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EXERCISE 10-4
(a) Nov. 30 Cash .......................................................... 300,000
(b) Dec. 31 Unearned Subscription Revenue ............ 25,000
(c) Mar. 31 Unearned Subscription Revenue ............. 75,000
EXERCISE 10-5
(a) Net pay = Gross pay – FICA taxes – Federal income tax
(b) Salaries and Wages Expense ................................... 1,780
(c) Salaries and Wages Payable ..................................... 1,341
EXERCISE 10-6
Payroll Tax Expense .................................................. 244.38
EXERCISE 10-7
(a) Current ratio
Working capital
(b) Current ratio
It would make its current ratio increase slightly, but its working capital
would remain the same.
EXERCISE 10-8
EXERCISE 10-9
Plan One
Issue Stock
Plan Two
Issue Bonds
Income before interest and taxes
Interest ($2,700,000 X 10%)
Income before taxes
Income tax expense (30%)
Net income
Outstanding shares
Earnings per share
$800,000
—
800,000
240,000
$560,000
210,000
$2.67
$800,000
270,000
530,000
159,000
$371,000
120,000
$3.09
EXERCISE 10-10
(a) Jan. 1 Cash ...................................................... 500,000
(b) July 1 Interest Expense ................................... 25,000
(c) Dec. 31 Interest Expense ................................... 25,000
EXERCISE 10-11
(a) Jan. 1 Cash ....................................................... 400,000
(b) July 1 Interest Expense .................................... 16,000
(c) Dec. 31 Interest Expense ....................................
16,000
EXERCISE 10-12
(a) (1) Cash ................................................................ 485,000
(2) Semiannual interest payments
OR
Principal at maturity ....................................... $500,000
Semiannual interest payments
(b) (1) Cash ................................................................ 525,000
(2) Semiannual interest payments
OR
Principal at maturity ....................................... $500,000
Semiannual interest payments
EXERCISE 10-13
(a) Jan. 1 Interest Payable .................................... 56,000
(b) Jan
1 Bonds Payable ...................................... 600,000
(c) July 1 Interest Expense ................................... 35,000
EXERCISE 10-14
1. June 30 Bonds Payable .................................... 130,000
Loss on Bond Redemption
2. June 30 Bonds Payable .................................... 150,000
Premium on Bonds Payable ............... 1,000
3. Dec. 31 Bonds Payable .................................... 20,000
Common Stock
EXERCISE 10-15
2015
Issuance of Note
Dec. 31 Cash ............................................................. 300,000
2016
First Installment Payment
June 30 Interest Expense
Second Installment Payment
Dec. 31 Interest Expense
EXERCISE 10-16
Long-term liabilities
Note: Interest Payable is a current liability
*EXERCISE 10-17
Present value of principal ($200,000 X .61391) ............ $122,782
*EXERCISE 10-18
(a) Jan. 1 Cash ...................................................... 750,150
(b) July 1 Interest Expense
($750,150 X 5%) ............................. 37,508
(c) Dec. 31 Interest Expense
[($750,150 + $1,508) X 5%] ............ 37,583
*EXERCISE 10-18 (Continued)
10-28 Copyright © 2014 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 9/e, Solutions Manual (For Instructor Use Only)
(b), (c)
Semiannual
Interest
Periods
(A)
Interest to
Be Paid
(4.5% X $800,000)
(B)
Interest Expense
to Be Recorded
(5% X Preceding
Bond Carrying Value)
(E X .05)
(C)
Discount
Amortization
(B) – (A)
(D)
Unamortized
Discount
(D) – (C)
(E)
Bond
Carrying Value
Issue date
1
2
36,000
36,000
37,508
37,583
1,508
1,583
49,850
48,342
46,759
750,150
751,658
753,241
*EXERCISE 10-19
(a) Jan. 1 Cash ........................................................ 318,694
(b) July 1 Interest Expense
($318,694 X 5%) ............................... 15,935
(c) Dec. 31 Interest Expense
[($318,694 – $565) X 5%] ................. 15,906
*EXERCISE 10-19 (Continued)
10-30 Copyright © 2014 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 9/e, Solutions Manual (For Instructor Use Only)
(b), (c)
Semiannual
Interest
Periods
(A)
Interest to
Be Paid
(5.5% X $300,000)
(B)
Interest Expense
to Be Recorded
(5.0% X Preceding
Bond Carrying Value)
(E X .05)
(C)
Premium
Amortization
(A) – (B)
(D)
Unamortized
Premium
(D) – (C)
(E)
Bond
Carrying Value
Issue date
1
2
16,500
16,500
15,935
15,906
565
594
18,694
18,129
17,535
318,694
318,129
317,535
