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    Chap 014

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    dbjn
    The document contains amortization tables and journal entries for the bond issuance and subsequent interest payments of Bradley Recreational Products and the note issuance of A&G Warehousers. It provides the cash payments, interest expense or revenue, and changes in the outstanding balances over the terms of the bonds and note. The journal entries record the initial issuances, subsequent interest accruals and payments, and amortization of the discounts on the bonds and note.

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    Chap 014

    Uploaded by

    dbjn
    1K views12 pages
    The document contains amortization tables and journal entries for the bond issuance and subsequent interest payments of Bradley Recreational Products and the note issuance of A&G Warehousers. It provides the cash payments, interest expense or revenue, and changes in the outstanding balances over the terms of the bonds and note. The journal entries record the initial issuances, subsequent interest accruals and payments, and amortization of the discounts on the bonds and note.

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    The document contains amortization tables and journal entries for the bond issuance and subsequent interest payments of Bradley Recreational Products and the note issuance of A&G Warehousers. It provides the cash payments, interest expense or revenue, and changes in the outstanding balances over the terms of the bonds and note. The journal entries record the initial issuances, subsequent interest accruals and payments, and amortization of the discounts on the bonds and note.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
    1K views12 pages

    Chap 014

    Uploaded by

    dbjn
    The document contains amortization tables and journal entries for the bond issuance and subsequent interest payments of Bradley Recreational Products and the note issuance of A&G Warehousers. It provides the cash payments, interest expense or revenue, and changes in the outstanding balances over the terms of the bonds and note. The journal entries record the initial issuances, subsequent interest accruals and payments, and amortization of the discounts on the bonds and note.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
    of 12

    Student Name: Instructor

    Class: McGraw-Hill/Irwin
    Problem 14-03
    Requirement 1:
    BRADLEY RECREATIONAL PRODUCTS
    Amortization Table at Effective Interest Rate

    Payment
    1
    2
    3
    4
    5
    6
    7
    8*
    *rounded

    Cash
    Interest
    4.5%
    4,500
    4,500
    4,500
    4,500
    4,500
    4,500
    4,500
    4,500
    36,000
    Correct!

    Effective
    Interest
    5%
    4,838
    4,855
    4,873
    4,892
    4,911
    4,932
    4,953
    4,978
    39,232
    Correct!

    Increase in
    Balance

    338
    355
    373
    392
    411
    432
    453
    478
    3,232

    Outstanding
    Balance
    96,768
    97,106
    97,461
    97,834
    98,226
    98,637
    99,069
    99,522
    100,000

    Correct!

    Requirement 2:
    BRADLEY RECREATIONAL PRODUCTS
    Amortization Table Straight-Line Method

    Payment
    1
    2
    3
    4
    5
    6
    7
    8

    Cash
    Payment
    4.5%
    100,000
    4,500
    4,500
    4,500
    4,500
    4,500
    4,500
    4,500
    4,500
    36,000
    Correct!

    Recorded
    Interest

    4,904
    4,904
    4,904
    4,904
    4,904
    4,904
    4,904
    4,904
    39,232
    Correct!

    Increase in
    Balance

    404
    404
    404
    404
    404
    404
    404
    404
    3,232

    Outstanding
    Balance
    96,768
    97,172
    97,576
    97,980
    98,384
    98,788
    99,192
    99,596
    100,000

    Correct!

    Requirement 3:
    BRADLEY RECREATIONAL PRODUCTS
    General Journal
    Account
    (effective interest)
    Interest expense
    Discount on bonds payable
    Cash
    (straight-line)
    Interest expense
    Discount on bonds payable
    Cash

    Debit

    Credit

    4,911

    - Correct!

    411
    4,500
    4,904

    - Correct!

    404
    4,500

    Given Data P14-03:


    BRADLEY RECREATIONAL PRODUCTS
    Bond issue
    Bond issue - term (years)
    Bond issue - interest rate
    Bond annual rate of return
    Bonds issued at

    100,000
    4
    9%
    10%
    96,768

    Student Name: Instructor


    Class: McGraw-Hill/Irwin
    Problem 14-05
    Requirement 1:
    Cromley Motor Products
    Interest
    Principal
    Present value (price) of the bonds

    $ 23,267,556
    54,147,200
    $ 77,414,756

    - Correct!

    Requirement 2:
    CROMLEY MOTOR PRODUCTS
    Amortization Schedule

    1
    2
    3
    4
    5
    6
    7
    8*
    *rounded

    Cash
    Payment
    4.5%

    Effective
    Interest
    5%

    3,600,000
    3,600,000
    3,600,000
    3,600,000
    3,600,000
    3,600,000
    3,600,000
    3,600,000
    28,800,000

    3,870,738
    3,884,275
    3,898,488
    3,913,413
    3,929,084
    3,945,538
    3,962,815
    3,980,893
    31,385,244

    Correct!

    Correct!

    Increase in
    Balance
    270,738
    284,275
    298,488
    313,413
    329,084
    345,538
    362,815
    380,893
    2,585,244

    Outstanding
    Balance
    77,414,756
    77,685,494
    77,969,769
    78,268,257
    78,581,670
    78,910,754
    79,256,292
    79,619,107
    80,000,000

    Correct!

    BARNWELL INDUSTRIES
    Amortization Schedule
    Cash
    Interest
    4.5%
    1
    2
    3
    4
    5
    6
    7
    8*
    *rounded

    3,600
    3,600
    3,600
    3,600
    3,600
    3,600
    3,600
    3,600
    28,800
    Correct!

    Effective
    Interest
    5%
    3,871
    3,884
    3,899
    3,913
    3,929
    3,946
    3,963
    3,980
    31,385
    Correct!

    Increase in
    Balance
    271
    284
    299
    313
    329
    346
    363
    380
    2,585
    Correct!

    Outstanding
    Balance
    77,415
    77,686
    77,970
    78,269
    78,582
    78,911
    79,257
    79,620
    80,000

    Student Name: Instructor


    Class: McGraw-Hill/Irwin
    Problem 14-05
    Requirement 3:
    General Journal
    Account
    February 1, 2011 (Cromley)
    Cash
    Discount on bonds payable
    Bonds payable
    February 1, 2011 (Barnwell)
    Bond investment
    Discount on bond investment
    Cash

    Debit

    Credit

    77,414,756
    2,585,244
    80,000,000
    80,000

    - Correct!
    - Correct!

    2,585
    77,415

    Requirement 4:
    General Journal
    Account
    July 31, 2011 (Cromley)
    Interest expense
    Discount on bonds payable
    Cash
    July 31, 2011 (Barnwell)
    Cash
    Discount on bond investment
    Interest revenue
    December 31, 2011 (Cromley)
    Interest expense
    Discount on bonds payable
    Interest payable
    December 31, 2011 (Barnwell)
    Interest receivable
    Discount bond on investment
    Interest revenue
    January 31, 2012 (Cromley)
    Interest expense
    Interest payable
    Discount on bonds payable
    Cash
    January 31, 2012 (Barnwell)
    Cash
    Discount on bond investment
    Interest receivable
    Interest revenue

    Debit

    Credit

    3,870,738

    - Correct!

    270,738
    3,600,000
    3,600
    271
    3,871
    3,236,896

    - Correct!
    - Correct!

    236,896
    3,000,000
    3,000
    237
    3,237

    - Correct!

    47,379
    3,600,000

    - Correct!

    3,000
    647

    - Correct!

    647,379
    3,000,000

    3,600
    47

    Student Name: Instructor


    Class: McGraw-Hill/Irwin
    Problem 14-05
    July 31, 2012 (Cromley)
    Interest expense
    Discount on bonds payable
    Cash
    July 31, 2012 (Barnwell)
    Cash
    Discount on bond investment
    Interest revenue
    December 31, 2012 (Cromley)
    Interest expense
    Discount on bonds payable
    Interest payable
    December 31, 2012 (Barnwell)
    Interest receivable
    Discount on bond investment
    Interest revenue
    January 31, 2013 (Cromley)
    Interest expense
    Interest payable
    Discount on bonds payable
    Cash
    January 31, 2013 (Barnwell)
    Cash
    Discount on bond investment
    Interest receivable
    Interest revenue

    3,898,488

    - Correct!

    298,488
    3,600,000
    3,600
    299
    3,899
    3,261,178

    - Correct!
    - Correct!

    261,178
    3,000,000
    3,000
    261
    3,261

    - Correct!

    52,236
    3,600,000

    - Correct!

    3,000
    652

    - Correct!

    652,236
    3,000,000

    3,600
    52

    Given Data P14-05:


    CROMLEY MOTOR PRODUCTS
    Bond issue by Cromley Motor Products
    Bond issue (years)
    Bond issue interest rate
    Bond annual yield
    Long-term investment by Barnwell Industries

    $ 80,000,000
    4
    9%
    10%
    $
    80,000

    Student Name: Instructor


    Class: McGraw-Hill/Irwin
    Problem 14-07
    Requirement 1:
    McWHERTER INSTRUMENTS
    Interest
    Principal
    Present value (price) of the bonds

    $ 274,545,440
    56,820,000
    $ 331,365,440

    - Correct!

    Requirement 2:
    General Journal
    Account
    January 1, 2009 (McWherter)
    Cash
    Discount on bonds
    Bonds payable
    January 1, 2009 (Blanton)
    Bond investment
    Discount on bond investment
    Cash

    Debit

    Credit

    331,365,440
    68,634,560
    400,000,000
    400,000

    - Correct!
    - Correct!

    68,635
    331,365

    Requirement 3:
    General Journal
    Account
    June 30, 2009 (McWherter)
    Interest expense
    Discount on bonds payable
    Cash
    June 30, 2009 (Blanton)
    Cash
    Discount on bond investment
    Interest revenue

    Debit

    Credit

    16,568,272

    - Correct!

    568,272
    16,000,000
    16,000
    568
    16,568

    - Correct!

    Requirement 4:
    General Journal
    Account
    December 31, 2009 (McWherter)
    Interest expense
    Discount on bonds payable
    Cash
    December 31, 2009 (Blanton)
    Cash
    Discount on bond investment
    Interest revenue

    Debit

    Credit

    16,596,686

    - Correct!

    596,686
    16,000,000
    16,000
    597
    16,597

    - Correct!

    Given Data P14-07:


    McWHERTER INSTRUMENTS
    Bond issue by McWherter Instruments
    $ 400,000,000
    Bond issue (years)
    20
    Bond issue interest rate
    8%
    Bond annual yield
    10%
    Long-term investment by Blanton Technologies $
    400,000

    Student Name: Instructor


    Class: McGraw-Hill/Irwin
    Problem 14-13
    A&G WAREHOUSERS
    Amortization Schedule
    Requirement 1 Present value (price) of note:
    Interest
    $
    Principal
    Present value (price) of the note
    $

    15,849
    68,301
    84,150

    - Correct!

    A&G WAREHOUSERS
    General Journal
    Account
    Equipment
    Discount on notes payable
    Notes payable

    Debit
    84,150
    15,850

    Credit

    100,000

    - Correct!

    Requirement 2:
    Amortization Schedule

    Dec.
    31
    2011
    2012
    2013
    2014
    *rounded

    Cash
    Payment
    5,000
    5,000
    5,000
    5,000
    20,000
    Correct!

    Effective
    Interest
    10%

    Increase in
    Balance

    8,415
    8,757
    9,132
    9,546
    35,850
    Correct!

    3,415
    3,757
    4,132
    4,546
    15,850

    Outstanding
    Balance
    84,150
    87,565
    91,322
    95,454
    100,000

    Correct!

    Requirement 3:
    A&G WAREHOUSERS
    General Journal
    Account
    Interest expense
    Discount on notes payable
    Cash

    Debit
    9,132

    Credit
    - Correct!

    4,132
    5,000

    Student Name: Instructor


    Class: McGraw-Hill/Irwin
    Problem 14-13
    Requirement 4:
    Loan Amount $
    Multiplier
    Installment Payment $

    84,150
    3.16987
    26,547
    Correct!

    Requirement 5:
    Amortization Schedule

    Dec.
    31
    2009
    2010
    2011
    2012
    *rounded

    Effective
    Interest
    10%

    Cash
    Interest
    26,547
    26,547
    26,547
    26,547
    106,188
    Correct!

    Increase in
    Balance

    8,415
    6,602
    4,607
    2,414
    22,038
    Correct!

    18,132
    19,945
    21,940
    24,133
    84,150

    Outstanding
    Balance
    84,150
    66,018
    46,073
    24,133
    -

    Correct!

    Requirement 6:
    A&G WAREHOUSERS
    General Journal
    Account
    Interest expense
    Note payable
    Cash

    Debit
    4,607
    21,940

    Credit

    26,547

    - Correct!

    Given Data P14-13:


    A&G WAREHOUSERS
    Note issue
    Term of note issue (years)
    Note issue interest rate
    Comparison interest rate

    100,000
    4
    5%
    10%

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