Student Name:
Class:
Part 1.
Date Account Titles Debit Credit
2013
Jan 1 3,456,448
543,552 «- Correct!
4,000,000
Part 2.
120,000$ «- Correct!
18,118 «- Correct!
138,118 «- Correct!
Part 3.
or:
Thirty payments of $120,000
Plus discount
Thirty payments of $120,000
Par value at maturity
Total repaid
Less amount borrowed
Sold bonds on stated issue date.
Discount on Bonds Payable
Cash
Bonds Payable
Cash payment
Straight-line discount amortization
Bond interest expense
McGraw-Hill/Irwin
Instructor
General Journal
HILLSIDE
Problem 14-02A
Student Name:
Class:
McGraw-Hill/Irwin
Instructor
Problem 14-02A
Part 5.
Date Account Titles Debit Credit
2013
Jun 30 138,118
18,118 «- Correct!
120,000 «- Correct!
2013
Dec 31 138,118
18,118 «- Correct!
120,000 «- Correct!
Discount on Bonds Payable
Cash
Bond Interest Expense
Discount on Bonds Payable
Cash
Bond Interest Expense
To record six months’ interest and discount amortization.
To record six months’ interest and discount amortization.
General Journal
HILLSIDE
Given Data P14-02A:
HILLSIDE
(4) 12/31/2014 carrying value
(3)
Check figures:
Issuance price
Maturity in years
Annual interest
Bonds issued, face value
Student Name:
Class:
Part 1
81,250$
250,000
331,250$
(255,333)
75,917$ «- Correct!
81,250$
(5,333)
75,917$ «- Correct!
Part 2
Unamortized Carrying
Premium Value
5,333$ 255,333$ «- Correct!
4,800 254,800$ «- Correct!
4,267 254,267$ «- Correct!
3,734 253,734$ «- Correct!
3,201 253,201$ «- Correct!
2,668 252,668$ «- Correct!
2,135 252,135$ «- Correct!
1,602 251,602$ «- Correct!
1,069 251,069$ «- Correct!
6/30/2017
12/31/2017
Date Account Titles Debit Credit
2013
June 30 7,592
533 «- Correct!
8,125
2013
Bond Interest Expense
Ten payments of $8,125
Less premium
Total bond interest expense
Straight-line Amortization Table
Semiannual Interest Period-End
Less amount borrowed
Total bond interest expense
or:
Instructor
McGraw-Hill/Irwin
Problem 14-04A
To record six months’ interest and premium amortization.
Bond Interest Expense
Premium on Bonds Payable
Cash
Ten payments of $8,125
Par value at maturity
Total repaid
6/30/2013
ELLIS
12/31/2013
1/1/2013
6/30/2015
12/31/2015
6/30/2016
12/31/2016
6/30/2014
12/31/2014
533 «- Correct!
8,125
Premium on Bonds Payable
Cash
To record six months’ interest and premium amortization.
250,000$
6.5%
5
255,333$
6%
252,668$
Given Data P14-04A:
Bonds issued, par value
Annual interest
Maturity in years
Issuance price
Check figures:
(2) 6/30/2015 carrying value
Annual market rate on issue date
ELLIS
Student Name:
Class:
Part 1.
Date Account Titles Debit Credit
2013
Jan 1 Cash 292,181
Discount on Bonds Payable 32,819 «- Correct!
Bonds Payable 325,000
Part 2.
65,000$
325,000
390,000$
(292,181)
97,819$ «- Correct!
65,000$
32,819
97,819$ «- Correct!
Total bond interest expense
Part 3.
Semiannual Cash Bond
Interest Interest Interest Discount Unamortized Carrying
Period-End Paid Expense Amortization Discount Value
1/1/2013 32,819$ 292,181$ «- Correct!
6/30/2013 8,125$ 11,687$ 3,562$ 29,257 295,743 «- Correct!
12/31/2013 8,125 11,830 3,705 25,552 299,448 «- Correct!
6/30/2014 8,125 11,978 3,853 21,699 303,301 «- Correct!
12/31/2014 8,125 12,132 4,007 17,692 307,308 «- Correct!
Instructor
General Journal
LEGACY
Sold bonds on stated issue date.
Problem 14-07A
McGraw-Hill/Irwin
Total bond interest expense
or:
LEGACY
Eight payments of $8,125
Par value at maturity
Total repaid
Less amount borrowed
Eight payments of $8,125
Plus discount
Part 4
Date Account Titles Debit Credit
2013
June 30 Bond Interest Expense 11,687
Discount on Bonds Payable 3,562
Cash 8,125 «- Correct!
2013
Dec. 31 Bond Interest Expense 11,830
Discount on Bonds Payable 3,705
Cash 8,125 «- Correct!
To record six months’ interest and discount amortization.
General Journal
LEGACY
To record six months’ interest and discount amortization.
Given Data P14-07A:
(3) 12/31/2014 Carrying value
Bonds issued, face value
Annual interest
Maturity in years
Issuance price
Market interest rate
Check figures:
(2)
LEGACY
Student Name:
Class:
Part 1.
Date Account Titles Debit Credit
2013
Jan 1 184,566
4,566 «- Correct!
180,000
Part 2.
59,400$
180,000
239,400$
(184,566)
54,834$ «- Correct!
59,400$
(4,566)
54,834$ «- Correct!
Total bond interest expense
Part 3.
Semiannual Cash Bond
Interest Interest Interest Premium Unamortized Carrying
Period-End Paid Expense Amortization Premium Value
1/1/2013 4,566$ 184,566$ «- Correct!
6/30/2013 9,900$ 9,228$ 672$ 3,894 183,894 «- Correct!
12/31/2013 9,900$ 9,195 705$ 3,189 183,189 «- Correct!
6/30/2014 9,900$ 9,159 741$ 2,448 182,448 «- Correct!
12/31/2014 9,900$ 9,122 778$ 1,671 181,671 «- Correct!
or:
Six payments of $9,900
Less premium
Par value at maturity
Total repaid
Less amount borrowed
Total bond interest expense
Sold bonds on stated issue date.
Bonds Payable
Premium on Bonds Payable
Cash
LEGACY
Six payments of $9,900
Instructor
McGraw-Hill/Irwin
Problem 14-08A
IKE
General Journal
Part 4
Date Account Titles Debit Credit
2013
June 30 9,228
672
9,900 «- Correct!
2013
Dec. 31 9,195
705
To record six months’ interest and premium amortization.
Cash
Date Account Titles Debit Credit
2015
Jan. 1 180,000
1,671
176,400
5,271 «- Correct!
General Journal
interest. This amount is fixed as it is the product of the contract rate and the
par value of the bonds and is unaffected by the change in the market rate.
Bond Interest Expense
IKE
General Journal
To record six months’ interest and premium amortization.
Premium on Bonds Payable
Gain on Retirement of Bonds
To record the retirement of bonds.
Cash
amounts reported on Ike’s financial statements.
If the market rate on the issue date had been 12% instead of 10%, the bonds
10%. Without providing numbers, describe how this change affects the
Part 6: Assume that the market rate on January 1, 2013, is 12% instead of
had been issued at a premium.
The statement of cash flows would show a smaller amount of cash received
from borrowing. However, the cash flow statements presented over the life of
the bonds (after issuance) would report the same total amount of cash paid for
As the years passed, the bond liability would increase with amortization of
the discount instead of decreasing with amortization of the premium.
The income statement would show larger amounts of bond interest expense
over the life of the bonds issued at a discount than it would show if the bonds
would have sold at a discount because the contract rate of 11% would have
been lower than the market rate.
This change would affect the balance sheet because the bond liability would
be smaller (par value minus a discount instead of par value plus a premium).
Premium on Bonds Payable
Cash
Bonds Payable
Bond Interest Expense
Premium on Bonds Payable
IKE
Given Data P14-08A:
(3) 6/30/2014 Carrying value
Bonds issued, face value
Annual interest
Maturity in years
Issuance price
Market interest rate
Check figures:
(5) Gain
IKE