Calculations Bonds Payable Discount on Bonds 800000 16000 1600 100105 800

Calculations bonds payable discount on bonds 800000

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Calculations: Bonds Payable Discount on Bonds 800,000 16,000 1,600 10/01/05 800 12/31/05 800,000 bal. 13,600 bal. Balance sheet presentation: Other assets or long-term assets: Bond issue costs ($4,000 $400 $200) $ 3,400 Current liabilities:
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Interest payable $ 16,000 Long-term liabilities: Bonds payable $800,000 Discount on bonds ( 13,600) $786,400 4. Determine the amount of gain or loss on the bonds redeemed on June 1, 2006. Amount of gain/(loss): Bonds Payable Discount on Bonds 800,000 16,000 1,600 10/01/05 800 12/31/05 800 04/01/06 533 06/01/06 800,000 bal. 12,267 bal. Bond amortization from 4/01/06 through 06/01/06: $1,600 × 2/6 = $533 Book value as of June 1, 2006: Bonds payable $800,000 Less unamortized discount ( 12,267) Less unamortized bond issue costs: $4,000 ($4,000 × 14/60) ( 3,067) Net carrying value as of June 1, 2006 $784,666 Portion of bonds retired ($200,000 ÷ $800,000) 25% Carrying value of bonds retired $196,166 Cash paid: $200,000 × 1.03 206,000 Loss on redemption ($ 9,834) 5. Record the entries necessary for the bond redemption. Retirement, June 1, 2006: DESCRIPTION DEBIT CREDIT Interest Expense 2,667 Bonds Payable 200,000 Loss on Retirement of Bonds 9,834 ×
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Discount on Bonds ($12,267 × 25%) 3,067 Bond Issue Costs ($3,067 × 25%) 767 Cash [($200,000 × 1.03) + $2,667] 208,667 . Determine the amount of discount on bonds payable and the amount of issue costs that should be amortized for the period ended October 1, 2006. Bond issue costs: Balance at June 1, 2006, before retirement $ 3,067 Removed at retirement 767 Balance after retirement $ 2,300 Remaining amortization period in months (60 14) 46 $ 50 4 Amortization for 4 months at October 1, 2006 $ 200 Discount on bonds: Balance at June 1, 2006, before retirement $12,267 Removed at retirement 3,067 Balance after retirement $ 9,200 Remaining amortization period in months (60 14) 46 $ 200 4 Amortization for 4 months at October 1, 2006 $ 800 Analyze: What is the balance of the Discount on Bonds account at June 1, 2006 before the reitirement of bonds? The balance of the Discount on Bonds account at June 1, 2006 is $12,267. ÷ × ÷ ×
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Problem 13-6 Note Payable Transactions (CPA adapted) A. On April 1, 2005, kern Company purchased a patent from Frey Corp. in exchange for a $100,000 non-interest-bearing note due April 1, 2007. There was no established price for the patent, and the note had no ready market. The prevailing interest rate for this type of note was 10 percent at April 1, 2005. B. Kern has a $200,000 note payable to Cain Company dated December 31, 2002, which bears interest at 9 percent (annual compounding) and is due on December 31, 2007. Interest is payable annually on December 31, and all interest payments were made through December 31, 2005 C. Kern has a $750,000 note payable to Able Company dated May 1, 2004, which bears interest at 9 percent. Principal payments of $250,000 plus interest are due annually beginning May 1, 2005. Kern made its first principal and interest payment on May 1, 2005. Required: 1 Prepare a schedule showing the amount of interest expense and interest paid for 2005 and the amount of interest accrued at December 31, 2005. $100,000 note $ $ 6,198 $ $ 6,198 $200,000 note 16,000 16,000 $750,000 note 67,500 52,500 30,000 Totals $83,500 $74,698 $30,000 $ 6,198 Calculations: $100,000 note PV of $100,000 at N = 2; I = 10% = $82,645 04/01/05 $ 82,645 04/01/06 $ $8,264 90,909 04/01/07 9,091 100,000 Interest expense for 2005: $8,264 × 9/12 = $6,198 Interest paid for 2005: $0 $200,000 note: Interest expense for 2005: $200,000 × 8% = $16,000 Interest paid for 2005: $16,000 $750,000 note: Interest Paid Interest Expense Interest Payable Note
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