1. Bonds

2. Short Problem 1 and 2 P97 667 P990 000

3. Short Problem 3 P2 245 704 P2 154296 P2 400 000

4. Short Problem 4 and 5 P 645 Gain: P51 200

5. Short Problem 6 and 7 Gain: P13 500 Gain: P8 000

6. Short Problem 8 and 9 Answers at the next slides…

7. Problem 8 July 1 19x9 Debit: Bond Interest Expense 3800 Bonds Payable 100 000 Loss on Retirement of Bonds Payable 6200 Credit: Discount on Bonds Payable (800 + 4200) 5000 Cash (3000 + 102 000) 105 000 July 1 19x9 Debit: Bond Interest Expense 3800 Bonds Payable 100 000 Loss on Retirement of Bonds Payable 6200 Credit: Discount on Bonds Payable (800 + 4200) 5000 Cash (3000 + 102 000) 105 000

8. Problem 9a – Issuer’s Book April 1 19x2 Debit: Bond Interest Expense 2 800 Bond Interest Payable 1 000 Premium on Bonds Payable (200 + 2933) 3133 Credit: Cash 4000 Common Stock 30 000 APIC: Common Stock 72 933 April 1 19x2 Debit: Bond Interest Expense 2 800 Bond Interest Payable 1 000 Premium on Bonds Payable (200 + 2933) 3133 Credit: Cash 4000 Common Stock 30 000 APIC: Common Stock 72 933

9. Problem 9a – Investor’s Book April 1 19x2 Debit: Cash 4 000 Credit: Bond Interest Revenue 2 800 Bond Interest Receivable 1 000 Investment on Bonds 200 April 1 19x2 Debit: Cash 4 000 Credit: Bond Interest Revenue 2 800 Bond Interest Receivable 1 000 Investment on Bonds 200

10. Problem 9b – Issuer’s Book April 1, 19x2 Debit: Interest Payable 1 000 Interest Expense 2 555 Premium on Bonds Payable (445 + 1733) 2178 Bonds Payable 100 000 Credit: Cash 4 000 Common Stocks 30 000 APIC: Common Stocks 71 733 April 1, 19x2 Debit: Interest Payable 1 000 Interest Expense 2 555 Premium on Bonds Payable (445 + 1733) 2178 Bonds Payable 100 000 Credit: Cash 4 000 Common Stocks 30 000 APIC: Common Stocks 71 733

11. Problem 9b – Investor’s Book April 1, 19x2 Debit: Cash 4 000 Investment on Stocks 101 733 Credit: Interest Receivable 1 000 Interest Revenue 2 555 Investment on Bonds (445 + 101 733) 102 178 April 1, 19x2 Debit: Cash 4 000 Investment on Stocks 101 733 Credit: Interest Receivable 1 000 Interest Revenue 2 555 Investment on Bonds (445 + 101 733) 102 178

12. Short Problem 10 and 11 P4 349 808 P5 075 000

13. Problem 10a April 1, 19x6 Cash 4 380 000 Premium on Bonds Payable 380 000 Bonds Payable 4 000 000 October 1, 19x6 Interest Payable 190 000 Cash 190 000 April 1, 19x7 Interest Expense 174 608 Premium on Bonds Payable 15 932 Cash 190 000 April 1, 19x6 Cash 4 380 000 Premium on Bonds Payable 380 000 Bonds Payable 4 000 000 October 1, 19x6 Interest Payable 190 000 Cash 190 000 April 1, 19x7 Interest Expense 174 608 Premium on Bonds Payable 15 932 Cash 190 000

14. Short Problem 12 and 13 P80 000 Gain: 116 000

15. Short Problem 14 and 15 A.106 510 B.50 000 P 4 385 340

16. Short Problem 16 P 220 000

17. Long Problem 1

18. 819 700 292 300 350 385 251 155

19. LP 1 – Requirement 1c Jan 31, 2004 Cash 819 700 Premium on Bonds Payable 19 700 Bonds Payable 800 000 July 31, 2004 Interest Expense 49 182 Premium on Bonds Payable 2 818 Cash 52 000 December 31, 2004 Interest Expense 40 844 Premium on Bonds Payable 11 156 Interest Payable 52 000 Jan 31, 2004 Cash 819 700 Premium on Bonds Payable 19 700 Bonds Payable 800 000 July 31, 2004 Interest Expense 49 182 Premium on Bonds Payable 2 818 Cash 52 000 December 31, 2004 Interest Expense 40 844 Premium on Bonds Payable 11 156 Interest Payable 52 000

20. LP 1 – Requirement 2 Jan 31, 2004 Cash 800 000 Notes Payable 800 000 Dec 31, 2004 Interest Expense 110 000 Interest Payable 110 000 Jan 31, 2005 Interest Payable 110 000 Interest Expense 10 000 Notes Payable 230 285 Cash 350 385 Jan 31, 2004 Cash 800 000 Notes Payable 800 000 Dec 31, 2004 Interest Expense 110 000 Interest Payable 110 000 Jan 31, 2005 Interest Payable 110 000 Interest Expense 10 000 Notes Payable 230 285 Cash 350 385

21. Long Problem 2 5 596 125

22. LP 2a May 1, 19x6 Cash 5 550 000 Discount on Bonds Payable 450 000 Bonds Payable 6 000 000 Nov 1, 19x6 Interest Payable 255 000 Cash 255 000 May 1, 19x7 Interest Expense 278 625 Discount on Bonds Payable 23 625 Cash 255 000 May 1, 19x6 Cash 5 550 000 Discount on Bonds Payable 450 000 Bonds Payable 6 000 000 Nov 1, 19x6 Interest Payable 255 000 Cash 255 000 May 1, 19x7 Interest Expense 278 625 Discount on Bonds Payable 23 625 Cash 255 000

23. Long Problem 3

24. LP 3 Retirement Apr 30 20x4 Bonds Payable 100 000 Loss on Calling Bonds 10 000 Discount on Bonds Payable 4 000 Cash 106 000 Issuance Mar 30 20x4 Cash 101 000 Premium on Bonds Payable 1 000 Bonds Payable 100 000 Retirement Apr 30 20x4 Bonds Payable 100 000 Loss on Calling Bonds 10 000 Discount on Bonds Payable 4 000 Cash 106 000 Issuance Mar 30 20x4 Cash 101 000 Premium on Bonds Payable 1 000 Bonds Payable 100 000

25. Long Problem 4

26. LP 4 – Issuer’s Book Dec 31, 20x5 Interest Expense 42 324 Discount on Bonds Payable 5 000 Interest Payable 37 324 Feb 1, 20x6 Interest Expense 1 333 Interest Payable 37 324 Discount on Bonds Payable 179 Cash 38 657 Bonds Payable 200 000 Discount on Bonds Payable 7 143 APIC: Common Stock 42 857 Common Stocks 150 000 Dec 31, 20x5 Interest Expense 42 324 Discount on Bonds Payable 5 000 Interest Payable 37 324 Feb 1, 20x6 Interest Expense 1 333 Interest Payable 37 324 Discount on Bonds Payable 179 Cash 38 657 Bonds Payable 200 000 Discount on Bonds Payable 7 143 APIC: Common Stock 42 857 Common Stocks 150 000

27. LP 4 – Investor’s Book Dec 31, 20x5 Investment in Bonds 5 000 Interest Receivable 37 324 Interest Revenue 42 324 Feb 1, 20x6 Cash 38 657 Investment on Bonds 179 Interest Revenue 1 333 Interest Receivable 37 324 Investment in Stocks 192 857 Investment in Bonds 192 857 Dec 31, 20x5 Investment in Bonds 5 000 Interest Receivable 37 324 Interest Revenue 42 324 Feb 1, 20x6 Cash 38 657 Investment on Bonds 179 Interest Revenue 1 333 Interest Receivable 37 324 Investment in Stocks 192 857 Investment in Bonds 192 857