Accounting 312 HW

7/31/2019 Accounting 312 HW

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1)August 1, 2007

Cash $15,000.00

Discounts on Notes Payable $600.00

Notes Payable $15,600.00

(To record 120-day non-interest

bearing note)

November 29,2007

Interest Expense $150.00

Discount on Notes Payable $150.00


Cash $15,600.00

To record payment of non-interest bearing note.

2)For companies to classify current liabilities into long-term debt, they have to issue new debt or securitie

It also needs to be done before issuing new financial statements or after year-end.

12/31/2006

Long-term Notes Payable $35,000.00


To reverse entry

1/10/2007


Cash $35,000.00

1/11/2007Cash $50,000.00


3)A]

12/23/2006

Purchases $12,000.00

Accounts Payable $12,000.00

To record purchase of merchandise

B]1/5/2007




C]

12/24/2006






D]

12/31/2006

Inventory $14,500.00

Accounts Receivables $14,500.00

To record merchandise purchased on consignment



s before paying the current liability.



A)12/31/2006

Lawsuit Loss $450,000

Lawsuit Liability $450,000

To record lawsuit loss contingency

B)12/31/2006

Lawsuit Loss $500,000

Lawsuit Liability $500,000 $500,000

C)This is a gain contingency. Gain contingencies can't be accrued even if the gain

is probably and reasonably estimated. The gain should be realized only

when realized.

To record lawsuit loss contingency.



A)

During 2007, Sales Date

Cash 800,000

Sales 800,000

To record 2,000 kitty litter boxes that were sold.

During 2007, Repair dateWarranty Expense 6,500

Cash, Inventory,

Accrued Payroll 6,500

To record payment for repair

12/31/2007

Warranty Expense 93,500

Liabilities for Warranties 93,500

To record estimated warranty expense

B)

During 2007, Sales DateCash 1,150,000

Sales 1,000,000

Unearned Warranty Revenue 150,000

To record sales of optional warranties

During 2007, Repair Date

Warranty Expense 7,250

Cash, Inventory,

Accrued Payroll 7,250

To record payment for repair

12/31/2007

Unearned Warranty Revenue $37,500

Warranty Revenue $37,500

To record estimated warranty expense



1)

1/1/2008

Cash $121,000.00

Premium on

Bonds Payable $121,000.00

To record bond issue cost and paid issue costs

June 30,2008

Bond Issue Expense $6,050.00

Unamortized Bond

Issue Costs $6,050.00

To record first interest payment on bond

2)

Jan 1,2007

Cash $2,080,000.00Premium on Bonds Payable $80,000.00

Bonds Payable $2,000,000.00

To record bond issue cost and paid issue costs

June 30,2007

Bonds Interest Expense $92,000.00

Premium on Bonds Payable $8,000.00

Cash $100,000.00

To record interest expense payment

Dec 31,2007

Bonds Interest Expense $92,000.00



To record interest expense payment



Guerini sold $6,000,000 of 5-year bonds on January 1,2006.

Date Cash Interest CV

$5,810,496.11

1-Jul-06 $172,500 $188,841.12 $5,826,837.23

1-Jan-07 $172,500 $189,372.21 $5,843,709.441-Jul-07 $172,500 $189,920.56 $5,861,130.00

1-Jan-08 $172,500 $190,486.73 $5,879,116.73

1-Jul-08 $172,500 $191,071.29 $5,897,688.02

1-Jan-09 $172,500 $191,674.86 $5,916,862.88

1-Jul-09 $172,500 $192,298.04 $5,936,660.92

1-Jan-10 $172,500 $192,941.48 $5,957,102.40

1-Jul-10 $172,500 $193,605.83 $5,978,208.23

1-Jan-11 $172,500 $194,291.77 $6,000,000.00

A)Face Interest Rate

Cash payment/ Face value

172,500 / 6,000,000 = .0288

.0288 * 2 = 5.75%, Annual Basis

B) Effective Interest Rate

Interest payment/ Issue Price

188,841.12 / 5,810,496.11 = .0325

.0325 * 2 = .065 = 6.5%, Annual Basis

C) Frequency of Bond Interest Payments

They pay semi-annually. First, I found out as I was calculating the interest rates, becausethe interest payments were only half of the annual basis, so I immediately knew from there.

The second biggest clue were the dates on the amortization chart, because they were paying twice a year.





Issue #1:Maturity Value $500,000

Face Interest 8.50%

Market Interest 12%

Life 4 years

Bond Pays Semi-Annually

Issue Price of Bond Using Table Factors

$500,000 * .62741= $313,705

21,250 * 6.20979= 131,958.04

(500,000*.085*.5 =21,250) $445,663.0375

Amortization Table using Effective Interest Rate Method


6/30/2006 $445,663.04

1/31/2007 $21,250 $26,739.78 $451,152.82

6/30/2007 $21,250 $27,069.17 $456,971.99

1/31/2008 $21,250 $27,418.32 $463,140.31

6/30/2008 $21,250 $27,788.42 $469,678.73

1/31/2009 $21,250 $28,180.72 $476,609.45

6/30/2009 $21,250 $28,596.57 $483,956.02

1/31/2010 $21,250 $29,037.36 $491,743.38

06/31/2010 $21,250 $29,504.60 $499,997.98

Amortization Table using Straight-Line Method

Date Cash Interest CV6/30/2006 $445,663.04

1/31/2007 $21,250.00 $28,042.12 $452,455.16

6/30/2007 $21,250.00 $28,042.12 $459,247.28

1/31/2008 $21,250.00 $28,042.12 $466,039.40

6/30/2008 $21,250.00 $28,042.12 $472,831.52

1/31/2009 $21,250.00 $28,042.12 $479,623.64

6/30/2009 $21,250.00 $28,042.12 $486,415.76

1/31/2010 $21,250.00 $28,042.12 $493,207.88

6/30/2010 $21,250.00 $28,042.12 $500,000.00

6/30/2006

Cash $445,663.04

Discount on Bonds Payable $54,336.96


To record issuance of bond





Issue #2:Maturity Value $850,000

Face Interest 11.50%

Market Interest 8%

Life 3 Years

Bond Pays Quarterly

Issue Price of Bond Using Table Factors

$850,000 * .78849 = 670,216.50

(850,000*.115*.25) * 10.57534= 258,434.87

(850,000*.115*.25=24,437.50) 928,651.37

Amortization Table Using Effective Interest Rate Method


3/31/2006 $928,651.37

6/30/2006 $24,437.50 18,573.03 $922,786.90

9/30/2006 $24,437.50 18,455.74 $916,805.14

12/31/2006 $24,437.50 18,336.10 $910,703.74

3/32/2007 $24,437.50 18,214.07 $904,480.31

6/30/2007 $24,437.50 18,089.61 $898,132.42

9/30/2007 $24,437.50 17,962.65 $891,657.57

12/31/2007 $24,437.50 17,833.15 $885,053.22

3/31/2008 $24,437.50 17,701.06 $878,316.78

6/30/2008 $24,437.50 17,566.34 $871,445.62

9/30/2008 $24,437.50 17,428.91 $864,437.03

12/31/2008 $24,437.50 17,288.74 $857,288.27

3/31/2009 $24,437.50 17,145.77 $849,996.54

Amortization Table using Straight-Line Method


3/31/2006 $928,651.37

6/30/2006 $24,437.50 17,883.22 $922,097.09

9/30/2006 $24,437.50 17,883.22 $915,542.81

12/31/2006 $24,437.50 17,883.22 $908,988.53

3/32/2007 $24,437.50 17,883.22 $902,434.25

6/30/2007 $24,437.50 17,883.22 $895,879.97

9/30/2007 $24,437.50 17,883.22 $889,325.69

12/31/2007 $24,437.50 17,883.22 $882,771.40

3/31/2008 $24,437.50 17,883.22 $876,217.12

6/30/2008 $24,437.50 17,883.22 $869,662.84

9/30/2008 $24,437.50 17,883.22 $863,108.56

12/31/2008 $24,437.50 17,883.22 $856,554.28

3/31/2009 $24,437.50 17,883.22 $850,000.00

3/31/2006



Cash $928,651.37



To record second interest payment

9/30/2006

Interest Expense $18,455.74Premium on Bonds Payable $5,981.76

Cash $24,437.50


3/31/2009


Cash $850,000.00

To record bond paid off at maturity



ISSUE #1:Maturity Value $2,235,000

Face Interest 8%

Market Rate 6.50%

Life 20 Year

Bonds Pay Semi-Annually

Issue Price Using PV Function

($2,607,268.86)



6/30/2000 $2,607,268.86

12/31/2000 $89,400.00 $84,736.24 $2,602,605.10

6/30/2001 $89,400.00 $84,584.67 $2,597,789.77

12/31/2001 $89,400.00 $84,428.17 $2,592,817.93

6/30/2002 $89,400.00 $84,266.58 $2,587,684.52

12/31/2002 $89,400.00 $84,099.75 $2,582,384.26

6/30/2003 $89,400.00 $83,927.49 $2,576,911.75

12/31/2003 $89,400.00 $83,749.63 $2,571,261.38

6/30/2004 $89,400.00 $83,565.99 $2,565,427.38

12/31/2004 $89,400.00 $83,376.39 $2,559,403.77

6/30/2005 $89,400.00 $83,180.62 $2,553,184.39

12/31/2005 $89,400.00 $82,978.49 $2,546,762.88

6/30/2006 $89,400.00 $82,769.79 $2,540,132.68

12/31/2006 $89,400.00 $82,554.31 $2,533,286.99

6/30/2007 $89,400.00 $82,331.83 $2,526,218.82

12/31/2007 $89,400.00 $82,102.11 $2,518,920.936/30/2008 $89,400.00 $81,864.93 $2,511,385.86

12/31/2008 $89,400.00 $81,620.04 $2,503,605.90

6/30/2009 $89,400.00 $81,367.19 $2,495,573.09

12/31/2009 $89,400.00 $81,106.13 $2,487,279.22

6/30/2010 $89,400.00 $80,836.57 $2,478,715.79

12/31/2010 $89,400.00 $80,558.26 $2,469,874.05

6/30/2011 $89,400.00 $80,270.91 $2,460,744.96

12/31/2011 $89,400.00 $79,974.21 $2,451,319.17

6/30/2012 $89,400.00 $79,667.87 $2,441,587.04

12/31/2012 $89,400.00 $79,351.58 $2,431,538.62

6/30/2013 $89,400.00 $79,025.01 $2,421,163.63

12/31/2013 $89,400.00 $78,687.82 $2,410,451.45

6/30/2014 $89,400.00 $78,339.67 $2,399,391.12

12/31/2014 $89,400.00 $77,980.21 $2,387,971.33

6/30/2015 $89,400.00 $77,609.07 $2,376,180.40

12/31/2015 $89,400.00 $77,225.86 $2,364,006.26

6/30/2016 $89,400.00 $76,830.20 $2,351,436.46

12/31/2016 $89,400.00 $76,421.69 $2,338,458.15



6/30/2017 $89,400.00 $75,999.89 $2,325,058.04

12/31/2017 $89,400.00 $75,564.39 $2,311,222.43

6/30/2018 $89,400.00 $75,114.73 $2,296,937.15

12/31/2018 $89,400.00 $74,650.46 $2,282,187.61

6/30/2019 $89,400.00 $74,171.10 $2,266,958.71

12/31/2019 $89,400.00 $73,676.16 $2,251,234.87

6/30/2020 $89,400.00 $73,165.13 $2,235,000.00

6/30/2000

Cash $2,607,268.86




6/30/2001

Interest Expense $84,584.67


Cash $89,400.00


6/30/2020


Cash $2,235,000.00




ISSUE #2:Maturity Value $1,785,000

Face Interest 3.50%

Market Rate 9.50%

Life 20 Year

Bonds Pay Semi-Annually

Issue Price using PV Function

($833,790.48)



6/30/2000 $833,790.48

12/31/2000 $31,237.50 $39,605.05 $842,158.03

6/30/2001 $31,237.50 $40,002.51 $850,923.04

12/31/2001 $31,237.50 $40,418.84 $860,104.38

6/30/2002 $31,237.50 $40,854.96 $869,721.84

12/31/2002 $31,237.50 $41,311.79 $879,796.13

6/30/2003 $31,237.50 $41,790.32 $890,348.94

12/31/2003 $31,237.50 $42,291.57 $901,403.02

6/30/2004 $31,237.50 $42,816.64 $912,982.16

12/31/2004 $31,237.50 $43,366.65 $925,111.31

6/30/2005 $31,237.50 $43,942.79 $937,816.60

12/31/2005 $31,237.50 $44,546.29 $951,125.39

6/30/2006 $31,237.50 $45,178.46 $965,066.35

12/31/2006 $31,237.50 $45,840.65 $979,669.50

6/30/2007 $31,237.50 $46,534.30 $994,966.30

12/31/2007 $31,237.50 $47,260.90 $1,010,989.706/30/2008 $31,237.50 $48,022.01 $1,027,774.21

12/31/2008 $31,237.50 $48,819.27 $1,045,355.98

6/30/2009 $31,237.50 $49,654.41 $1,063,772.89

12/31/2009 $31,237.50 $50,529.21 $1,083,064.61

6/30/2010 $31,237.50 $51,445.57 $1,103,272.67

12/31/2010 $31,237.50 $52,405.45 $1,124,440.63

6/30/2011 $31,237.50 $53,410.93 $1,146,614.06

12/31/2011 $31,237.50 $54,464.17 $1,169,840.72

6/30/2012 $31,237.50 $55,567.43 $1,194,170.66

12/31/2012 $31,237.50 $56,723.11 $1,219,656.26

6/30/2013 $31,237.50 $57,933.67 $1,246,352.44

12/31/2013 $31,237.50 $59,201.74 $1,274,316.68

6/30/2014 $31,237.50 $60,530.04 $1,303,609.22

12/31/2014 $31,237.50 $61,921.44 $1,334,293.16

6/30/2015 $31,237.50 $63,378.92 $1,366,434.58

12/31/2015 $31,237.50 $64,905.64 $1,400,102.73

6/30/2016 $31,237.50 $66,504.88 $1,435,370.10

12/31/2016 $31,237.50 $68,180.08 $1,472,312.68



6/30/2017 $31,237.50 $69,934.85 $1,511,010.04

12/31/2017 $31,237.50 $71,772.98 $1,551,545.51

6/30/2018 $31,237.50 $73,698.41 $1,594,006.43

12/31/2018 $31,237.50 $75,715.31 $1,638,484.23

6/30/2019 $31,237.50 $77,828.00 $1,685,074.73

12/31/2019 $31,237.50 $80,041.05 $1,733,878.28

6/30/2020 $31,237.50 $82,359.22 $1,785,000.00

6/30/2000

Cash $833,790.48




6/30/2001


Cash $31,237.50



6/30/2020


Cash $1,785,000.00




ISSUE #1:Issued on 7/1/2008

Mature on 6/30/2018

Maturity Value $1,200,000

Face interest Rate 8%

Life 10 year

Bond Pay Semi-AnnuallyIssue Price 87.5378

Yield Rate Calculation

N 20

PMT $48,000.0

PV $1,050,453.60

FV $1,200,000

I 5%

Amortizaton Table based on Effecitve Interest Rate Method


7/1/2008 $1,050,453.60

12/31/2008 $48,000.00 $52,522.67 $1,054,976.27

7/1/2009 $48,000.00 $52,748.80 $1,059,725.07

12/31/2009 $48,000.00 $52,986.24 $1,064,711.32

7/1/2010 $48,000.00 $53,235.56 $1,069,946.87

12/31/2010 $48,000.00 $53,497.33 $1,075,444.21

7/1/2011 $48,000.00 $53,772.20 $1,081,216.4112/31/2011 $48,000.00 $54,060.81 $1,087,277.22

7/1/2012 $48,000.00 $54,363.85 $1,093,641.07

12/31/2012 $48,000.00 $54,682.04 $1,100,323.12

7/1/2013 $48,000.00 $55,016.15 $1,107,339.26

12/31/2013 $48,000.00 $55,366.95 $1,114,706.21

7/1/2014 $48,000.00 $55,735.30 $1,122,441.51

12/31/2014 $48,000.00 $56,122.07 $1,130,563.58

7/1/2015 $48,000.00 $56,528.17 $1,139,091.75

12/31/2015 $48,000.00 $56,954.58 $1,148,046.33

7/1/2016 $48,000.00 $57,402.31 $1,157,448.63

12/31/2016 $48,000.00 $57,872.42 $1,167,321.05

7/1/2017 $48,000.00 $58,366.04 $1,177,687.09

12/31/2017 $48,000.00 $58,884.34 $1,188,571.44

7/1/2018 $48,000.00 $59,428.56 $1,200,000.00

7/1/2008

Cash $1,050,453.60






7/1/2009


Cash $48,000.00

Discount on Bonds Payable $4,748.80To record second interest payment

7/1/2018


Cash $1,200,000.00




ISSUE #2Issued on 1/1/2008

Mature on 12/31/1012

Maturity Value $2,000,000

Face interest Rate 12%

Life 5-Year

Bond Pay Semi-AnnuallyIssue Price 105.35

Yield Rate Calculation

N 10

PMT $120,000.0

PV $2,107,000.00

FV 2,000,000

I 5%

Amortizaton Table based on Effecitve Interest Rate Method


1/1/2008 $2,107,000.00

7/1/2008 $120,000.00 $111,610.28 $2,098,610.28

1/1/2009 $120,000.00 $111,165.87 $2,089,776.15

7/1/2009 $120,000.00 $110,697.91 $2,080,474.06

1/1/2010 $120,000.00 $110,205.17 $2,070,679.23

7/1/2010 $120,000.00 $109,686.33 $2,060,365.56

1/1/2011 $120,000.00 $109,140.00 $2,049,505.567/1/2011 $120,000.00 $108,564.73 $2,038,070.29

1/1/2012 $120,000.00 $107,958.99 $2,026,029.28

7/1/2012 $120,000.00 $107,321.17 $2,013,350.45

1/1/2014 $120,000.00 $106,649.55 $2,000,000.00

1/1/2008

Cash $2,107,000.00




1/1/2009



Cash $120,000.00


1/1/2014




Cash $2,000,000.00


Documents

Accounting 312 HW