Solution_P10-6A.pdf
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10-40 Copyright © 2011 John Wiley & Sons, Inc. Weygandt, IFRS, 1/e, Solutions Manual (For Instructor Use Only)
*PROBLEM 10-6A
(a) 2011July 1 Cash........................................................... 2,271,813
Bonds Payable .............................. 2,271,813
(b) ATWATER CORPORATIONBond Premium Amortization
Effective-Interest Method—Semiannual Interest Payments10% Bonds Issued at 8%
Semi-annualInterestPeriods
(A)
Interestto BePaid
(B)
InterestExpense
(C)Premium
Amor-tization(A) – (B)
(D)
BondCarrying
Value
Issue date123
$100,000 100,000 100,000
$90,873 90,507 90,128
$9,127 9,493 9,872
$2,271,813 2,262,686 2,253,193 2,243,321
(c) Dec. 31 Bond Interest Expense ($2,271,813 X 4%).............................. 90,873Bonds Payable ....................................... 9,127
Bond Interest Payable ($2,000,000 X 5%)..................... 100,000
(d) 2012July 1 Bond Interest Expense
[($2,271,813 – $9,127) X 4%].......... 90,507Bonds Payable ....................................... 9,493
Cash.................................................. 100,000
(e) Dec. 31 Bond Interest Expense [($2,262,686 – $9,493) X 4%].......... 90,128Bonds Payable ....................................... 9,872
Bond Interest Payable................. 100,000