Problem 14-2B (Concluded)
Part 3
Twenty payments of $170,000…………..….. $3,400,000
Par value at maturity………………………….… 3,400,000
Total repaid…………………………….…..………. 6,800,000
Part 4 (Semiannual amortization: $390,000/20 = $19,500)
Semiannual
Period-End
Unamortized
Discount
Carrying
Value
1/01/2015……............... $390,000 $3,010,000
6/30/2015……............... 370,500 3,029,500
Part 5
2015
June 30 Bond Interest Expense…………………..…………..………….189,500
Discount on Bonds Payable……………………….…….. 19,500
Cash………………………………………………………………… 170,000
To record six months’ interest and
discount amortization.
2015
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
6/30/2015……............... 753,285 4,153,285
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
or:
Ten payments of $14,400…………………...... $ 144,000
Less premium……………………………………… (12 ,988)
Total bond interest expense..................... $ 131 ,012
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
6/30/2018 3,895 323,895
12/31/2018 2,596 322,596
6/30/2019 1,299* 321,299
12/31/2019 0 320,000
* 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
Discount on Bonds Payable…………………………….……..41,506
Bonds Payable……………………………………………….... 240,000
Sold bonds on stated issue date.
Part 2
Thirty payments of $7,200*….……………….. $ 216,000
Par value at maturity………………………….… 240,000
Total bond interest expense..................... $ 257,506
* Semiannual interest payment, computed as $240,000 x 6% x ½ year.
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
6/30/2015 40,122 199,878
Problem 14-5B (Concluded)
Part 4
2015
June 30 Bond Interest Expense…………………..…………..………….8,584
2015
Dec. 31 Bond Interest Expense…………………..…………..………….8,584
Discount on Bonds Payable……………………….…….. 1,384
Cash………………………………………………………………… 7,200
To record six months’ interest and
discount amortization.
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
9/30/2017……….….104,684 10,468 49,848 60,316 54,836
*Adjusted for rounding.
Part 3
2015
Dec. 31 Interest Expense…………………………………………………….3,750
2016
Sept. 30 Interest Expense…………………………………………………….11,250
Interest Payable………………………………………………..……3,750
Problem 14-7B (30 minutes)
Part 1
Atlas Company
Debt-to-equity ratio = $80,000 / $100,000 = 0.80
Part 2
Bryan’s debt-to-equity ratio is much higher than that for Atlas. This implies
that Bryan has a more risky financing structure. Before concluding that