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Problem 14-3B (40 minutes)
Part 1
2015
Jan. 1 Cash..............................................................................4,192,932
Part 2
(a) Cash Payment = $3,400,000 x 10% x 6/12 year = $170,000
Part 3
Twenty payments of $170,000.................. $3,400,000
Par value at maturity................................. 3,400,000
Problem 14-3B (Concluded)
Part 4
Semiannual
Period-End
Unamortized
Premium
Carrying
Value
1/01/2015..................... $792,932 $4,192,932
Part 5
2015
June 30 Bond Interest Expense.................................................130,353
2015
Dec. 31 Bond Interest Expense.................................................130,353
Problem 14-4B (45 minutes)
Part 1
Ten payments of $14,400*......................... $ 144,000
Par value at maturity................................. 320 ,000
Part 2
Straight-line amortization table ($12,988/10 = $1,299**)
Semiannual
Interest Period-End
Unamortized
Premium
Carrying
Value
1/01/2015 $12,988 $332,988
6/30/2015 11,689 331,689
12/31/2015 10,390 330,390
* Adjusted for rounding.
**Rounded to nearest dollar.
Problem 14-4B (Concluded)
Part 3
2015
June 30 Bond Interest Expense.................................................13,101
2015
Dec. 31 Bond Interest Expense.................................................13,101
Problem 14-5B (60 minutes)
Part 1
2015
Jan. 1 Cash..............................................................................198,494
Part 2
Thirty payments of $7,200*....................... $ 216,000
or:
Thirty payments of $7,200*....................... $ 216,000
Part 3 Straight-line amortization table ($41,506/30= $1,384)
Semiannual
Interest Period-End
Unamortized
Discount
Carrying
Value
1/01/2015 $41,506 $ 198,494
Problem 14-5B (Concluded)
Part 4
2015
June 30 Bond Interest Expense.................................................8,584
2015
Dec. 31 Bond Interest Expense.................................................8,584
Problem 14-6B (45 minutes)
Part 1 Amount of Payment
Note balance.................................................................$150,000
Part 2
Payments
Period
Ending
Date
(A)
Beginning
Balance
[Prior (E)]
(B)
Debit
Interest
Expense
[10% x (A)]
+
(C)
Debit
Notes
Payable
[(D) - (B)]
=
(D)
Credit
Cash
[computed]
(E)
Ending
Balance
[(A) - (C)]
9/30/2016.............$150,000 $15,000 $ 45,316 $ 60,316 $104,684
*Adjusted for rounding.
Part 3
2015
Dec. 31 Interest Expense...........................................................3,750
2016
Sept. 30 Interest Expense...........................................................11,250
Problem 14-7B (30 minutes)
Part 1
Atlas Company
Bryan Company
Part 2
Bryan’s debt-to-equity ratio is much higher than that for Atlas. This implies
Problem 14-8BB (60 minutes)
Part 1
2015
Part 2
Thirty payments of $7,200*....................... $ 216,000
or:
Thirty payments of $7,200........................ $ 216,000
Part 3
Semiannual
Interest
Period-End
(A)
Cash Interest
Paid
[3% x $240,000]
(B)
Bond Interest
Expense
[4% x Prior (E)]
(C)
Discount
Amortization
[(B) - (A)]
(D)
Unamortized
Discount
[Prior (D) - (C)]
(E)
Carrying
Value
[$240,000 - (D)]
1/01/2015 $41,506 $198,494
6/30/2015 $7,200 $7,940 $740 40,766 199,234
Problem 14-8BB (Concluded)
Part 4
2015
June 30 Bond Interest Expense.................................................7,940
2015
Dec. 31 Bond Interest Expense.................................................7,969
