Acct 551 Week 1 Assignment
E16-1 Solution.
1. Cash ($10,000,000x0.99) 9,900,000 Discount on bond payable 100,000 Bond payable 10,000,000 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 payable 10,000,000 Paid in capital -stock warrants 400,000
3. Debt conversion expense 75,000 Bond payable 10,000,000 Discount on bond payable 55,000 Common stock 1,000,000 Paid in capital in excess of par 8,945,000 Cash 75,000
E16-6 Solution
A. Dec31, 20112 Bond interest expense 117,000 Premium bond payable (60,000x1/20) 3,000 Cash (3,000,000x8%x6/12) 120,000
B.January 1, 2013 Bond payable 600,000 Premium on bond payable 9,600 Common stock [8x100x (600,000/1,000)] 480,000 Paid in capital in excess of par- common stock 129,600 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 expense 11,700 Premium on bond payable 300 (9,600/ 8 years) x3/12 Interest payable ($600,000x8%x3/12) 12,000 March 31, 2013 Bonds payable 600,000 Premium on bond payable 9,300 Common stock 480,000 Paid in capital in excess of par-common stock 129,300 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 expense 70,200 Premium on bond payable 1,800 Interest payable (600,000x8%x1/4) 12,000 Cash 84, 0000 Calculation: Premium to be amortized:
1. Cash ($10,000,000x0.99) 9,900,000 Discount on bond payable 100,000 Bond payable 10,000,000 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 payable 10,000,000 Paid in capital -stock warrants 400,000
3. Debt conversion expense 75,000 Bond payable 10,000,000 Discount on bond payable 55,000 Common stock 1,000,000 Paid in capital in excess of par 8,945,000 Cash 75,000
E16-6 Solution
A. Dec31, 20112 Bond interest expense 117,000 Premium bond payable (60,000x1/20) 3,000 Cash (3,000,000x8%x6/12) 120,000
B.January 1, 2013 Bond payable 600,000 Premium on bond payable 9,600 Common stock [8x100x (600,000/1,000)] 480,000 Paid in capital in excess of par- common stock 129,600 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 expense 11,700 Premium on bond payable 300 (9,600/ 8 years) x3/12 Interest payable ($600,000x8%x3/12) 12,000 March 31, 2013 Bonds payable 600,000 Premium on bond payable 9,300 Common stock 480,000 Paid in capital in excess of par-common stock 129,300 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 expense 70,200 Premium on bond payable 1,800 Interest payable (600,000x8%x1/4) 12,000 Cash 84, 0000 Calculation: Premium to be amortized: