El journalize i liabilities on December 31, 20109 U Proxluctions tocal n zation method E14-19 Preparing Learning Objective 1 rest rate is 6%, Benson Realty the bonds pay interest semiannually ing an amortization schedule and recording mortgages payable entries Company purchased a building and land with a fair market Kellerman Company P of en on building, $425,000, and land, $125,000) on January 1, 2018. Kellerman ada 20-year, 6% mortgage payable. Kellerman will make monthly payments of 1040 37. Round to two decimal places. Explanations are not required for journal 3. Interest Expense $2.750.00 uance. ective interest amortization method Round to the nearest dollar) equirement 1, journalize issuance of Requirements 1. Journalize the mortgage payable issuance on January 1, 2018 2. Prepare an amortization schedule for the first two payments. 3. Journalize the first payment on January 31, 2018 4. Journalize the second payment on February 28, 2018 Learning Objective 2 EPS Plan A 5195 E14-20 Analyzing alternative plans to raise money SB Electronics is considering two plans for raising $4,000,000 to expand operations Plan A is to issue 9% bonds payable, and plan B is to issue 500,000 shares of com mon stock. Before any new financing, SB Electronics has net income of $350,000 and 300,000 shares of common stock outstanding Management believes the company can use the new funds to earn additional income of $700,000 before interest and tases. The income tax rate is 30%. Analyze the SB Electronics situation to determine which plan will result in higher earnings per share. Use Exhibit 14-6 as a guide Learning Objectives 2, 3 E14-21 Determining bond prices and interest expense Jones Company is planning to issue $490,000 of 9%, five-year bonds payable to borrow for a major expansion. The owner, Shane Jones, asks your advice on some related matters 2. Market price $436,100 CHAPTER 14 Chapter 14 Requirements 1. Answer the following questions: a. At what type of bond price will Jones Company have total interest equal to the cash interest payments? b. Under which type of bond price will Jones Company's total interest greater than the cash interest payments? c. If the market interest rate is 12%, what type of bond price can Jones Compen expect for the bonds? 2. Compute the price of the bonds if the bonds are issued at 89. 3. How much will Jones Company pay in interest each year? How much willones Company's interest expense be for the first year? 514-25 Journalizing bond issuan On January 1, 2018, Roberts Unl face value of $240,000. The bone December 31. Requirements 1. Journalize the issuance of th 2. Journalize the semiannual in June 30, 2018 3. Journalize the semiannual ir December 31, 2018. 4. Journalize the retirement of ment has already been reco Learning Objective 3 2. Interest Exp. 56,600 E14-22 Journalizing bond issuance and interest payments On June 30, Parker Company issues 11%, five-year bonds payable with a face value of $120,000. The bonds are issued at face value and pay interest on June 30 and December 31. Requirements 1. Journalire the issuance of the bonds on June 30. 2. Journalire the semiannual interest payment on December 31. E14-23 Journalizing bond issuance and interest On June 30, Daughtry Limited issues 8%, 20-year bonds payable with a face ville 513000. The bonds are issued at 86 and pay interest on June 30 and December Requirements 1. Journalize the issuance of the bonds on June 30. 2. Journalize the semiannual interest pavment and amortization of bond die December 31. E14-24 Journalizing bondo E14-26 Retiring bonds payable Coastal View Magazine issued $6 31, 2018, at 94. On July 31, 20 interest payments. Requirements 1. Without making journal able at July 31, 2021. 2. Assume all amortization the bonds on July 31, 203 Learning Objective 3 1. June 30 Discount $18.200 E14-27 Reporting current an Pediatric Dispensary borrow bond payable that must be year. The first payment of P the missing information Learning Objective 3
