Problem 6-1

Req 1
Jan-01 Cash 6,737,000
Bond Payable 6,000,000
Premium 737,000

Dec-31 Interest Expense 720,000

Cash 720,000

Settled Interest 720,000

Interest Expense 673,700
Premium 46,300

Premium 46,300
Interest 46,300

Req 2 Noncurrent Liabilities

Bond Payable 6,000,000
Premium 690,700
Carrying Amount 6,690,700

Problem 6-2
Req 1 Principal 5,000,000 Present Value
Normal Rate 6% 3% PV of Annuity
Effective Rate 8% 4%
Maturity Date 2,021 Principal
Period 1 Year 2 Periods Interest
Payable Semi-annually June 30 and December 31 Present Value

Date Interest Payment Interest ExpenseAmortization Carrying Amount

01/01/2020 4,818,500
6/30/2020 150,000 192,740 42,740 4,861,240
12/31/2020 150,000 194,450 44,450 4,905,690
6/30/2021 150,000 196,228 46,228 4,951,917
12/31/2021 150,000 198,077 48,077 4,999,994
Revised 198,083 48,083 5,000,000

Req 2
Year 2020
Jan-01 Cash 4,818,500
Discount 181,500
Bond Payable 5,000,000

Jun-30 Interest Expense 192,740

Cash 150,000
Discount 42,740

Dec-31 Interest Expense 194,450

Cash 150,000
 Discount 44,450

Year 2021
Jun-30 Interest Expense 196,228
Cash 150,000
Discount 46,228

Dec-31 Interest Expense 198,083

Cash 150,000
Discount 48,083

Bond Payable 5,000,000

Cash 5,000,000

Problem 6-3
A Principal 3,000,000 Present Value
Normal Rate 16% 8% PV of Annuity
Effective Rate 20% 10%
Maturity Date 2,022 Principal
Period 3 Year 6 Interest
Payable Semi-annually June 30 and December 31 Present Value

Date Interest Payment Interest ExpenseAmortization Carrying Amount

01/01/2020 2,738,682
6/30/2020 240,000 273,868 33,868 2,772,550
12/31/2020 240,000 277,255 37,255 2,809,805
6/30/2021 240,000 280,981 40,981 2,850,786
12/31/2021 240,000 285,079 45,079 2,895,864
6/30/2022 240,000 289,586 49,586 2,945,451
12/31/2022 240,000 294,545 54,545 2,999,996
Revised 294,549 54,549 3,000,000

B
Year 2020
Jan-01 Cash 2,738,682
Discount 261,318
Bond Payable 3,000,000

Jun-30 Interest Expense 273,868

Cash 240,000
Discount 33,868

Year 2022
Dec-31 Interest Expense 294,549
Cash 240,000
Discount 54,549

Bond Payable 3,000,000

Cash 3,000,000
Problem 6-4
A Principal 2,000,000
Normal Rate 12% 6%
Effective Rate 10% 5%
Maturity Date 2,022 Principal
Period 3 Year 6 Interest
Payable Semi-annually April 1 and October 1 Present Value

Date Interest Payment Interest ExpenseAmortization Carrying Amount

04/01/2020 2,101,520
10/01/2020 120,000 105,076 14,924 2,086,596
04/01/2021 120,000 104,330 15,670 2,070,926
10/01/2021 120,000 103,546 16,454 2,054,472
04/01/2022 120,000 102,724 17,276 2,037,196
10/01/2022 120,000 101,860 18,140 2,019,055
04/01/2023 120,000 100,953 19,047 2,000,008
Revised 100,945 19,055 2,000,000

B
Year 2020
Apr-01 Cash 2,101,520
Bond Payable 2,000,000
Premium 101,520

Oct-01 Interest Expense 105,076

Premium 14,924
Cash 120,000

Dec-31 Interest Expense 52,165

Premium 7,835
Accrued Interest Payable 60,000

Year 2021
Jan-01 Accrued Interest Payable 60,000
Interest Expense 60,000

Apr-01 Interest Expense 112,165

Premium 7,835
Cash 120,000

Oct-01 Interest Expense 103,546

Premium 16,454
Cash 120,000

Dec-31 Interest Expense 51,362

Premium 8,638
Cash 60,000
Problem 6-5
Req 1
Interest Paid 320,000
Interest Expense 380,560
Discount Amortization 60,560

Carrying Amount as of 2020 3,805,600

Discount Amortization 60,560
Before Payment 3,866,160
Repayment 800,000
Carrying Amount as of 2021 3,066,160

Req 2 Cash 3,805,600

Discount 194,400
Bond Payable 4,000,000

Interest Expense 380,560

Cash 320,000
Discount 60,560

Bond Payable 800,000

Cash 800,000

Problem 6-6
12/31/2020 Principal 2,000,000
Interest 360,000
Payment 2,360,000
Present Value of 1 1
Present Value 2,185,124

12/31/2021 Principal 2,000,000

Interest 240,000
Payment 2,240,000
Present Value of 1 1
Present Value 1,920,352

12/31/2022 Principal 2,000,000

Interest 120,000
Payment 2,120,000
Present Value of 1 1
Present Value 1,682,856

Total Present Value 5,788,332

Req 2 Cash 5,788,332

Discount 211,668
Bond Payable 6,000,000
 Interest Expense 463,067
Cash 360,000
Discount 103,067

Bond Payable 2,000,000

Cash 2,000,000

Req 3 Bond Payable 6,000,000

Discount 108,601
Payment on 2020 2,000,000
Carrying Amount as of 2020 3,891,399

Problem 6-7
Req 1 Principal 6,236,000
Interest 11,470,000
Price of Bonds 17,706,000

Req 2 Cash 17,706,000

Discount 2,294,000
Bond Payable 20,000,000

Req 3 interest Expense 1,062,360

Discount 62,360
Cash 1,000,000

Req 4 Interest Expense 1,066,102

Discount 66,102
Cash 1,000,000

Problem 6-8
Req 1 Principal 7,540,000
Interest 14,952,000
Price of Bonds 22,492,000

Req 2 Cash 22,492,000

Premium 2,492,000
Bond Payable 20,000,000

Req 3 Interest Expense 1,124,600

Premium 75,400
Cash 1,200,000

Req 4 Interest Expense 1,120,830

Premium 79,170
Cash 1,200,000

Problem 6-9
Req 1 Principal 4,000,000
Normal Rate semiannually 0
Interest 240,000
Present Value of 1 1
PV of Interest Payment 230,760

Principal 2,000,000
Interest 240,000
Present Value of 1 1
Total Present Value 2,071,104

Interest 120,000
Present Value of 1 1
PV of Interest Payment 106,680

Principal 2,000,000
Interest 120,000
Present Value of 1 1
Total Present Value 1,812,176

Total PV of Bond 4,220,720

Req 2
Date Interest Payment Interest ExpenseAmortization Principal Payment
01/01/2020
6/30/2020 240,000 168,829 71,171
12/31/2020 240,000 165,982 74,018 2,000,000
6/30/2021 120,000 83,021 36,979
12/31/2021 120,000 81,542 38,458 2,000,000
Revised 81,448 38,552

Req 3
Year 2020
Jan-01 Cash 4,220,720
Bond Payable 4,000,000
Premium 220,720

Jun-20 Interest Expense 168,829

Premium 71,171
Cash 240,000

Dec-31 Interest Expense 165,982

Premium 74,018
Cash 240,000

Bond Payable 2,000,000

Cash 2,000,000

Year 2021
Jun-01 Interest Expense 83,021
 Premium 36,979
Cash 120,000

Dec-31 Interest Expense 81,448

Premium 38,552
Cash 120,000

Bond Payable 2,000,000

Cash 2,000,000

Problem 6-10
Req 1 Principal 3,192,000
Interest 4,756,500
Total Market Price 7,948,500

Req 2
Date Interest Payment Interest ExpenseAmortization Carrying Amount
03/01/2020 7,948,500
09/01/2020 350,000 317,940 32,060 7,916,440
03/01/2021 350,000 316,658 33,342 7,883,098
09/01/2021 350,000 315,324 34,676 7,848,422
03/01/2022 350,000 313,937 36,063 7,812,358
09/01/2022 350,000 312,494 37,506 7,774,853
03/01/2023 350,000 310,994 39,006 7,735,847
09/01/2023 350,000 309,434 40,566 7,695,281
03/01/2024 350,000 307,811 42,189 7,653,092
09/01/2024 350,000 306,124 43,876 7,609,216
03/01/2025 350,000 304,369 45,631 7,563,584
09/01/2025 350,000 302,543 47,457 7,516,128
03/01/2026 350,000 300,645 49,355 7,466,773
09/01/2026 350,000 298,671 51,329 7,415,444
03/01/2027 350,000 296,618 53,382 7,362,061
09/01/2027 350,000 294,482 55,518 7,306,544
03/01/2028 350,000 292,262 57,738 7,248,806
09/01/2028 350,000 289,952 60,048 7,188,758
03/01/2029 350,000 287,550 62,450 7,126,308
09/01/2029 350,000 285,052 64,948 7,061,360
03/01/2030 350,000 282,454 67,546 6,993,815
Revised 288,640 61,360 7,000,000

Req 3
Year 2020
Mar-01 Cash 7,948,500
Bond Payable 7,000,000
Premium 948,500

Sep-01 Interest Expense 317,940

Premium 32,060
Cash 350,000
Dec-31 Interest Expense 211,105
Premium 22,228
Accrued Interest Payable 233,333
 0.92
1.30

5,000,000 4,623,000
150,000 195,500
4,818,500
 0.56

3,000,000 1,693,500
240,000
2,738,682
2,000,000
120,000
2,101,520
Carrying Amount
4,220,720
4,149,549
2,075,531
2,038,552
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