Acct 551 Week 1 Assignment

Only available on StudyMode
  • Download(s) : 193
  • Published : April 24, 2013
Open Document
Text Preview
E16-1 Solution.

1. Cash ($10,000,000x0.99)9,900,000
Discount on bond payable 100,000
Bond payable10,000,000
Unamortized bond issue cost 70,000
Cash 70,000

2. Cash (10,000,000x0.98)9,800,000
Discount on bond payable 600,000
Bond payable10,000,000
Paid in capital -stock warrants 400,000

3. Debt conversion expense 75,000
Bond payable10,000,000
Discount on bond payable 55,000
Common stock1,000,000
Paid in capital in excess of par8,945,000
Cash 75,000

E16-6 Solution

A. Dec31, 20112
Bond interest expense117,000
Premium bond payable (60,000x1/20) 3,000
Cash(3,000,000x8%x6/12)120,000

B.January 1, 2013
Bond payable600,000
Premium on bond payable 9,600
Common stock [8x100x (600,000/1,000)]480,000
Paid in capital in excess of par- common stock129,600 Calculation:
Total premium (3,000,000x0.02) = $60,000
Premium amortization ($50,000x2/10) = $12,000
Balance = $48,000
Bond converted ($600,000/3,000,000) = 20%
Related premium ($48,000x20%) = $9,600

C. March 31, 2013
Interest expense11,700
Premium on bond payable 300
(9,600/ 8 years) x3/12
Interest payable ($600,000x8%x3/12)12,000

March 31, 2013
Bonds payable600,000
Premium on bond payable 9,300
Common stock480,000
Paid in capital in excess of par-common stock129,300
Calculation:
Premium as of Jan 1, 2013 for $600,000 of bonds $9,600;
= 9,600/8 years remaining x 3/12 = $300
Premium as of march 31, 2013 for $600,000 of bonds $9,300

D. June 30, 2013
Interest expense70,200
Premium on bond payable 1,800
Interest payable (600,000x8%x1/4)12,000
Cash84, 0000
Calculation:
Premium to be amortized:...
tracking img