F-1
SOLUTIONS TO APPENDIX F
EXERCISE F1
a. $30,000 x 2.158925 = $64,768 (Table I, 8%, 10 years)
EXERCISE F2
EXERCISE F3
F-2
EXERCISE F4
a.
Present Value of Principal
$50,000
x
.5083491
=
$ 25,417
Present Value of Interest
($50,000 x 6%)
$3,000
x
7.0235822
=
21,071
Selling Price
$46,488
1Table II, 7%, 10 years
2Table IV, 7%, 10 years
b.
Account Titles
Debit
Credit
Cash
46,488
Discount on Bonds Payable
3,512
Bonds Payable
50,000
c. Interest payment amount: $50,000 x .06 = $3,000
Interest expense: Carrying value x effective interest rate
$46,488 x 7% = $3,254.16
Amortization of Discount: Interest Payment $3,000.00
Less: Interest Expense ( 3,254.16)
Amortization $ 254.16
Account Titles
Debit
Credit
Interest Expense
3,254.16
Discount on Bonds Payable
254.16
Cash
3,000.00