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Department
Business Administration
Course
Business Administration 2257
Professor
Eric Silverberg
Semester
Winter

Description
February 1, 2011 – January 31, 2012 o This year Issue 15000 5.5 per cent bonds on April 1, 2011  Dr Everything Payment dates on October 1 and April 1  Cr A/P Callable at 98.5 any time after October 1, 2011 - Utilities Expense (WIP) - Insurance Expense (WIP) October 1, 2011 - Pay off wages payable Bond interest expense 27,902 - Wages expense (WIP) 5.5% Bond payable 27,902 - Production Supplies (WIP) Expense: $14,680,058 × 6% × 6/12 = $440,402 - Raw materials (WIP) Paid: $15,000,000 × 5.5% × 6/12 = $412,500 - Solve for WIP Bond amortization: $440,402 - $412,500 = $27,902 - Bring to FG - Solve for FG and move to COGS December 29, 2011: Recalled and retired 20 percent of the outstanding - Bank Loan (move to current portion) bonds o REPLENISH! - Bond Interest Payment Bond interest expense 44,124 5.5% Bond payable 44,124 o Dr Bond Interest Expense o Cr 8% Bond Payable CV: ($14,680,058 + $27,902) × 20% = $2,941,592  Amount of amortization Expense: $2,941,592× 6% × 3/12 = $44,124 - Bond Recall Paid: $15,000,000 × 20% × 5.5% × 3/12 = $41,250 o Dr Bond Interest Expense Bond amortization: $44,124 - $41,250 = $2,874 o Cr 8% Bond Payable  Amount of Interest Expense! Loss on recall 10,534 - Loss on Recall 5.5% Bond payable 10,534 o Dr Loss on Recall CV: $2,941,592 + $2,874 = $2,944,466 o Cr 8% Bond Payable Cash paid: $2,996,250 - $41,250 = $2,955,000 Loss: $2,955,000 - $2,944,466 = $10,534 - FYE Bond Interest o Dr Bond Interest Expense o Cr Bond Interest Payable January 31, 2012: FYE
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