= $6,000 or $10,000 X .60.SOLUTIONS TO ASSIGNMENTS
| Back | Next | Homepage |
EXERCISE 16-3
(a) Jan. 1 Cash ($400,000 X 103%)............................ 412,000
Premium on Bonds Payable........................... 12,000
Bonds Payable.................................................. 400,000
(b) July 1 Bond Interest Expense.............................. 17,700
Premium on Bonds Payable..................... 300
($12,000 X 1/40)
Cash ($400,000 X 9% X 1/2)............................. 18,000
(c) Dec. 31 Bond Interest Expense............................. 17,700
Premium on Bonds Payable.................... 300
Bond Interest Payable.................................... 18,000
2022
(d) Jan. 1 Bonds Payable........................................... 400,000
Cash.................................................................... 400,000
EXERCISE 16-4
(a) 2001
Dec. 31 Cash............................................................. 280,000
Discount on Bonds Payable.................... 20,000
Bonds Payable................................................. 300,000
(b) 2002
June 30 Bond Interest Expense............................. 17,500
Discount on Bonds Payable.......................... 1,000
($20,000 ÷ 20)
Cash ($300,000 X 11% X 1/2)......................... 16,500
(c) 2002
Dec. 31 Bond Interest Expense............................. 17,500
Discount on Bonds Payable.......................... 1,000
Cash ($3000,000 X 11% X 1/2)....................... 16,500
(d) 2011
Dec. 31 Bonds Payable........................................... 300,000
Cash.................................................................... 300,000
EXERCISE 16-6
1. June 30 Bonds Payable.......................................... 130,000
Loss on Bond Redemption..................... 23,800
($131,300 – $107,500)
Discount on Bonds Payable......................... 22,500
($130,000 – $107,500)
Cash ($130,000 X 101%)................................ 131,300
2. June 30 Bonds Payable.......................................... 150,000
Premium on Bonds Payable................... 1,000
Gain on Bond Redemption............................ 7,000 *
Cash ($150,000 X 96%)................................... 144,000
*$151,000 – (96% X $150,000)
3. Dec. 31 Bonds Payable.......................................... 20,000
Common Stock................................................ 3,000
($5 X 30 X 20)
Paid-in Capital in Excess of
Par Value...................................................... 17,000
Note:
EXERCISE 16-8
(a) Car Rental Expense.................................... 500
Cash..................................................................... 500
(b) Jan. 1 Leased Equipment...................................... 149,211
Lease Liability.................................................... 149,211
EXERCISE 16-9
(a) Long-term liabilities
Bonds payable, due 2010.............................. $150,000
Add: Premium on bonds payable.............. 32,000 $182,000
Lease liability.................................................................... 59,500
Total long-term liabilities........................................ $241,500
(b)Bond Sinking Fund should be classified as a long-term investment. Bond Interest Payable should be classified as a current liability.
PROBLEM 16-1A |
(a) 2002
Jan. 1 Cash........................................................ 4,160,000
Bonds Payable............................................... 4,000,000
Premium on Bonds Payable........................ 160,000
(b) See page 16-20.
(c) 2002
July 1 Bond Interest Expense........................ 192,000
Premium on Bonds Payable.............. 8,000
($80,000 ÷ 20)
Cash.................................................................. 200,000
Dec. 31 Bond Interest Expense........................ 192,000
Premium on Bonds Payable.............. 8,000
Bond Interest Payable.................................. 200,000
2003
Jan. 1 Bond Interest Payable......................... 200,000
Cash.................................................................. 200,000
July 1 Bond Interest Expense........................ 192,000
Premium on Bonds Payable.............. 8,000
Cash.................................................................. 200,000
Dec. 31 Bond Interest Expense........................ 192,000
Premium on Bonds Payable.............. 8,000
Bond Interest Payable.................................. 200,000
(d) Current Liabilities
Bond Interest Payable $200,000
Long-term Liabilities
Bonds payable, due 2012 $4,000,000
Add: Premium on bonds payable 128,000 $4,128,000
|
PROBLEM 16-3A |
(a) 2003
Jan. 1 Bond Interest Payable........................ 180,000**
Cash................................................................... 180,000
(b) July 1 Bond Interest Expense...................... 170,000**
Premium on Bonds Payable............. 10,000**
($200,000 ÷ 20)
Cash................................................................... 180,000
(c) July 1 Bonds Payable..................................... 1,200,000**
Premium on Bonds Payable.............
76,000**
Gain on Bond Redemption............................
64,000
($1,276,000 – $1,212,000)
Cash ($1,200,000 X 101%).............................. 1,212,000
*($200,000 –
$10,000) X .40 = $76,000
(d) Dec. 31 Bond Interest Expense...................... 102,000**
Premium on Bonds Payable............. 6,000**
Bond Interest Payable.................................... 108,000
($1,800,000 X 12% X 1/2)
**$200,000
– $10,000 – $76,000 = $114,000;
= $6,000 or $10,000 X .60.
|
PROBLEM 16-4A |
|
(a) |
Semiannual Interest Period |
|
Cash Payment |
|
Interest Expense |
|
Reduction of Principal |
|
Principal Balance |
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue Date 1 2 3 4 |
|
$69,748 69,748 69,748 69,748 |
|
$48,000 46,695 45,312 43,846 |
|
$21,748 23,053 24,436 25,902 $95,139 |
|
$800,000 778,252 755,199 730,763 704,861 |
(b) 2001
Dec. 31 Cash............................................................. 800,000
Mortgage Notes Payable................................ 800,000
2002
June 30 Interest Expense........................................ 48,000
Mortgage Notes Payable.......................... 21,748
Cash.................................................................... 69,748
Dec. 31 Interest Expense........................................ 46,695
Mortgage Notes Payable.......................... 23,053
Cash.................................................................... 69,748
(c) 12/31/02
Current Liabilities
Current portion of mortgage notes payable
$50,338 **
Long-term Liabilities
Mortgage notes payable, due 2011
$704,861 **
**($24,436 +
$25,902)
**($755,199 – $24,436 – $25,902)
|
PROBLEM 16-5A |
(a) Choi
Inc. should record the Shirley Delivery lease as a capital lease
because: (1) the lease term is greater than 75% of the estimated economic life
of the leased property and (2) the present value of the lease payments is 90% or
more of the fair market value of the computer. It should be noted that only one
condition needs to be met to require
capitalization.
Both the Mall Co. and Snipes Auto leases should be reported as operating leases because none of the four conditions is met to require treatment as a capital lease.
(b) The Mall Co. lease is an operating lease. The entry to record the lease payment in 2002 therefore is as follows:
Rent Expense..................................................................... 4,200
Cash......................................................................................... 4,200
(c) The Shirley Delivery lease is a capital lease. The entry to record the capital lease on January 1, 2002 therefore is as follows:
Leased Asset—Computer............................................... 31,000
Lease Liability........................................................................ 31,000
