ACCT101 Financial Accounting Homework 4: E9-7, E9-8, E9-18 5th Edition

Homework 4 – Chapter 9

Name: Section: G5 Grade:

Edition of textbook: 5th Edition

Submission due date: before 3:30 pm on Thursday 20 October

Please follow this example to journalize the transactions in the exercises

where journal entries are asked.

Date Debit Credit

Account Name 200
Account Name 200
(Description of transaction)
ACCT101 Financial Accounting Homework 4: E9-7, E9-8, E9-18 5th Edition

Exercise 9-7 (LO 9-5)

January 1, 2021 Debit Credit

Cash 500,000
Bonds Payable 500,000
(Issue bonds at face amount)

June 30, 2021

Interest expense 22,500
Cash 22,500
(Pay semi-annual interest)
($22,500= $500,000 x 9% x 1/2
December 31, 2021
Interest expense 22,500
Cash 22,500
(Pay semi-annual interest)
ACCT101 Financial Accounting Homework 4: E9-7, E9-8, E9-18 5th Edition

Exercise 9-8 (LO 9-5)

Requirement 1
(1) (2) (3) (4) (5)
Increase in
Cash Interest Carrying Carrying
Date Paid Expense Value Value
Face Carrying Value Prior
Amount x 5% Market (3) – (2) Carrying
x 4.5% Rate Value + (4)
Stated Rate
1/ 1 /2021 457,102
6/30/2021 22,500 22,855 355 457,457
12/31/2021 22,500 22,873 373 457,830

Requirement 2
January 1, 2021 Debit Credit
Cash 457,102
Discount on Bonds Payable 42,898
Bonds Payable 500,000
(Issue bonds at a discount)

June 30, 2021

Interest Expense 22,855
Discount on Bonds Payable 355
(difference)
Cash 22,500
(Pay semi-annual interest)

December 31, 2021

Interest Expense 22,873
Discount on Bonds Payable 373
(difference)
Cash 22,500
(Pay semi-annual interest)
ACCT101 Financial Accounting Homework 4: E9-7, E9-8, E9-18 5th Edition

Exercise 9-18 (LO 9-7) Please use the Present Value Tables (i.e., Table 2 and Table 4
on page P-2 and P-4 in the textbook) at the end of the textbook to calculate the bond price.

Requirement 1

Bond is issued at a premium.

PV of principal $41,000,000 x 0.20829 = 8,539,890

PV of interest payments $1,845,000 x 19.79277 = 36,517,661

Issue price of bonds = $45,057,551

Requirement 2

Bond is issued at face amount.

PV of principal $41,000,000 x 0.17193 = 7,049,130

PV of interest payments $1,845,000 x 18.40158 = 33,950,915

Issue price of bonds = $41,000,045

Requirement 3

Bond is issued at a discount.

PV of principal $41,000,000 x 0.14205 = 5,824,050

PV of interest payments $1,845,000 x 17.15909 = 31,658521

Issue price of bonds = $37,482,571