ACCTG415 Study Guide - Midterm Guide: Effective Interest Rate, Dividend, Retained Earnings

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violetchinchilla775

8 Apr 2014

School

University of Alberta

Department

Accounting

Course

ACCTG415

Professor

Jason Lee

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Document Summary

Note: the bond issue costs, in effect, increased the discount and the effective interest rate. Thus, the discount of ,431 9 will be amortized at 10. 6% over 5 years. Interest expense (= 10. 6% 4,514,659 6/12) Akerlof paid million for 1 million common shares of yellen inc. on january 15, 2014, the investment in common shares of yellen had the carrying value of million but their fair value was million. January 15, 2014: to revalue the investment in yellen inc. : 3,000,000: to record the declaration of the property dividend: 33,000,000: to recognize the unrealized gain of million (= 33 million 21 million): Note: this journal entry can be made at any time prior to the distribution of the property dividend. To record the distribution of the property dividend: The average issue price of preferred shares is 21,000,000 420,000 = . The average issue price of common shares is 64,000,000 2,000,000 = .

Related Questions

Problem 10-3B

Straight-line: Amortization of bond premium P1 P3

Refer to the bond details in Problem 10-2B, exceptassume that the bonds are issued at a price of $4,192,932.

Required

Prepare the January 1, 2013, journal entry to record the bonds'issuance.

For each semiannual period, compute (a) the cashpayment, (b) the straight-line premium amortization, and(c) the bond interest expense.

Determine the total bond interest expense to be recognized overthe bonds' life.

Prepare the first two years of an amortization table likeExhibit 10.11 using the straight-line method.

Prepare the journal entries to record the first two interestpayments.

Check

(3) $2,607,068

(4) 6/30/2014 carrying value, 4,073,991

1. Journal Entry:

Date	Account Title	Debit	Credit
Jan1 2013	Cash	3,010,000
	Discount on issue ofBonds	390,000
	10% Bonds Payable		3,400,000

2. Cash Payment for Each semiannual period:

3,400,000 x 5% = $170,000

Straight Line Discount amortization = 390,000 / 20 = $19,500

Bond Interest Expenses = 170,000 + 19,500 = $189,500

3. Total Bond Interest expenses = 189,500 x 20 = $3,790,000

4. Amortization Table:

Date	Interest Payment	Interest Expenses	Amortization of BondDiscount	Debit Balance in BondsDiscount	Book Value of the Bonds
1 Jan 2013				390,000	3,010,000
30 June 2013	170,000	189,500	19,500	370,500	3,029,500
Dec31 2013	170,000	189,500	19,500	351,000	3,049,000

5. Journal entries for interest:

Date	Account Title	Debit	Credit
June 30, 2013	Interest Expenses	189,500
	Discount on Issue ofBonds		19,500
	Cash		170,000

Dec31, 2013	Interest Expenses	189,500
	Discount on Issue ofBonds		19,500
	Cash		170,000

fuchsiajackal691

$488,000.

PLEASE BE SURE OF THE ANSWERS AND PROVIDE SOLUTION FOR EACH SOTHAT I CAN UNDERSTAND.

ACCTG415 Study Guide - Midterm Guide: Effective Interest Rate, Dividend, Retained Earnings

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Related Questions

Required:
1.	Prepare the January 1, 2015, journal entry to record the bondsâissuance.