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Monday, April 11, 2011

Valix Finacc vol 2 Problem 2-5

Financial Accounting Volume 2 2008 Valix-Peralta
Chapter 2 Problem 2-5

  Requirement 1

      2008
April    1   Cash                                                                                     4,850,000
                 Discount on bonds payable                                                  100,000
                 Bond issue cost                                                                        50,000
                          Bonds payable                                                                               5,000,000

Oct      1   Interest expense                                                                     300,000
                         Cash (5,000,000x12%x6/12)                                                           300,000

Dec  31  Interest expense                                                                       150,000
                         Accrued interest payable (5,000,000x12%x3/12)                         150,000

               Interest expense                                                                          22,500
                         Discount on bonds payable (100,000/5x9/12)                                15,000
                         Bond issue cost (50,000/5x9/12)                                                       7,500

     2009
Jan    1 Accrued interest payable                                                          150,000
                        Interest expense                                                                                150,000

April  1 Interest expense                                                                         300,000
                       Cash                                                                                                   300,000

July   1 Interest expense                                                                           15,000
                       Discount on bonds payable (20,000x6/12)                                      10,000
                       Bond issue cost (10,000x6/12)                                                           5,000

                      Retirement price (2,000,000x99%)                                          1,980,000
                      Add: Accrued interest from April to July 1, 2008
                               (2,000,000x12%x3/12)                                                           60,000
                      Total payment                                                                              2,040,000

                     Bonds payable retired                                                                 2,000,000
                     Less: Applicable discount (2/5x75,000)             30,000
                               Applicable issue cost (2/5x37,500)          15,000                 45,000
                     Book value of bonds retired                                                        1,955,000
                     Less: Retirement price                                                                1,980,000
                     Loss on early retirement                                                                 (25,000)

July 1   Bonds payable                                                                     2,000,000
            Interest expense                                                                         60,000
            Loss on early retirement of bonds                                            25,000
                 Cash                                                                                                      2,040,000
                 Discount on bonds payable                                                                      30,000
                 Bond issue cost                                                                                         15,000

Oct  1  Interest expense                                                                       180,000
                Accrued interest payable (3,000,000x12%x6/12)                               180,000

Dec 31 Interest expense                                                                       90,000
                Accrued interest payable (3,000,000x12%x3/12)                                 90,000

i       31 Interest expense                                                                        9,000
                Discount on bonds payable (12,000x6/12)                                              6,000
                Bond issued cost (6,000x6/12)                                                                 3,000

            Revised annual amortization
                Discount (3/5x20,000)                                                        12,000
                Issue cost (3/5x10,000)                                                        6,000

Requirement 2

 Noncurrent liabilities
      Bonds payable                                                                       3,000,000
      Discount on bonds payable                                                  (     39,000)
      Bond issue cost                                                                     (     19,500)
      Book Value                                                                              2,941,500
 



                       

2 comments:

  1. Pakipost naman po ung financial acctg vol 2 ni Valix. Kailangan ko po talaga
    Pls. Maraming salamat po! God Bless po sa inyo. tnx.

    ReplyDelete
  2. but hnde lahat nka post ung vol2 pki post nman pls

    ReplyDelete