Student Name:
Class:
Part 1.
Date Account Titles Debit Credit
2013
Jan 1 3,456,448
543,552 «- Correct!
4,000,000
Part 2.
18,118 «- Correct!
138,118 «- Correct!
Part 3.
Par value at maturity
Thirty payments of $120,000
7,600,000$
(3,456,448)
Cash payment
4,143,552$ «- Correct!
4,143,552$ «- Correct!
Plus discount
Total bond interest expense
Thirty payments of $120,000
Total repaid
Less amount borrowed
Total bond interest expense
or:
Bonds Payable
Straight-line discount amortization
Bond interest expense
McGraw-Hill/Irwin
Instructor
General Journal
HILLSIDE
Problem 10-02A
Sold bonds on stated issue date.
Discount on Bonds Payable
Cash
Student Name:
Class:
McGraw-Hill/Irwin
Instructor
Problem 10-02A
Part 5.
Date Account Titles Debit Credit
2013
Jun 30 138,118
18,118 «- Correct!
120,000 «- Correct!
2013
Dec 31 138,118
18,118 «- Correct!
120,000 «- Correct!
Discount on Bonds Payable
Cash
Bond Interest Expense
Discount on Bonds Payable
Cash
Bond Interest Expense
To record six months’ interest and discount amortization.
To record six months’ interest and discount amortization.
General Journal
HILLSIDE
Given Data P10-02A:
HILLSIDE
(4) 12/31/2014 carrying value
(3)
Check figures:
Issuance price
Maturity in years
Annual interest
Bonds issued, face value
Student Name:
Class:
Part 1
81,250$
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!
533 250,533$ «- Correct!
– 250,000$ «- Correct!
Part 3
Date Account Titles Debit Credit
2013
June 30 7,592
533 «- Correct!
8,125
2013
Dec. 31 7,592
6/30/2016
12/31/2016
6/30/2014
12/31/2014
Straight-line Amortization Table
Semiannual Interest Period-End
1/1/2013
6/30/2015
12/31/2015
6/30/2013
12/31/2013
Less amount borrowed
Total bond interest expense
or:
Ten payments of $8,125
Less premium
Total bond interest expense
ELLIS
To record six months’ interest and premium amortization.
ELLIS
General Journal
Bond Interest Expense
Premium on Bonds Payable
Cash
6/30/2017
12/31/2017
Problem 10-04A
McGraw-Hill/Irwin
Instructor
Bond Interest Expense
Ten payments of $8,125
Par value at maturity
Total repaid
533 «- Correct!
8,125
To record six months’ interest and premium amortization.
Premium on Bonds Payable
Cash
250,000$
6.5%
5
255,333$
6%
252,668$
Given Data P10-04A:
Check figures:
(2) 6/30/2015 carrying value
Annual market rate on issue date
ELLIS
Bonds issued, par value
Annual interest
Maturity in years
Issuance price
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$
97,819$ «- Correct!
Total bond interest expense
Plus discount
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!
Total repaid
Less amount borrowed
Problem 10-07A
McGraw-Hill/Irwin
General Journal
LEGACY
Sold bonds on stated issue date.
Eight payments of $8,125
Par value at maturity
LEGACY
Eight payments of $8,125
Instructor
Total bond interest expense
or:
Part 4
Date Account Titles Debit Credit
2013
June 30 Bond Interest Expense 11,687
Discount on Bonds Payable 3,562
Cash 8,125 «- Correct!
2013
Dec. 31 Bond Interest Expense 11,830
Discount on Bonds Payable 3,705
Cash 8,125 «- Correct!
To record six months’ interest and discount amortization.
General Journal
LEGACY
To record six months’ interest and discount amortization.
Market interest rate
Given Data P10-07A:
Check figures:
(2)
LEGACY
(3) 12/31/2014 Carrying value
Bonds issued, face value
Annual interest
Maturity in years
Issuance price
Student Name:
Class:
Part 1.
Date Account Titles Debit Credit
2013
Jan 1 184,566
4,566 «- Correct!
180,000
Part 2.
59,400$
180,000
239,400$
(184,566)
54,834$ «- Correct!
59,400$
(4,566)
54,834$ «- Correct!
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
Total bond interest expense
LEGACY
Six payments of $9,900
Par value at maturity
Total repaid
Less amount borrowed
Total bond interest expense
McGraw-Hill/Irwin
Instructor
IKE
General Journal
Sold bonds on stated issue date.
Bonds Payable
Premium on Bonds Payable
Cash
Problem 10-08A
Part 4
Date Account Titles Debit Credit
2013
June 30 9,228
672
9,900 «- Correct!
2013
Dec. 31 9,195
705
9,900 «- Correct!
Part 5
Date Account Titles Debit Credit
2015
Jan. 1 180,000
1,671
176,400
5,271 «- Correct!
Cash
amounts reported on Ike’s financial statements.
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
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.
Bond Interest Expense
IKE
General Journal
Premium on Bonds Payable
Cash
Bonds Payable
Bond Interest Expense
Premium on Bonds Payable
Cash
IKE
To record six months’ interest and premium amortization.
If the market rate on the issue date had been 12% instead of 10%, 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). 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 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 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.
(5) Gain
IKE
(3) 6/30/2014 Carrying value
Bonds issued, face value
Annual interest
Maturity in years
Issuance price
Market interest rate
Given Data P10-08A:
Check figures: