Homework Solutions  
» Home
  

See All Homework
Questions here

Question Description

 
Posted by: Homeworkhelp
Price Quoted by Student: $6
Posted On: 2011-03-09 04:04:06
 
Question

Patton issues $650,000 of 5%, four-year bonds dated January 1, 2004, that pay

 

Problem 14-5A Straight-line amortization of bond discount

 

ANSWER KEY P14-5A Patton issues $650,000 of 5%, four-year bonds dated January 1, 2004, that pay interest semiannually

Fundamental Accounting Principles, 17th Ed Seventeenth Edition Larson Wild Chiappetta:

 

Problem 14-5A Patton issues $650,000 of 5%, four-year bonds dated January 1, 2004, that pay interest semiannually on June 30 and December 31. They are issued at $584,361 and their market rate is 8% at the issue date.

 

Required

1. Prepare the January 1, 2004, journal entry to record the bonds’ issuance.

2. Determine the total bond interest expense to be recognized over the bonds’ life.

3. Prepare a straight-line amortization table like the one in Exhibit 14.7 for the bonds’ first two years.

4. Prepare the journal entries to record the first two interest payments.

5. Assume the market rate on January 1, 2004, is 4% instead of 8%. Without providing numbers, describe how this change affects the amounts reported on Patton’s financial statements.

Check (2) $195,639 (3) 12/31/2005 carrying value, $617,181

Solutions
ANSWER KEY P 14-5A Patton issues $650,000 of 5%, f
Price $6
Attachment 1: P14-5A Patton issues.doc
Solution Posted By: Homeworkhelp    Posted on: 09-03-2011