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snow_lady [41]
3 years ago
15

Discount-Mart issues $10 million in bonds on January 1, 2012. The bonds have a ten-year term and pay interest semiannually on Ju

ne 30 and December 31 each year. Below is a partial bond amortization schedule for the bonds. Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value 1/1/12 8,640,967 06/30/2012 300,000 345,639 45,639 8,686,606 12/31/2012 300,000 347,464 47,464 8,734,070 06/30/2013 300,000 349,363 49,363 8,783,433 12/31/2013 300,00 351,337 51,337 8,834,770
What is the interest expense on the bonds in 2012?

A .$693,103.

B $600,000.

C $345,639.

D $347,464.
Business
1 answer:
jeyben [28]3 years ago
7 0

Answer:

B. $600,000

Explanation:

The computation of the interest expense on the bond for the year 2012 is shown below:

= Interest expense as on 30 June 2012 + interest expense as on December 31 2012

= $300,000 + $300,000

= $600,000

For computing the interest expense for the year 2012, we added the interest expense of June 30 and for December 31 of 2012 only so that the correct amount could come

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Assume that you will be opening a savings account today by depositing $100,000. The savings account pays 5 percent compound annu
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Pitney Co. purchased an office building, land, and furniture for $639,300 cash. The appraised value of the assets was as follows
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Solution :

a).<u> Amount to be recorded on the books for each of the assets.</u>

                          Working                                                  Allocated cost($)

Land        (639,300 / 716,016 )x 136,043                                 121467

Building   (639,300 / 716,016 )x 179,004                                 159825

Furniture   (639,300 / 716,016 )x 400,969                              358008

Total                                                                                          639,300

b). <u>Statement model</u>

Assets : Cash + Land + Building + Furniture

            639,300 + 121,467 +  159825 + 358008

Cash flow = 639,300

c). <u>Journal entry</u>

General journal                        Debit($)           Credit($)

Land                                        121,467

Building                                   159,825

Furniture                                  358,008

Cash                                                             639,300  

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