Type
Solution Manual
Book Title
Financial Accounting Fundamentals 5th Edition
ISBN 13
978-0078025754

978-0078025754 Chapter 10 Solution Manual Part 4

March 26, 2020
Problem 10-1B (Concluded)
Part 3
a.
Cash Flow
Table
Table Value*
Amount
Present Value
Par value .................
B.1
$90,000
$45,747
* Table values are based on a discount rate of 7% (half the annual market rate)
and 10 periods (semiannual payments).
b.
2015
Jan. 1
Cash ................................................................
83,674
Problem 10-2B (40 minutes)
Part 1
2015
Jan. 1
Cash ................................................................
3,010,000
Part 2
[Note: The semiannual amounts for (a), (b), and (c) below are the same throughout
the bonds’ life because the company uses straight-line amortization.]
Problem 10-2B (Concluded)
Part 3
Twenty payments of $170,000 ..................
$3,400,000
Par value at maturity ................................
3,400,000
Part 4 (Semiannual amortization: $390,000/20 = $19,500)
Semiannual
Period-End
Unamortized
Discount
Carrying
Value
1/01/2015 .....................
$390,000
$3,010,000
Part 5
2015
June 30
Bond Interest Expense ................................
189,500
Discount on Bonds Payable ................................
19,500
Problem 10-3B (40 minutes)
Part 1
2015
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
Total repaid .................................................
6,800,000
Problem 10-3B (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 10-4B (45 minutes)
Part 1
Ten payments of $14,400* .........................
$ 144,000
Par value at maturity ................................
320,000
Total repaid .................................................
464,000
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
* Adjusted for rounding.
**Rounded to nearest dollar.
Problem 10-4B (Concluded)
Part 3
2015
2015
Problem 10-5B (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
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 10-5B (Concluded)
Part 4
2015
June 30
Bond Interest Expense ................................
8,584
discount amortization.
Problem 10-6B (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
2016
Sept. 30
Interest Expense ............................................................
11,250
Problem 10-7B (30 minutes)
Part 1
Atlas Company
Debt-to-equity ratio = $80,000 / $100,000 = 0.80
Problem 10-8BB (60 minutes)
Part 1
2015
Jan. 1
Cash ................................................................
198,494
Part 2
Thirty payments of $7,200* ........................
$ 216,000
Par value at maturity ................................
240,000
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 10-8BB (Concluded)
Part 4
2015
June 30
Bond Interest Expense ................................
7,940
Discount on Bonds Payable ................................
740
Problem 10-9BB (45 minutes)
Part 1
Ten payments of $14,400 ..........................
$144,000
Par value at maturity ................................
320,000
Total repaid .................................................
464,000
Part 2
Semiannual
Interest
Period-End
(A)
Cash Interest
Paid
[4.5% x $320,000]
(B)
Bond Interest
Expense
[4% x Prior (E)]
(C)
Premium
Amortization
[(A) - (B)]
(D)
Unamortized
Premium
[Prior (D) - (C)]
(E)
Carrying
Value
[$320,000 + (D)]
1/01/2015
$12,988
$332,988
6/30/2015
$ 14,400
$ 13,320
$ 1,080
11,908
331,908
12/31/2015
14,400
13,276
1,124
10,784
330,784
6/30/2016
14,400
13,231
1,169
9,615
329,615

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