BondsBonds

Short Problem 1 and 2

Short Problem 1 and 2

P97 667

P990 000

Short Problem 3Short Problem 3

P2 245 704

P2 154296

P2 400 000

Short Problem 4 and 5

P 645

Gain: P51 200

Short Problem 6 and 7

Short Problem 6 and 7

Gain: P13 500

Gain: P8 000

Short Problem 8 and 9

Short Problem 8 and 9

Answers at the next slides…

Problem 8Problem 8• July 1 19x9• Debit:

• Bond Interest Expense 3800• Bonds Payable 100 000• Loss on Retirement of Bonds Payable 6200

• Credit:• Discount on Bonds Payable (800 + 4200) 5000

• Cash (3000 + 102 000) 105 000

• July 1 19x9• Debit:

• Bond Interest Expense 3800• Bonds Payable 100 000• Loss on Retirement of Bonds Payable 6200

• Credit:• Discount on Bonds Payable (800 + 4200) 5000

• Cash (3000 + 102 000) 105 000

Problem 9a – Issuer’s BookProblem 9a – Issuer’s Book• April 1 19x2

• Debit:• Bond Interest Expense 2 800• Bond Interest Payable 1 000• Premium on Bonds Payable (200 + 2933) 3133

• Credit:• Cash 4000• Common Stock 30 000• APIC: Common Stock 72 933

• April 1 19x2• Debit:

• Bond Interest Expense 2 800• Bond Interest Payable 1 000• Premium on Bonds Payable (200 + 2933) 3133

• Credit:• Cash 4000• Common Stock 30 000• APIC: Common Stock 72 933

Problem 9a – Investor’s BookProblem 9a –

Investor’s Book• April 1 19x2• Debit:

• Cash 4 000

• Credit:• Bond Interest Revenue 2 800• Bond Interest Receivable 1 000• Investment on Bonds 200

• April 1 19x2• Debit:

• Cash 4 000

• Credit:• Bond Interest Revenue 2 800• Bond Interest Receivable 1 000• Investment on Bonds 200

Problem 9b – Issuer’s BookProblem 9b – Issuer’s Book• April 1, 19x2

• Debit:• Interest Payable 1 000• Interest Expense 2 555• Premium on Bonds Payable (445 + 1733) 2178

• Bonds Payable 100 000

• Credit:• Cash 4 000• Common Stocks 30 000• APIC: Common Stocks 71 733

• April 1, 19x2• Debit:

• Interest Payable 1 000• Interest Expense 2 555• Premium on Bonds Payable (445 + 1733) 2178

• Bonds Payable 100 000

• Credit:• Cash 4 000• Common Stocks 30 000• APIC: Common Stocks 71 733

Problem 9b – Investor’s BookProblem 9b –

Investor’s Book• April 1, 19x2• Debit:

• Cash 4 000• Investment on Stocks 101 733

• Credit:• Interest Receivable 1 000• Interest Revenue 2 555• Investment on Bonds (445 + 101 733) 102 178

• April 1, 19x2• Debit:

• Cash 4 000• Investment on Stocks 101 733

• Credit:• Interest Receivable 1 000• Interest Revenue 2 555• Investment on Bonds (445 + 101 733) 102 178

Short Problem 10 and 11

Short Problem 10 and 11

P4 349 808

P5 075 000

Problem 10aProblem 10a• April 1, 19x6

• Cash 4 380 000• Premium on Bonds Payable 380 000• Bonds Payable 4 000 000

• October 1, 19x6• Interest Payable 190 000

• Cash 190 000

• April 1, 19x7• Interest Expense 174 608• Premium on Bonds Payable 15 932

• Cash 190 000

• April 1, 19x6• Cash 4 380 000

• Premium on Bonds Payable 380 000• Bonds Payable 4 000 000

• October 1, 19x6• Interest Payable 190 000

• Cash 190 000

• April 1, 19x7• Interest Expense 174 608• Premium on Bonds Payable 15 932

• Cash 190 000

Short Problem 12 and 13

Short Problem 12 and 13

P80 000

Gain: 116 000

Short Problem 14 and 15

Short Problem 14 and 15

A. 106 510

B. 50 000

P 4 385 340

Short Problem 16Short Problem 16

P 220 000

Long Problem 1Long Problem 1

819 700292 300

350 385251 155

LP 1 – Requirement 1c

LP 1 – Requirement 1c• Jan 31, 2004

• Cash 819 700• Premium on Bonds Payable 19 700• Bonds Payable 800 000

• July 31, 2004• Interest Expense 49 182• Premium on Bonds Payable 2 818

• Cash 52 000

• December 31, 2004• Interest Expense 40 844• Premium on Bonds Payable 11 156

• Interest Payable 52 000

• Jan 31, 2004• Cash 819 700

• Premium on Bonds Payable 19 700• Bonds Payable 800 000

• July 31, 2004• Interest Expense 49 182• Premium on Bonds Payable 2 818

• Cash 52 000

• December 31, 2004• Interest Expense 40 844• Premium on Bonds Payable 11 156

• Interest Payable 52 000

LP 1 – Requirement 2LP 1 – Requirement 2• Jan 31, 2004

• Cash 800 000• Notes Payable 800 000

• Dec 31, 2004• Interest Expense 110 000

• Interest Payable 110 000

• Jan 31, 2005• Interest Payable 110 000• Interest Expense 10 000• Notes Payable 230 285

• Cash 350 385

• Jan 31, 2004• Cash 800 000

• Notes Payable 800 000

• Dec 31, 2004• Interest Expense 110 000

• Interest Payable 110 000

• Jan 31, 2005• Interest Payable 110 000• Interest Expense 10 000• Notes Payable 230 285

• Cash 350 385

Long Problem 2Long Problem 2

5 596 125

LP 2aLP 2a• May 1, 19x6

• Cash 5 550 000• Discount on Bonds Payable 450 000

• Bonds Payable 6 000 000

• Nov 1, 19x6• Interest Payable 255 000

• Cash 255 000

• May 1, 19x7• Interest Expense 278 625

• Discount on Bonds Payable 23 625• Cash 255 000

• May 1, 19x6• Cash 5 550 000• Discount on Bonds Payable 450 000

• Bonds Payable 6 000 000

• Nov 1, 19x6• Interest Payable 255 000

• Cash 255 000

• May 1, 19x7• Interest Expense 278 625

• Discount on Bonds Payable 23 625• Cash 255 000

Long Problem 3Long Problem 3

LP 3 LP 3 • Retirement• Apr 30 20x4

• Bonds Payable 100 000• Loss on Calling Bonds 10 000

• Discount on Bonds Payable 4 000• Cash 106 000

• Issuance • Mar 30 20x4

• Cash 101 000• Premium on Bonds Payable 1 000• Bonds Payable 100 000

• Retirement• Apr 30 20x4

• Bonds Payable 100 000• Loss on Calling Bonds 10 000

• Discount on Bonds Payable 4 000• Cash 106 000

• Issuance • Mar 30 20x4

• Cash 101 000• Premium on Bonds Payable 1 000• Bonds Payable 100 000

Long Problem 4Long Problem 4

LP 4 – Issuer’s BookLP 4 – Issuer’s Book• Dec 31, 20x5

• Interest Expense 42 324• Discount on Bonds Payable 5 000• Interest Payable 37 324

• Feb 1, 20x6 • Interest Expense 1 333• Interest Payable 37 324

• Discount on Bonds Payable 179• Cash 38 657

• Bonds Payable 200 000• Discount on Bonds Payable 7 143• APIC: Common Stock 42 857• Common Stocks 150 000

• Dec 31, 20x5• Interest Expense 42 324

• Discount on Bonds Payable 5 000• Interest Payable 37 324

• Feb 1, 20x6 • Interest Expense 1 333• Interest Payable 37 324

• Discount on Bonds Payable 179• Cash 38 657

• Bonds Payable 200 000• Discount on Bonds Payable 7 143• APIC: Common Stock 42 857• Common Stocks 150 000

LP 4 – Investor’s Book

LP 4 – Investor’s Book• Dec 31, 20x5

• Investment in Bonds 5 000• Interest Receivable 37 324

• Interest Revenue 42 324

• Feb 1, 20x6• Cash 38 657• Investment on Bonds 179

• Interest Revenue 1 333• Interest Receivable 37 324

• Investment in Stocks 192 857• Investment in Bonds 192 857

• Dec 31, 20x5• Investment in Bonds 5 000• Interest Receivable 37 324

• Interest Revenue 42 324

• Feb 1, 20x6• Cash 38 657• Investment on Bonds 179

• Interest Revenue 1 333• Interest Receivable 37 324

• Investment in Stocks 192 857• Investment in Bonds 192 857