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Christian Brown

Ch 13 Accounting assignment

1. A)
Period Cash Interest Discount Unamortized Closing net
Interest Expense Amortization Amount liablility
(5%) (6%)
Opening balance 24,921 775,079
Mar 31, 20X4 20,000 23,252 3252 21,669 778,331
Sep 30, 20X4 20,000 23,350 3350 18,319 781,681
Mar 31, 20X5 20,000 23,450 3450 14,869 785,131
Sep 30, 20X5 20,000 23,554 3554 11,315 788,685
Mar 31, 20X6 20,000 23,661 3661 7654 792,346
Sep 30, 20X6 20,000 23,770 3770 3884 796,116
Mar 31, 20X7 20,000 23,883 3883 0 800,000

B)
Oct 1, 20X3 Cash 775,079
Discount on Bonds Payable 24,921
Bonds Payable 800,000
To record issuance of bonds at a discount

Dec 31, 20X3 Interest Expense 11,626


Discount on Bonds Payable 1626
Interest Payable 10,000
To record year end interest expense

Mar 31, 20X4 Interest Expense 11,626


Interest Payable 10,000
Discount on Bonds Payable 1626
Cash 20,000
To record interest expense

C) Statement of financial position Dec 31, 20X3


Bonds payable $800,000
Discount on bonds payable (24,921 – 1626) (23,295)
Net book value of bonds payable $776,705
2.

June 30, 2010 Cash (925,852 + 20,000) 945,852


Discount on bonds payable (1,000,000 – 925,852) 74,148
Interest Payable (1,000,000 * 8% * 3/12) 20,000
Bonds Payable 1,000,000
To record issue of bond and accrued interest

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