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    IA2 Ch. 5 6

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    The document appears to contain accounting entries related to bonds payable. It includes entries for interest expense, premium/discount on bonds, cash payments, and amortization schedules calculating bond values over time. The amortization schedules show the bonds decreasing in carrying value from their original amounts to the principal of $1,000,000 by maturity through periodic interest expense and premium/discount amortization entries.

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    IA2 Ch. 5 6

    Uploaded by

    Jessa
    43 views12 pages
    The document appears to contain accounting entries related to bonds payable. It includes entries for interest expense, premium/discount on bonds, cash payments, and amortization schedules calculating bond values over time. The amortization schedules show the bonds decreasing in carrying value from their original amounts to the principal of $1,000,000 by maturity through periodic interest expense and premium/discount amortization entries.

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    IA2-Ch.-5-6

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    The document appears to contain accounting entries related to bonds payable. It includes entries for interest expense, premium/discount on bonds, cash payments, and amortization schedules calculating bond values over time. The amortization schedules show the bonds decreasing in carrying value from their original amounts to the principal of $1,000,000 by maturity through periodic interest expense and premium/discount amortization entries.

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    43 views12 pages

    IA2 Ch. 5 6

    Uploaded by

    Jessa
    The document appears to contain accounting entries related to bonds payable. It includes entries for interest expense, premium/discount on bonds, cash payments, and amortization schedules calculating bond values over time. The amortization schedules show the bonds decreasing in carrying value from their original amounts to the principal of $1,000,000 by maturity through periodic interest expense and premium/discount amortization entries.

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    of 12

    Chapter 5

    3,500,000.00 1,500,000.00

    3,000,000.00 300,000.00

    9 6,500,000.00 D 5.00

    2,750,000.00 1,250,000.00 -

    2,000,000.00 2,500,000.00

    10 4,750,000.00 A 3,750,000.00

    2,750,000.00

    1,250,000.00

    4,000,000.00 A

    11 5,000,000.00 Cash 5,450,000.00

    500,000.00 TC/BIC 200,000.00

    (200,000.00) B/P 5,000,000.00

    150,000.00 Premium on Bonds 500,000.00

    5,450,000.00 A Interest Expense 150,000.00

    12 4,000,000.00 Cash 3,900,000.00

    (40,000.00) BIC/TC 140,000.00

    (140,000.00) Discount on Bonds 40,000.00

    80,000.00 B/P 4,000,000.00

    3,900,000.00 C Interest Expense 80,000.00

    13 5,000,000.00 Cash 5,075,000.00

    200,000.00 BIC/TC 125,000.00

    (125,000.00) B/P 5,000,000.00

    5,075,000.00 C Premium on Bonds 200,000.00


    14 2,150,000.00 B
    15 50,000.00 B
    16 80,000.00 B
    17 90,000.00 B
    18 80,000.00 B
    19 315,000.00 D
    20 240,000.00 A 4M * 6%

    (122,400.00) D (4M*.95) - 3,677,600

    3,800,000.00 B
    21 AAB
    22 ABC
    23 BACA
    BIC/TC

    Cash

    5,000.00 5,000,000.00

    1,000.00 12% Cash

    5,000,000.00 600,000.00 Interest Expense

    110% 1/4 July1 to Oct 1

    5,500,000.00 150,000.00 Accrued Interest

    Proceeds 4,000.00 4,000,000.00

    (BIC/TC) 1,000.00 8%

    AccInt 4,000,000.00 320,000.00

    Cash Rec. 99% 1/4 Jan1 to Apr1

    3,960,000.00 80,000.00 Accrued Interest

    5,000.00

    1,000.00

    5,000,000.00

    C 104%
    5,200,000.00
    200k

    200k

    150K

    rest Expense 150K


    Interest Expense (Dr) Cash (Cr)
    Date Expense Paid
    Beginning
    Jan - June 2020 48,227.00 40,000.00
    July- Dec 2020 48,638.35 40,000.00
    Jan - June 2021 49,070.27 40,000.00
    July- Dec 2021 49,523.78 40,000.00

    Carrying Value * Effective Face Value * Nominal


    10% * 6/12 8% * 6/12

    Jan - June 2020 Interest Expense 48,227.00


    Discount on Bonds
    Cash

    July- Dec 2020 Interest Expense 48,638.35


    Discount on Bonds
    Cash

    Jan - June 2021 Interest Expense 49,070.27


    Discount on Bonds
    Cash

    July- Dec 2021 Interest Expense 49,523.78


    Discount on Bonds
    Cash

    Cash (Cr.) Interest Expense (Dr)


    Date Paid Expense
    Beginning - -
    1st Year 120,000.00 104,974.00
    2nd Year 120,000.00 103,471.40
    3rd Year 120,000.00 101,818.54

    Face * NR CV * ER

    1st Year Interest Expense 104,974.00


    Premium on Bonds 15,026.00
    Cash

    (PI-C)
    2nd Year Interest Expense 103,471.40
    Premium on Bonds 16,528.60
    Cash

    3rd Year Interest Expense 101,814.60


    Premium on Bonds 18,185.40
    Cash
    DISCOUNT
    Amort C/V or C/A
    964,540.00 IM
    8,227.00 972,767.00 964540 * 1.05 - 40K
    8,638.35 981,405.35 964540 * 1.05 - 40K *1.05 -40K *5%
    9,070.27 990,475.62
    9,523.78 1,000,000.00 Principal = PV of 1
    Interest = PVOA of 1
    Balancing Figure CV + Exp - Paid

    964,540.00
    8,227.00
    8,227.00 8,638.35
    40,000.00 9,070.27
    9,523.78
    1,000,000.00
    8,638.35
    40,000.00

    9,070.27
    40,000.00
    Cash 964,540.00
    Discount on Bonds 35,460.00
    9,523.78 Bonds Payable
    40,000.00

    12%
    PREMIUM 10%
    Amort C/V or C/A 3 years
    - 1,049,740.00 annual
    (15,026.00) 1,034,714.00 1049740 * 1.10 - 120000
    (16,528.60) 1,018,185.40 1049740 * 1.10 - 120000 *10%
    (18,181.46) 1,000,000.00

    Exp - Paid CV + Exp - Paid 4 decimal places


    CV +Amort

    120,000.00
    1,049,740.00
    15,026.00
    16,528.60
    18,185.40
    1,000,000.00
    120,000.00

    120,000.00
    N=4
    I = 5%

    0.82 1,000,000.00 822,700.00


    3.55 40,000.00 141,838.00
    964,538.00

    1M

    PV - Principal 0.75 1,000,000.00 751,310.00


    PV - Interest 2.49 120,000.00 298,422.00
    1,049,732.00
    Cash (Cr.) Interest Expense (Dr)
    Date Paid Expense
    Beginning
    Jan - June 2020 40,000.00 48,227.00
    July- Dec 2020 40,000.00 48,638.35
    Jan - June 2021 40,000.00 49,070.27
    July- Dec 2021 40,000.00 49,523.78

    Interest Expense 48,227.00


    Cash
    Discount on Bonds

    Interest Expense 48,638.35


    Cash
    Discount on Bonds

    Cash (Cr.) Interest Expense (Dr)


    Date Paid Expense
    Beginning
    1st Year 120,000.00 104,974.00
    2nd Year 120,000.00 103,471.40
    3rd Year 120,000.00 101,818.54

    Interest Expense 104,974.00


    Amort in Premium 15,026.00
    Cash

    Interest Expense 103,471.00


    Amort in Premium 16,529.00
    Cash

    Interest Expense 101,818.54


    Amort in Premium 18,181.46
    Cash
    DISCOUNT
    Amort C/V or C/A
    964,540.00
    (8,227.00) 972,767.00
    (8,638.35) 981,405.35
    (9,070.27) 990,475.62
    (9,523.78) 1,000,000.00

    40,000.00
    8,227.00

    40,000.00
    8,638.35

    PREMIUM
    Amort C/V or C/A
    1,049,740.00
    15,026.00 1,034,714.00
    16,528.60 1,018,185.40
    18,181.46 1,000,000.00

    120,000.00

    120,000.00

    120,000.00

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