EXERCISE 14-9

(a) January 1, 2010

Cash 860.651.79

Bonds Payable 860,651.79

(b) Schedule of Interest Expense and Bond Premium Amortization

Effective-Interest Method
12% Bonds Sold to Yield 10%

Date Cash Interest Premium Jumlah

Paid Expense Amortized tercatat
obligasi
1/1/15 860,651.79
12/31/15 96,000.00* 86,065.18 9,934.82 850,716.97
12/31/16 96,000.00 85,071.70 10,928.30 839,788.67
12/31/17 96,000.00 83,978.87 12,021.13 827,767.54

* 96.000 = $800.000 x 0,12

** 86.065,18 = $86.065,18 x 0,10

(c) December 31, 2015

Interest Expense 86,065.18

Bonds Payable (premium) 9,934.82
Cash 96,000.00

(d) December 31, 2016

Interest Expense 83,978.87

Bonds Payable premium) 12,021.13
Cash 96,000.00
EXERCISE 14-11

(a) 1. January 1, 2015

1.

Land 300,000
Notes Payable 300,000
(The $300,000 capitalized land cost
represents the present value of the note
discounted
for five years at 11%.)

2.

Equipment $297,079
Notes Payable $297,079

Computation of the present value of the

note
Present value of $400,00 due in 8 years at $173,572
11%
$400,000 X 0.43393 *
Present value of $24,000 payable annually 123,507
for
8 years at 11% annually $24,000 X
5.14612
Present value of the note $297,079

*4043393 ( 1/(1,11^8))

**5,14612= 1- (1/(1,11^8))/ 0,11

(b)

31 des 2015

1. Interest Expense 33,000

Notes Payable($300,000 X 0.11) . 33,000

2. Interest Expense ($297,079 X 0.11 ) 32,679

Notes Payable 8,679

 Cash ($400,000 X 0.06) 24,000

EXERCISE 14-12

(a)

Nilai nominal of the zero-interest-bearing note $600,00

Discounting factor (12% for 3 periods) = 1/(1,12^3) X 0.71178

Jumalh yang idcatat for the land at January 1, 2015 $427,068

Nilai tercatat of the note at January 1, 2015 $427,068

Applicable interest rate (12%) X 0 .12

Interest expense to be reported in 2015 $ 51,248

(b) January 1, 2015

Cash 4,000,000

Notes Payable ($4,000,000 X 0.68301) 2,732,040

Unearned Revenue 1,267,960*

*$4,000,000 ($4,000,000 X 0.68301) = $1,267,960

Nilai tercatat of the note at January 1, 2011 $2,732,040

Applicable interest rate (10%) X 0.10

Interest expense to be reported for 2015 $ 273,204

EXERCISE 14-20

(a) Gottlieb Co.s entry:

Note Payable 199,800

Property 90,000

Gain on Disposition of Property

(140,000 90,000 50,000

Gain on Extinguishment of Debt 59,800*

*199,800 140,000

(b) Present value of restructured cash flows:

Present value of $220,000 due in 2 years

at 8%, interest payable annually

($220,000 X 0.85734 *(1/1.18^2) $188,615

Present value of $11,000 interest payable

annually for 2 years at 8% (Table 6-4

($11,000 X 1.78326* (1-(1,08^2))/0,08)) 19,616

Fair value of note $208,231

Vargo Corp.s entries

2015 Note Payable (Old) 270,000

 Gain on Extinguishment of Debt 61,769

Note Payable (New) 208,231

2016 Interest Expense ($208,231 X 8%). 16,658

Note Payable 5,658

Cash (5% X $220,000) 11,000

2017 Interest Expense [($208,231 + $5,658) X .08] 17,111

Note Payable 213,889

Cash [$220,000 + (5% X $220,000)] 231,000

PROBLEM 14-2

(a) Present value of the principal

$2,000,000 X 0.38554 (PV10, 10%) $ 771,080

Present value of the interest payments

$210,000* X 6.14457 (PVOA10, 10%) 1,290,360

Present value (selling price of the bonds) $2,061,440

*$2,000,000 X 10.5% = $210,000

Cash $2,061,440

Bonds Payable $2,061,440

(b)

Date Cash Interest Premium Jumlah

Paid Expense Amortized tercatat of
Bonds
1/1/04 $2,061,440
1/1/15 $210,000 $206,144 $3,856 2,057,584
1/1/16 210,000 205,758 4,242 2,053,342
1/1/17 210,000 205,334 4,666 2,048,676
1/1/18 210,000 204,868 5,132 2,043,544
(c) jumlah tercatat of 1/1/17 $2,048,676

Less: Amortization of bond premium (5,132 2) 2,566

Carrying amount as of 7/1/17 $2,046,110

Reacquisition price $1,065,000

Carrying amount as of 7/1/17 ($2,046,110 2) (1,023,055)

Loss $ 41,945

Entry for accrued interest

Interest Expense ($204,868 X 1/2 X 1/2) 51,217

Bonds Payable 1,283

Cash ($210,000 X 1/2 X 1/2 52,500

Entry for reacquisition

Bonds Payable 1,023,055

Loss on Extinguishment of Bonds 41,945

Cash 1,065,000

*Premium as of 7/1/17 to be written off ($2,046,110 $2,000,000) X 1/2 =

$23,055

The loss is reported as other income and expense

PROBLEM 14-5

(a) December 31, 2015

Computer 409,806.00

Notes Payable 409,806.00

(Computer capitalized at the present

value of the note$600,000 X 0.68301)

(b) December 31, 2016

Depreciation Expense 67,961.20

Accumulated DepreciationComputer 67,961.20

[($409,806 $70,000) 5]

Interest Expense 40,980.60

Notes Payable 40,980.60

Schedule of Note Discount Amortization

Date Debit, Interest Expense Carrying Amount
Credit, Notes Payable of Note
12/31/15 $409,806.00
12/31/16 $40,980.60 450,786.60
12/31/17 45,078.66 495,865.26
12/31/18 49,586.53 545,451.79
12/31/19 54,548.21* 600,000.00

*3.03 adjustment due to rounding.

(c) December 31, 2017

Depreciation Expense 67,961.20

Accumulated DepreciationComputer 67,961.20

 Interest Expense 45,078.66

Notes Payable 45,078.66

PROBLEM 14-8

1. Sanford Co

1/3/15 Cash 472,090*

Bonds Payable 472,090

*Present value of $500,000 due in 7 periods at 6%

($500,000 X .66506) $332,530

Present value of interest payable semiannually

($25,000 X 5.58238 139,560

Proceeds from sale of bonds $472,090

1/9/15 Interest Expense 28,325*

Bonds Payable 3,325

Cash 25,000

31/12/15 Interest Expense 19,017

Bonds Payable ($3,525 X 4/6) 2,350

Interest Payable ($25,000 X 4/6) 16,667

1/3/16 Interest Expense 9,508

Interest Payable 16,667

Bonds Payable ($3,525 X 2/6 1,175

Cash 25,000

1/9/16 Interest Expense 28,736

 Bonds Payable 3,736

Cash 25,000

31/12/16 Interest Expense 19,308

Bonds Payable ($3,961 X 4/6) 2,641

Interest Payable 16,667

Schedule of Bond Discount Amortization

Effective-Interest Method
10% Bonds Sold to Yield 12%

Date Cash Interest Discount Carrying

Paid Expense Amortized Amount of
Bonds
3/1/10 $472,090
9/1/10 $25,000 $28,325 $3,325 475,415
3/1/11 25,000 28,525 3,525 478,940
9/1/11 25,000 28,736 3,736 482,676
3/1/12 25,000 28,961 3,961 486,637
9/1/12 25,000 29,198 4,198 490,835
3/1/13 25,000 29,450 4,450 495,285
9/1/13 25,000 29,715* 4,715 500,000
*Rounded $2.

2. Titania Co.

1/6/15 Cash 425,853

Bonds Payable 425,853

Present value of $400,000 due in 8 periods at 5%

($400,000 X0 .67684) $270,736

Present value of interest payable semiannually

($24,000 X 6.46321) 155,117

Proceeds from sale of bonds $425,853

1/12/15 Interest Expense 21,293*

Bonds Payable 2,707

Cash ($400,000 X 0.12 X 6/12 24,000

31/12/15 Interest Expense ($21,157 X 1/6) 3,526

Bonds Payable ($2,843 X 1/6) 474

Interest Payable ($24,000 X 1/6) 4,000

1/16/15 Interest Expense ($21,157 X 5/6) 17,631

Interest Payable 4,000

Bonds Payable ($2,843 X 5/6) 2,369

Cash 24,000

1/10/15 Interest Expense ($21,015 X .3* X 4/6) 4,203

Bonds Payable ($2,985 X .3 X 4/6) 597

Cash 4,800

*$120,000 $400,000 = .3

*Reacquisition price

$126,000 ($120,000 X 12% X 4/12) $121,200

Net carrying amount of bonds redeemed:

($420,303* X .30) $597 (125,494)

Gain on extinguishment $ (4,294)

11/12/15 Interest Expense ($21,015 X .7*) 14,711

Bonds Payable ($2,985 X .7) 2,089

Cash ($24,000 X .7) 16,800

 *($400,000 $120,000) $400,000 = .7

31/12/15 Interest Expense ($20,866 X .7 X 1/6) 2,434

Bonds Payable ($3,134 X .7 X 1/6) 366

Interest Payable ($24,000 X .7 X 1/6) 2,800

1/6/15 Interest Expense ($20,866 X .7 X 5/6) 12,172

Interest Payable 2,800

Bonds Payable ($3,134 X .7 X 5/6) 1,828

Cash ($24,000 X .7) 16,800

1/12/15 Interest Expense ($20,709 X .7) 14,496

Bonds Payable ($3,291 X .7 2,304

Cash ($24,000 X .7) 16,800

Date Cash Interest Premium Carrying

Paid Expense Amortized Amount of
Bonds
6/1/10 $425,853
12/1/10 $24,000 $21,293 $2,707 423,146
6/1/11 24,000 21,157 2,843 420,303
12/1/11 24,000 21,015 2,985 417,318
6/1/12 24,000 20,866 3,134 414,184
12/1/12 24,000 20,709 3,291 410,893
6/1/13 24,000 20,545 3,455 407,438
12/1/13 24,000 20,372 3,628 403,810
6/1/14 24,000 20,190* 3,810 400,000

*$.50 disesuaikan.