ACCT 211 Homework 10 Accounting for Long-Term Liabilities Problems Assignment solutions answers

ACCT 211 Homework 10 Accounting for Long-Term Liabilities Problems Assignment solutions complete answers 

 

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Hillside issues $1,300,000 of 7%, 15-year bonds dated January 1, 2021, that pay interest semiannually on June 30 and December 31.

The bonds are issued at a price of $1,591,194.

Required:
1. Prepare the January 1 journal entry to record the bonds’ issuance.
2(a) For each semiannual period, complete the table below to calculate the cash payment.
2(b) For each semiannual period, complete the table below to calculate the straight-line premium amortization.
2(c) For each semiannual period, complete the table below to calculate the bond interest expense.
3. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life.
4. Prepare the first two years of a straight-line amortization table.
5. Prepare the journal entries to record the first two interest payments.

 

Legacy issues $600,000 of 7.0%, four-year bonds dated January 1, 2021, that pay interest semiannually on June 30 and December 31. They are issued at $541,807 when the market rate is 10%.

Required:
1. Prepare the January 1 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 for the bonds' first two years. (Round your intermediate and final answers to the nearest whole dollar.)

 

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

 

On January 1, 2021, Norwood borrows $510,000 cash from a bank by signing a five-year installment note bearing 9% interest. The note requires equal payments of $131,116 each year on December 31.
 
Required:
1. Complete an amortization table for this installment note.
2. Prepare the journal entries in which Norwood records the following:
(a) Norwood borrows $510,000 cash by signing a five-year, 9% installment note.
(b) Record the first installment payment on December 31, 2021.
(c) Record the second installment payment on December 31, 2022.

 

The following information is available for both Pulaski Company and Scott Company at the current year-end.
 

 
Pulaski Company
Scott Company
Total assets
$ 2,331,500
$ 1,200,500
Total liabilities
827,500
521,500
Total equity
1,504,000
679,000
 
Required:
1. Compute the debt-to-equity ratio for both companies.
2. Which company has the riskier financing structure?

 

Hartford Research issues bonds dated January 1 that pay interest semiannually on June 30 and December 31. The bonds have a $25,000 par value and an annual contract rate of 10%, and they mature in 10 years. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided. Round all table values to 4 decimal places, and use the rounded table values in calculations.)

 
Required:
Consider each separate situation.
 
1. The market rate at the date of issuance is 8%.
(a) Complete the below table to determine the bonds' issue price on January 1.
(b) Prepare the journal entry to record their issuance.
2. The market rate at the date of issuance is 10%.
(a) Complete the below table to determine the bonds' issue price on January 1.
(b) Prepare the journal entry to record their issuance.
3. The market rate at the date of issuance is 12%.
(a) Complete the below table to determine the bonds' issue price on January 1.
(b) Prepare the journal entry to record their issuance.

 

Ike issues $200,000 of 9%, three-year bonds dated January 1, 2021, that pay interest semiannually on June 30 and December 31. They are issued at $205,239 when the market rate is 8%.

Required:
1. Prepare the January 1 journal entry to record the bonds' issuance.

 

2. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life.

 

3. Prepare an effective interest amortization table for the bonds' first two years. (Round your intermediate and final answers to the nearest whole dollar.)

 

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