Homework Chapter 11

On July 1, 20Y1, Danzer Industries Inc. issued $26,600,000 of 10-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of S25,010,623 Interest on the bonds is payable semiannually on December 31 and June 30 The fiscal year of the company is the calendar year Required: 1. Journakze the entry to record the amount of cash proceeds from the issuance of the bonds on May 1, 2014" 2 Journaize the entries to record the following a The First semiannual interest payment on December 31, 2014, and the amortization of the bond discount, using the straight line method (Round to the nearest dollar) b. The interest payment on June 30, 2012, and the amortization of the bond discount voing the straight-line method (Round to the nearest dolar) 3. Determine the total interest expense for 2011 4 Will the bond proceeds always be tess than the face amount of the bonds when the contract rate is less than the market rate of interest? 5 Compute the price of $25,010,623 received for the bonds by using the present we tables (Round to the nearest dodar) *Refer to the Chart of Accounts for exact wording of accounts Present Value Tables Two present value tables are provided. Present Value of S1 at Compound Interest Due Inn Periods and Present Value of Ordinary Annuity of S1 per Period. Use them as directed in the problem requirements. Periods 7% 1 093453 2 0.87344 Present Value of 51 at Compound Interest Due in n Periods 4.0% 4.5% 5% 5.5% 6% 6.5% 096154 0.95694 0.95238 0.94787 0.94340 0.93897 0.92456 091573 0.90703 0.89845 0.89000 0.83166 088900 087630 0 36384 0.85161 0.83962 0.82785 0.85480 0.83856 0 82270 0.80722 0.79209 0.77732 0.82193 0 80245 0.78353 0.76513 0.74726 0.72988 0.79031 0.76790 0.74622 0.72525 0.70496 0.68533 3 0.81630 4 0.76290 5 0.71299 6 066634 7 0.75992 0.73483 0.71068 0.68744 0.66506 064351 062275 8 0.73069 0.70319 0.67684 065160 0.62741 0.60423 058201 9 0.70259 0.67290 0.64451 0.61763 059190 0 56735 0 54393 10 067556 064393 0.61391 058543 0.55839 0.53273 0.50835 Present Value Tables 10 0.67556 0.64393 0.61391 0.58543 0.55839 0.53273 0.50835 11 0.64958 0.61620 0.58468 0.55491 0.52679 0.50021 0.47509 12 0.62460 0.58966 0.55684 0.52598 0.49697 0.46968 0.44401 13 0.60057 0.56427 0.53032 0.49856 0.46884 0.44102 0.41496 14 0.57748 0.53997 0.50507 0.41410 0.38782 0.47257 0.44230 0.44793 0.41727 15 0.55526 051672 0.48102 0.38883 0.36245 16 0.49447 0.45811 0.42458 0.39365 0.36510 033873 17 0.53391 0.51337 0.49363 0.47318 0.37136 0.34281 0.31657 18 0.45280 0.43630 0.40245 0.41552 0.38147 0.39573 0.36158 0.35034 0.32189 0.29586 19 0.47464 0.43330 0.33051 0.30224 0.27651 20 0.45639 0.41464 0.34273 0.31180 0.28380 0.25842 21 0.43883 0.37689 0.35894 0 34185 0.32486 0.29416 0.26648 0.39679 0.37970 024151 22 0.42196 0.30793 0.27751 0.25021 0.22571 23 0.40573 0.36335 0.32557 0.29187 0.26180 023494 0.21095 Present Value Tables 24 0.39012 0.34770 0.31007 0.27666 0.24698 0.22060 0.19715 25 0.37512 0.33273 0.29530 0.26223 0.23300 0.20714 0.18425 26 0.36069 0.31840 0.28124 0.24856 0.21981 0.19450 0.17220 27 0.34682 0.30469 0.26785 0.23560 0.20737 0.18263 0.16093 28 0.33348 0.29157 0.25509 0.22332 0.19563 0.17148 0.15040 29 30 31 32 0.32065 0.27902 0.24295 0.21168 0.18456 0.16101 0.14056 0.30832 0.267000.23138 0.20064 0.17411 0.15119 0.13137 0.29646 025550 0.22036 0.19018 0.16425 0.14196 0.12277 0.28506 0.24450 0.20987 0.18027 0.15496 0.13329 0.11474 0.27409 0.23397 0.19987 0.17087 0.14619 0.12516 0.10723 0.26355 0.22390 0.19035 0.16196 0.13791 0.11752 0.10022 0.25342 0.21425 0.18129 0.15352 0.13011 0.11035 0.09366 0.20829 017193 0.14205 0.11746 0.09722 0.08054 0.06678 33 34 35 40 45 0.17120 0.13796 0.11130 0.08988 0.07265 0.05879 0.04761 50 0.14071 0.11071008720 0.06877 0.05429004291 0.03395 Present Value Tables Periods 7% 1 0.93458 2 1.80802 3 2.62432 4 3.38721 5 4 10020 Present Value of Ordinary Annuity of 51 per Period 4.0% 4.5% 5% 5.5% 6% 6.5% 0.96154 0.95694 0 95238 0.94787 0.94340 0.93897 1.88509 1.87267 1.85941 1.84632 1.83339 1.82063 2.77509 274896 2.72325 269793 267301 264848 3.62990 358753 3.54595 350515 3.46511 342580 4 45182 438998 432948 4 27028 421236 4.15568 524214 5.15787 507569 4 99553 4.91732 4 84101 6.00205 5.89270 5.78637 5.68297 558238 5.48452 673274 6.59589 6 46321 633457 620979 6,08875 7 43533 7 26879 7 10782 6.95220 6.80169 6.65610 8. 11090 7.91272 7.72173 7.53763 7.36009 7.18883 876048 8 52892 830641 809254 788687 7.68904 938507 9. 11959 886325 861852 8 38384 815873 6 476654 538929 7 8 5.97130 9 651523 10 7.02358 11 7.49867 794269 12 Present Value Tables 13 9.98565 9.68285 9.39357 9.11708 8.85268 8.59974 835765 14 10.56312 10 22283 9.89864 9.58965 9.29498 9 01384 8.74547 15 11.11839 10.73955 10.37966 10.03758 9.71225 9.40267 9.10791 16 11.65230 11 23402 1083777 10.46216 10.10590 9.76776 9.44665 17 12.16567 11 70719 11 27407 10 86461 10 47726 10.11058 9.76322 18 12.65930 12.15999 11.68959 11 24607 10.82760 10.43247 10.05909 19 13 13394 12.59329 12.08532 11.60765 11.15812 10.73471 10.33560 20 13.59033 13.00794 11 95038 11.46992 11.01851 1059401 12 46221 1282115 21 14.02916 13.40472 1227524 11.76408 11 28498 10.83553 22 14 45112 13.78442 13.16300 12.58317 12 04158 1153520 11.06124 23 14.85684 13.48857 12.87504 12 30338 11 77014 11.27219 14 14777 14 49548 24 15 24696 13.79864 13.15170 12 55036 11 99074 11 46933 25 15 62208 14 82821 1409394 13.41393 12.78336 12. 19788 11.65358 26 15.98277 15 14661 14 37519 13 66250 12.39237 11 82578 13.00317 13 21053 27 16.32959 15 45130 14 64303 13 89810 12 57500 11 98671 ChedMyWoch Present Value Tablos ZOU UU 13 11 26 15.98277 15.14661 14.37519 13.66250 1300317 12 39237 11.82578 27 16.32959 15.45130 14.64303 13.89810 1321053 12 57500 11.98671 28 16.66306 15.74287 14.89813 14.12142 13.40616 12 74648 12 13711 29 16.98371 16.02189 15.14107 1433310 13.59072 12.90749 12 27767 30 17 29203 16.28889 15 37245 14 53375 13.76483 13.05868 12 40904 31 17 58849 16.54439 15 59281 14.72393 13.92909 13.20063 12.53181 32 1787355 16.78809 15 80268 14 90420 14.08404 13 33393 12 64656 33 18 14765 17.02286 16.00255 15 07507 14 23023 13.45909 12.75379 34 18 41120 17 24676 15 23703 1436814 1357661 12 85401 16.19290 16.37419 35 18.56461 17 46101 1539055 14 49825 1368698 12.94767 40 19.79277 18 40158 17 15909 16 04612 15 04630 14 14553 1333171 45 20 72004 19. 15635 17.77407 16.54773 15 45583 13 60552 1448023 14 72452 50 21 48218 19 76201 18 25593 16.93152 15 76185 13 80075 CHART OF ACCOUNTS Danzer Industries Inc. General Ledger ASSETS 110 Cash REVENUE 410 Sales 610 Interest Revenue 611 Gain on Redemption of Bonda 111 Petty Cash 121 Accounts Receivable EXPENSES 122 Allowance for Doubtful Accounts 126 Interest Receivable 127 Notes Receivable 131 Merchandise Inventory 141 Omice Supplies 142 Store Supplies 510 Cost of Merchandise Sold 515 Credit Card Expense 516 Cash Short and Over 521 Sales Salaries Expense BA 521 Sales Salanes Expense Chart of Accounts 142 Store Supplies 151 Prepaid Insurance 191 Land 522 Omice Salaries Expense 192 Store Equipment 193 Accumulated Depreciation Store Equipment 194 Office Equipment 195 Accumulated Depreciation Office Equipment LIABILITIES 210 Accounts Payable 531 Advertising Expense 532 Delvery Expense 533 Repairs Expense 534 Selling Expenses 535 Rent Expense 536 Insurance Expense 537 Office Supplies Expanse 538 Store Supplies Expense 541 Bad Debt Expense 561 Depreciation Expense-Store Equipment 562 Depreciation Expense-Office Equipment 590 Miscellaneous Expense 710 Interest Expense 711 Loss on Redemption of Bonds 221 Salaries Payable 231 Sales Tax Payable 232 Interest Payable 241 Notes Payable 251 Bonds Payable 252 Discount on Bonds Payable Chart of Accounts 251 Bonds Payable 710 Interest Expense 711 Loss on Redemption of Bonds 252 Discount on Bonds Payable 253 Premium on Bonds Payable EQUITY 311 Common Stock 312 Paid In Capital in Excess of Pat Common Stock 315 Treasury Stock 321 Preferred Stock 322 Paid in Captain Excess of Par-Preferred Stock 331 Paid in Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends 352 Stock Dividends 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 2014 2a Journalze the entry to record the first servannual interest payment on December 31, 2017, and the amortization of the band discount, using the straight line (Round to the nearest dollar) Refer to the Chart of Accounts for exact wording of account hies, 2. Journakze the entry to record the interest payment on June 30, 2012 and the amortization of the bond decount using the straight line method Refer to the Chart of Accounts for erad wording of account ttles (Round to the nearest dolar) Question not attempted. PAGE 10 JOURNAL Score: 0/37 ACCOUNTING EQUATION DATE DOCTOR POST DET CROT HUSETS TOUTY Final Questions Shaded cells have feedback 3. Determine the total interest expense for 20Y1 Enter amount as a positive number $1.720,632 X Ponts 0/1 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? Yes Points