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Principles of Accounting, Volume 1: Financial Accounting

Exercise Set B

Principles of Accounting, Volume 1: Financial AccountingExercise Set B

Exercise Set B

EB 1.

LO 13.1Sharapovich Inc. borrowed $50,000 from Kerber Bank and signed a 5-year note payable stating the interest rate was 5% compounded annually. Sharapovich Inc. will make payments of $11,548.74 at the end of each year. Prepare an amortization table showing the principal and interest in each payment.

EB 2.

LO 13.1Waylan Sisters Inc. issued 3-year bonds with a par value of $100,000 and a 6% annual coupon when the market rate of interest was 5%. If the bonds sold at 102.438, how much cash did Williams Sisters Inc. receive from issuing the bonds?

EB 3.

LO 13.1Smashing Cantaloupes Inc. issued 5-year bonds with a par value of $35,000 and an 8% semi-annual coupon (payable June 30 and December 31) on January 1, 2018, when the market rate of interest was 10%. Were the bonds issued at a discount or premium? Assuming the bonds sold at 92.288, what was the sales price of the bonds?

EB 4.

LO 13.1Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market rate of 4%. The bonds paid interest semi-annually on June 30 and Dec. 31. How much money did the company receive when the bonds were issued? The bonds would be quoted at what rate?

EB 5.

LO 13.2Haiku Inc. issued $600,000 of 10-year bonds with a stated rate of 11% when the market rate was 12%. The bonds pay interest semi-annually. Prepare the first three years of an amortization schedule. Assume that the bonds were issued for $565,710.

EB 6.

LO 13.2Waldron Inc. issued $400,000 bonds with a stated rate of 7% when the market rate was 5%. They are 3-year bonds with interest to be paid annually. Prepare a table to amortize the premium of the bonds. Assume that the bonds were issued for $421,844.

EB 7.

LO 13.3Willoughby Inc. issued 100 bonds with a face value of $1,000 and a stated rate of 4% and received $105,000. What is the journal entry to record the sale of the bonds?

EB 8.

LO 13.3Allante Corporate issued 50 bonds with a face value of $1,000 and a stated rate of 4% and received $45,000. What is the journal entry to record the sale of the bonds?

EB 9.

LO 13.3Roo Incorporated issued 50 bonds with a face value of $1,000 and a stated rate of 6% when the market rate was 6%. What is the journal entry to record the sale of the bonds?

EB 10.

LO 13.3Piedmont Corporation issued $200,000 of 10-year bonds at par. The bonds have a stated rate of 6% and pay interest annually. What is the journal entry to record the first interest payment to the bondholders?

EB 11.

LO 13.3Lunar Corporation issued $80,000 in bonds for $87,000 on Jan. 1. The bonds had a stated rate of 8% and pay interest quarterly. What is the journal entry to record the first interest payment?

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