Comprehensive Bond Problem
Not what you're looking for?
Please explain how you get answers and don't use PV in Excel. Attached also are PV tables.
2. Bell Company sells $2,400,000 of 6% bonds on June 1, 2010. The
bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2014. The bonds
yield 5% On October 1, 2011, Douglas Company buys back $720,000
worth of the bonds for $738,000 (includes accrued interest). Give the entries through
December 31, 2012.
Jun 1, 10 Cash Amount
Bonds Payable 2,400,000
Premium on Bonds Payable Amount
Maturity value of bonds payable $2,400,000
Present value of $2,400,000 due in 8 periods at 2.5% Formula
Present value of interest payable semiannually Formula
Proceeds from sale of bonds Formula
Premium on bonds payable Formula
Dec 1, 10 Interest Expense Amount
Account Title Amount
Cash [$2,400,000 * 6.00% * (6/12)] 72,000
Note: Amortization table is semi-annual, interest rate is stated as annual value.
Dec 31, 10 Account title Amount
Account title Amount
Account title Amount
Jun 1, 11 Account Title Amount
Account Title Amount
Account Title Amount
Account Title 21,600
Oct 1, 11 Account title Amount
Account title Amount
Account title Amount
Oct 1, 11 Account title Amount
Account title Amount
Account title Amount
Account title Amount
Net carrying amount of bonds redeemed - Par value 720,000
Unamortized premium Amount
Formula
Reacquisition price Amount
Gain on redemption Formula
Dec 1, 11 Account title Amount
Account title Amount
Account title Amount
Dec 31, 11 Account title Amount
Account title Amount
Account title Amount
Jun 1, 12 Account title Amount
Account title Amount
Account title Amount
Account title Amount
Dec 1, 12 Account Amount
Account Amount
Account Amount
Schedule of Bond Discount Amortization
Effective Interest Method
6% Bonds Sold to Yield 5%
Date "Cash
Paid" "Interest
Expense" "Bond
Premium" "Carrying
Value
of Bonds"
Jun 1, 10 Amount
Dec 1, 10 Formula Formula Formula Formula
Jun 1, 11 Formula Formula Formula Formula
Dec 1, 11 Formula Formula Formula Formula
Jun 1, 12 Formula Formula Formula Formula
Dec 1, 12 Formula Formula Formula Formula
Jun 1, 13 Formula Formula Formula Formula
Dec 1, 13 Formula Formula Formula Formula
Jun 1, 14 Formula Formula Formula Formula.
Purchase this Solution
Solution Summary
The solution explains the comprehensive bond problem and provides an answer.
Solution Preview
Please see the attached file for the complete tutorial.
NOTE: To look at how each figure was computed, click on that cell to view the computation in the formula bar.
2. Bell Company sells $2,400,000 of 6% bonds on June 1, 2010. The
bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2014. The bonds
yield 5% On October 1, 2011, Douglas Company buys back $720,000
worth of the bonds for $738,000 (includes accrued interest). Give the entries through
December 31, 2012.
Jun 1, 10 Cash 2,486,042
Bonds Payable 2,400,000
Premium on Bonds Payable 86,042
Maturity value of bonds payable $2,400,000
Present value of ...
Purchase this Solution
Free BrainMass Quizzes
Change and Resistance within Organizations
This quiz intended to help students understand change and resistance in organizations
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
Operations Management
This quiz tests a student's knowledge about Operations Management
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.