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843
Problem 14-9AB (Concluded)
Part 3
2017
June 30
Bond Interest Expense ................................
7,660
2017
Dec. 31
Bond Interest Expense ................................
7,646
Part 4
As of December 31, 2019
Cash Flow
Table
Table Value*
Amount
Present Value
Par value .....................
B.1
0.8885
$250,000
$222,125
Comparison to Part 2 Table
This present value ($252,326) equals the carrying value of the bonds in
844
Problem 14-10AB (60 minutes)
Part 1
2017
Jan. 1
Cash ................................................................
184,566
Part 2
Six payments of $9,900* ...........................
$ 59,400
Part 3
Semiannual
Interest
Period-End
(A)
Cash Interest
Paid
[5.5% x $180,000]
(B)
Bond Interest
Expense
[5% x Prior (E)]
(C)
Premium
Amortization
[(A) - (B)]
(D)
Unamortized
Premium
[Prior (D) - (C)]
(E)
Carrying
Value
[$180,000 + (D)]
845
Problem 14-10AB (Concluded)
Part 4
2017
June 30
Bond Interest Expense ................................
9,228
2017
Dec. 31
Bond Interest Expense ................................
9,195
Part 5
2019
Jan. 1
Bonds Payable ..............................................................
180,000
Part 6
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
846
Problem 14-11AD (35 minutes)
Part 1
Part 2
Part 3
Capital Lease Liability Payment (Amortization) Schedule
Period
Ending
Date
Beginning
Balance of
Lease
Liability
Interest on
Lease
Liability
(8%)
Reduction
of Lease
Liability
Cash
Lease
Payment
Ending
Balance of
Lease
Liability
Year 1
$39,927
$ 3,194*
$ 6,806
$ 10,000
$33,121
Part 4
Depreciation Expense—Leased Asset, Off. Equip ...................
7,985
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 14
847
PROBLEM SET B
Problem 14-1B (50 minutes)
Part 1
a.
Cash Flow
Table
Table Value*
Amount
Present Value
Par value .................
B.1
0.6139
$90,000
$55,251
b.
2017
Part 2
a.
Cash Flow
Table
Table Value*
Amount
Present Value
Par value .................
B.1
0.5584
$90,000
$50,256
b.
2017
848
Problem 14-1B (Concluded)
Part 3
a.
Cash Flow
Table
Table Value*
Amount
Present Value
Par value .................
B.1
0.5083
$90,000
$45,747
b.
2017
Problem 14-2B (40 minutes)
Part 1
2017
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 14-2B (Concluded)
Part 3
Twenty payments of $170,000 ..................
$3,400,000
Part 4 (Semiannual amortization: $390,000/20 = $19,500)
Semiannual
Period-End
Unamortized
Discount
Carrying
Value
1/01/2017 .....................
$390,000
$3,010,000
Part 5
2017
850
Problem 14-3B (40 minutes)
Part 1
2017
Jan. 1
Cash ................................................................
4,192,932
Part 2
Part 3
851
Problem 14-3B (Concluded)
Part 4
Semiannual
Period-End
Unamortized
Premium
Carrying
Value
1/01/2017 .....................
$792,932
$4,192,932
Part 5
2017
2017
852
Problem 14-4B (45 minutes)
Part 1
Part 2
Semiannual
Interest Period-End
Unamortized
Premium
Carrying
Value
1/01/2017
$12,988
$332,988
853
Problem 14-4B (Concluded)
Part 3
2017
June 30
Bond Interest Expense ................................
13,101
2017
Dec. 31
Bond Interest Expense ................................
13,101
854
Problem 14-5B (60 minutes)
Part 1
2017
Jan. 1
Cash ................................................................
198,494
Part 2
Thirty payments of $7,200* ........................
$ 216,000
Par value at maturity ................................
240,000
Part 3 Straight-line amortization table ($41,506/30= $1,384)
Semiannual
Interest Period-End
Unamortized
Discount
Carrying
Value
1/01/2017
$41,506
$ 198,494
855
Problem 14-5B (Concluded)
Part 4
2017
June 30
Bond Interest Expense ................................
8,584
2017
Dec. 31
Bond Interest Expense ................................
8,584
Problem 14-6B (45 minutes)
Background: Amount of Payment (given in the problem)
Note balance
$150,000
Part 1
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)]
9/30/2018 .............
$150,000
$15,000
$ 45,316
$ 60,316
$104,684
Part 2
857
Problem 14-7B (30 minutes)
Part 1
Atlas Company
Part 2
Bryan’s debt-to-equity ratio is much higher than that for Atlas. This implies
858
Problem 14-8BB (60 minutes)
Part 1
2017
Jan. 1
Cash ................................................................
198,494
Part 2
Thirty payments of $7,200* ........................
$ 216,000
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)]
1/01/2017
$41,506
$198,494
