,220 \$1,300 \$4,700 = \$2,720 4. Why might a company call its bonds for retirement?

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• Fall '09
• CHERIEABAKER
• 1966, 1973, 1970, 1965