5-1 Debit Credit

2020 2021
1-Apr Cash (7M x 106%) 7,420,000 1-Jan
Bonds Payable 7,000,000
Premium on Bonds Payable 420,000
1-Apr
1-Oct Interest Expense (7M x 12% x 6/12) 420,000
Cash 420,000
1-May
Interest Expense 210,000
Accrued Interset Payable 210,000

Premium on Bonds Payable 42,000

Interest Expense 42,000

Amortization:
Premium 420,000
Life of Bonds 10 Requirement #2: Presentati
Date of Sale April

5-2
Requirement #1
2020 2021
1-Jan Unissued Bonds Payable $ 8,000,000 Jun-31
Authorized Bonds Payable $ 8,000,000

Cash(5M x 95%) 4,750,000 1-Sep

Discount on Bonds Payable 250,000
Unissued Bonds Payable 5,000,000

30-Jun Interest Expense (5M x 12% x 6/12) 300,000

Cash 300,000

31-Dec Interest Expense (5M x 12% x 6/12) 300,000

Cash 300,000

Interest Expense 25,000

Discount on Bonds Payable 25,000
31-Dec
Amortization:
Discount on Bonds Payable 250,000
 Life of Bonds 10
Sold on January

Inventory Errors
2013 2014
Sales Incorrect Correct Incorrect Correct
Beginning Inventory
Cost of Goods Purchased
Cost of Available Available
Ending Inventory
Cost of Goods Sold
Gross Profit
Operating Expenses
Net Income
 Debit Credit

Accrued Interest Payable 210,000

Interest Payable 210,000

Interest Expense 420,000

Cash 420,000

Requirement #2: Presentation on Financial Statement

Noncurrent Liabilities:
Bonds Payable 7,000,000
Premium on Bonds Payable 346,500
Carrying Amount $ 7,346,500

Interest Expense 300,000

Cash 300,000

Cash (2M x 103%) 2,060,000

Unissued Bonds Payable 2,000,000
Premium on Bonds Payable
Interest Expense (2M x .12*2/12) 40,000.00
Premium:
Bonds Payable 2,000,000
Issue Price 103%
Total $ 2,060,000

Accrued Interest Expense

June 30 - Sept 1 2 months

Interest Expense (7M x 12% x 6/12) 420,000

Cash 420,000
Interest Expense 25,000
Discount on Bonds Payable 25,000
Amortization on Bonds Discount

Premium on Bonds Payable

Interest Expense
Amlortization on Premium:
Premium 60,000
Life of the Bonds 120 months
Expired Portion
(Jan 2020 - Sept 2021) 20 months
Remaining lIfe of Bonds 100 months

Amortization Monthly 600

From Sept 1 to Dec 31 4 months
Amort. Of Premium 2,400
From Sept 1 to Dec 31

Requirement #2: Presemtation on the Financial Statement

Noncurrent lIability $ 8,000,000
Authorized Bond Payable 1,000,000
Less: Unissued Bonds Payable 7,000,000
Premium on Bonds Payable 57,600
Total $ 7,057,600
Discount on Bonds Payable
Carrying Amount