978-0077862381 Chapter 10 Solution Manual Part 3

subject Type Homework Help
subject Pages 9
subject Words 1208
subject Authors Jan Williams, Joseph Carcello, Mark Bettner, Susan Haka

Unlock document.

This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
page-pf1
25 Minutes, Medium
Aug 6 Cash 12,000
Notes Pa
y
able 12,000
Se
p
t 16 18,000
Notes Pa
y
able 18,000
Dec 16 18,000
450
Cash 450
Grove Bank. Issued a 45-day promissory note.
Issued 3-month, 10% note to Seawald Equipment
To record purchase of merchandise and issue
PROBLEM 10.3
A
SWANSON CORPORATION
a.
General Journal
Office Equipment
20xx
Borrowed $12,000 @ 12% per annum from Maple
90-day, 14% note payable to Gathman Corporation.
Notes Payable
Interest Expense
Education.
page-pf2
25 Minutes, Medium PROBLEM 10.4
A
SPEEDY LUBE
a.
Oct 1 Interest Expense 10,800
310
Cash 11,110
c.
Reduction in
Monthly Interest Unpaid Unpaid
Payment Expense Balance Balance
1,080,000$
d.
b.
General Journal
2015
Sept. 1, 2015
Period Date
Interest Payment
Mortgage Note Payable
Payable in 360 Monthly Installments of $11,110)
(12%, 30-Year Mortgage Note Payable for $1,080,000;
The amount of the monthly payments exceeds the amount of the monthly interest expense.
Therefore, a portion of each payment reduces the unpaid balance of the loan. The
At December 31, 2015, two amounts relating to this mortgage loan will appear as
current liabilities in the borrower’s balance sheet. First, as payments are due on the
Amortization Table
Issue date
page-pf3
15 Minutes, Easy
Aug 1 Cash 10,250,000
Bonds Pa
y
able 10,000,000
Bond Interest Pa
y
able 250,000
b.
Nov 1 250,000
Cash 500,000
e.
($10,000,000 x 10% x 4/12 = $333,333).
and interest expense for four months since Dec. 31
To record semiannual bond interest payment
months ($10,000,000 x 10% x 3/12 = $250,000).
Bond Interest Payable
bonds at 100 plus accrued interest for three
The market rate of interest on the date of issuance was 10%. Because the bonds were
issued at par (100), the market rate had to have equaled the contract interest rate printed
on the bonds.
a.
Issued $10,000,000 face value of 10%, 20-yea
r
PROBLEM 10.5
A
General Journal
2015
GREEN MOUNTAIN POWER COMPAN
Y
sale or distribution in any manner.
page-pf4
35 Minutes, Strong
Dec 31 Bond Interest Expense 2,693,334
26,667
Bond Interest 2,666,667
2,666,667$
26,667
2,693,334$
Mar 1 2,666,667
1,346,667
(1) Bonds issued at 98:
To record accrual of bond interest expense for
Bond Interest Expense
Discount amortization ($1,600,000 ÷ 20 years) x 4/12
Bond interest expense for four months
2016
2015
Discount on Bonds Payable
Contract interest ($80,000,000 x 10% x 4/12)
Bond Interest Payable
four months in 2015:
PROBLEM 10.6
A
a.
General Journal
EVANSVILLE LUMBER COMPAN
Y
* Actual amount differs slightly due to rounding
Education.
page-pf5
b.
Net bond liability at Dec. 31, 2016: Bonds Bonds
Issued Issued
at 98 at 101
80,000,000$ 80,000,000$
*
Less: Discount on bonds payable ($1,600,000-$106,667) (1,493,333)
PROBLEM 10.6
A
EVANSVILLE LUMBER COMPANY (concluded
)
Bond payable
page-pf6
45 Minutes, Strong
a.
Liabilities: (in thousands)
Accounts payabl
e
65,600$
11,347
Accrued interest payabl
e
7,333
Notes payable (short-term) 110,000
Capital lease obligation (current portion) 4,621
Current liabilities:
Accrued expenses payable (other than interest)
PROBLEM 10.7
A
MURFREESBORO TELEPHONE CORPORATION
December 31, 2015
Partial Balance Shee
t
CORPORATION (MTC)
M
URFREESBORO TELEPHONE
Education.
page-pf7
b. (1)
(2)
(6)
d.
Note to instructor: We do not expect students to have advance knowledge of telephone companies.
However, we believe this situation enables us to make a most important point: To properly
interpret financial information about a business organization, one must understand the nature of
the company’s operations and its business environment.
As the 6 3/4% bond issue is being refinanced on a long-term basis (that is, paid from the
proceeds of a long-term bond issue rather than from current assets), it is classified as a
long-term liability rather than a current liability.
The 8 1/2% bonds will be repaid from a bond sinking fund rather than from current
$18,000) is classified as long-term.
Income taxes payable relate to the current year’s income tax return and, therefore, are
a current liability. Although deferred income taxes can include a current portion, all of
the deferred income taxes are stated to be a long-term liability.
Based solely upon its debt ratio and interest coverage ratio, Murfreesboro Telephone
Corporation appears to be a good credit risk. One must consider, however, that MTC is a
PROBLEM 10.7
A
MURFREESBORO
TELEPHONE CORPORATION
(concluded)
page-pf8
20 Minutes, Strong
a.
Liabilities:
Unearned revenues 300,000$
100,000
Notes payable (current portion) 12,000
A
ccrue
d
b
on
d
i
nterest paya
bl
e
36
,
000
448,000$
900,000$
PROBLEM 10.8
A
PETERSEN CORPORATION
Bonds payable
Current liabilities:
Income taxes payable
Long-term liabilities:
page-pf9
25 Minutes, Easy
Current Long-Term Owners'
Transaction Revenue - Expenses = Net Income Assets = Liabilities + Liabilities + Equity
a. NE I D NE I NE D
b. NE NE NE NE I D NE
c. NE I D D I NE D
d. I NE I NE D NE I
PROBLEM 10.1B
PHILMAR, INC.
Income Statement Balance Sheet
page-pfa
30 Minutes, Medium
a.
Liabilities:
Income taxes payable 15,000$
26,000
Mortgage note payable-current ( $750,000 - $ 733,000) 17,000
Accrued interest on mortgage note payabl
e
15,000
Trade accounts payable 275,000
b.
(1)
(2)
Current liabilities:
Accrued expenses and payroll taxe
s
PROBLEM 10.2B
GEORGIA PEACH
December 31, 2015
Partial Balance Shee
t
GEORGIA PEACH
Comments on information in the numbered paragraphs:
Although the note payable to Smithfield Bank is due in 90 days, it is classified as a
long-term liability because it is approved to be refinanced on a long-term basis.
The $17,000 principal amount of the mortgage note payable scheduled for
Education.
page-pfb
25 Minutes, Medium
Jul 1 Cash 20,000
Notes Pa
y
able 20,000
Se
p
t ## 30,000
Notes Pa
y
able 30,000
Oct 1 20,000
600
Cash 20,600
Dec ## 30,000
750
Cash 750
Notes Pa
y
able 30,000
b.
c.
90-day, 12% note payable to Listen Corporation.
Office Equipment
Bank. Issued a 90-day promissory note.
Issued 3-month, 10% note to Moontime Equipment
as payment for office equipment.
Notes Payable
Interest Expense
renewal note. Interest: $30,000 x 10% x 3/12 = $750.
Interest Expense
Paid note and interest to Moontime Equipment
which matured today and issued a 60-day, 12%
PROBLEM 10.3B
SWANLEE CORPORATION
a.
General Journal
Notes Payable
The Moontime Equipment note dated September 16 was due in full on December 16. The
higher rate of interest on the new note may be associated with the increased risk of
collectin
g
in 60 da
y
s the $30,000
p
rinci
p
al
p
lus accrued interest due.
20xx
Adjusting Entr
y
Borrowed $20,000 @ 12% per annum from Weston
Education.

Trusted by Thousands of
Students

Here are what students say about us.

Copyright ©2022 All rights reserved. | CoursePaper is not sponsored or endorsed by any college or university.