Tugas Chapter 14 Ester PDF

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Intermediate Assignments in English questions and answers....

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Name: Ester Intan S ID: 11190002

E14.3 (Entries for Bond Transactions) Presented below are two independent situations. 1. On January 1, 2020, Simon Company issued $200,000 of 9%, 10-year bonds at par. Interest is payable quarterly on April 1, July 1, October 1, and January 1. 2. On June 1, 2020, Garfunkel Company issued $100,000 of 12%, 10-year bonds dated January 1 at par plus accrued interest. Interest is payable semi-annually on July 1 and January 1. Instructions For each of these two independent situations, prepare journal entries to record the following. a. The issuance of the bonds. b. The payment of interest on July 1. c. The accrual of interest on December 31. Jawab: 1. Simon Company: a). 1 January 2020 Cash $200,000 Bonds Payable $200,000 b). 1 July 2020 Interest expense $4,500 Cash $4,500 ($200,000x9%x3/12) c). 31 December 2020 Interest Expense $4,500 Interest Payable $4,500 2. Garfunkle Company: a). 1 June 2020 Cash $105,000 Bonds Payable $100,000 Interest Expense $5,000 ($100,000x12%x5/12) b). 1 July 2020 Interest Expense $6,000 Cash $6,000 ($100,000x12%x6/12) c). 31 December 2020 Interest Expense $6,000 Interest Payable $6,000

E14.4 (Entries for Bond Transactions—Straight-Line) Celine Dion Company issued $600,000 of 10%, 20-year bonds on January 1, 2020, at 102. Interest is payable semiannually on July 1 and January 1. Dion Company uses the straight-line method of amortization for bond premium or discount. Instructions Prepare the journal entries to record the following. a. The issuance of the bonds. b. The payment of interest and the related amortization on July 1, 2020. c. The accrual of interest and the related amortization on December 31, 2020. Jawab: a). 1 January 2020 Cash

$612,000

($600,000x102%) Bonds Payable

$600,000

Premium on Bonds Payable $12,000 b). 7 July 2020 Interest Expense

$29,700

Premium on Bonds Payable $300 ($12,000/40) Cash

$30,000

($600,000x10%x6/12) c). 31 December 2020 Interest Expense

$29,700

Premium on Bonds Payable $300 Interest Payable

$30,000

E14.7 (Amortization Schedule—Effective-Interest) Assume the same information as E14.6. Instructions Set up a schedule of interest expense and discount amortization under the effective-interest method. (Hint: The effective-interest rate must be computed.) Bunga efektif atau tingkat hasil adalah 12%. Itu ditentukan menggunakan Tabel 6-2 untuk nilai diskonto pokok ($ 1.134.860) dan Tabel 6-4 untuk nilai potongan bunga ($ 720.956); $ 1.134.860 ditambah $ 720.956 sama dengan hasil $ 1.855.816. (Kalkulator keuangan mungkin digunakan untuk menentukan tingkat 12%.) Schedule of Discount Amortization Cash Paid Interest Discount Expense Amortized

Year

January 1 2020 December 31,2020

$200,000 200,000 200,000 200,000 200,000 *$222,697.92 = $1,855,816 x 12%

$222,697.92* 225,421.67 228,472.27 231,888.94 235,703.20

$22,697.92 25,421.67 28,472.27 31,888.94 35,703.20

Carrying Amount of Bonds $1,855,816.00 1,878,513.92 1,903,935.59 1,932,407.86 1,964,296.80 2,000,000.00

E14.10 (Entries for Bond Transactions) On January 1, 2020, Aumont Company sold 12% bonds having a maturity value of $500,000 for $537,907.37, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2020, and mature January 1, 2025, with interest payable December 31 of each year. Aumont Company allocates interest and unamortized discount or premium on the effective-interest basis. Instructions (Round answers to the nearest cent.) a. Prepare the journal entry at the date of the bond issuance. b. Prepare a schedule of interest expense and bond amortization for 2020–2022. c. Prepare the journal entry to record the interest payment and the amortization for 2020. d. Prepare the journal entry to record the interest payment and the amortization for 2022. Jawab: a). January 1,2020 Cash

$537,907.37 Premium on Bonds Payable

$37,907.37

Bonds Payable

$500,000.00

b) Schedule of Interest Expense and Bond Premium Amortization Effective-Interest Method 12% Bonds Sold to Yield 10% Date Cash Paid Interest Premium Amortized Expense 1 January 2020 31 December 2020 31 December 2021 31 December 2022 *$500,000x12%

$60,000.00*

$53,790.74

$6,209.26

Carrying Amount of Bonds $537,907.37 531,698.11

60,000.00

53,169.81

6,830.19

524,867.92

60,000.00

52,486.79

7,513.21

517,354.71

c). 31 December 2020 Interest Expense

$53,790.74

Premium on Bonds Payable $6,209.26 Cash

$60,000.00

d). 31 December 2022 Interest Expense

$52,486.79

Premium on Bonds Payable $7,513.21 Cash

$60,000.00

E14.14 (Entries for Redemption and Issuance of Bonds) On June 30, 2012, County Company issued 12% bonds with a par value of $800,000 due in 20 years. They were issued at 98 and were callable at 104 at any date after June 30, 2020. Because of lower interest rates and a significant change in the company’s credit rating, it was decided to call the entire issue on June 30, 2021, and to issue new bonds. New 10% bonds were sold in the amount of $1,000,000 at 102; they mature in 20 years. County Company uses straight-line amortization. Interest payment dates are December 31 and June 30. Instructions a. Prepare journal entries to record the redemption of the old issue and the sale of the new issue on June 30, 2021. b. Prepare the entry required on December 31, 2021, to record the payment of the fi rst 6 months’ interest and the amortization of premium on the bonds.

Jawab: a). 30 June 2021 Bonds Payable $800,000 Loss on Redemption of Bonds $40,800 Discount on Bonds Payable Cash Reacquisition price ($800,000x 104%) Less: Net carrying amount of bonds redeemed: Par Value $800,000 Unamortized discount (8,800) (.02x $800,000x11/20) Loss on redemption Cash ($1,000,000x102%) $1,020,000 Premium on Bonds Payable Bonds Payable b). 31 December 2021 Interest Expense Premium on Bonds Payable (1/40 x $20,000) Cash (5%x1.000.000)

$8,800 $832,000 $832,000

$791,200 $40,800

$20,000 $1,000,000

$49,500 $500 $50,000

E14.16 (Entries for Zero-Interest-Bearing Notes) On January 1, 2020, Carter Company makes the two following acquisitions. 1. Purchases land having a fair value of $200,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $337,012. 2. Purchases equipment by issuing a 6%, 8-year promissory note having a maturity value of $250,000 (interest payable annually). The company has to pay 11% interest for funds from its bank. Instructions (Round answers to the nearest cent.) a. Record the two journal entries that should be recorded by Carter Company for the two purchases on January 1, 2020. b. Record the interest at the end of the first year on both notes using the effective-interest method.

Jawab: a). 1. 1 January 2020 Land

$200,000.00

Discount on Notes Payable

$137,012.00

Notes Payable

2.

$337,012.00

Equipment

Discount on Notes Payable

$185,674.30 $64,325.70

Notes Payable

$250,000.00

(Computation of the discount on notes payable) Maturity value

$250,000.00

Present value of $250,000 due in 8 years at 11% ($250,000x.43393)

$108,482.50

Present value of $15,000 payable annually for 8 years at 11% Annually ($15,000x5.14612)

$77,191.80

Present value of the note

(185,674.30)

Discount

$64,326.70

b). 1. Interest Expense

$22,000.00

Discount on Notes Payable

$22,000.00

($200,000x.11) 2. Interest Expense

$20,424.17

($184,674.30x.11) Discount on Notes Payable

$5,424.17

Cash ($250,000x.06)

$15,000.00

E14.19 (Fair Value Option) Fallen Company commonly issues long-term notes payable to its various lenders. Fallen has had a pretty good credit rating such that its effective borrowing rate is quite low (less than 8% on an annual basis). Fallen has elected to use the fair value option for the long-term notes issued to Barclay’s Bank and has the following data related to the carrying and fair value for these notes. Any changes in fair value are due to changes in market rates, not credit risk. Carrying Value Fair Value December 31, 2020 $54,000 $54,000 December 31, 2021 44,000 42,500 December 31, 2022 36,000 38,000 Instructions a. Prepare the journal entry at December 31 (Fallen’s year-end) for 2020, 2021, and 2022, to record the fair value option for these notes. b. At what amount will the note be reported on Fallen’s 2021 balance sheet? c. What is the effect of recording the fair value option on these notes on Fallen’s 2022 income? d. Assuming that general market interest rates have been stable over the period, does the fair value data for the notes indicate that Fallen’s creditworthiness has improved or declined in 2022? Explain. Jawab: Year Ending Carrying Value Fair Value Unrealized Change in Holding Gain or Unrealized Loss Holding Gain or Loss 2020 $54,000 $54,000 $0 $0 2021 44,000 42,500 1,500 1,500 2022 36,000 38,000 (2,000) (500) a). 2020 No entry / Tidak ada jurnal (carrying value=Fair value) 2021 Notes Payable $1,500 Unrealized Holding Gain or Loss – Income

$1,500

Unrealized Holding Gain or Loss - Income $3,500 Notes Payable Income

$3,500

2022

b). The fair value of $42,500 c). Unrealized holding loss of $3,500 d). Fallen’s kredit telah menkredit dan meningkat di tahun 2022 karena obligasi. Investor menerima tingkat yang lebih tinggi dibandingkan dengan investor dalam resiko serupa investasi....