Student Name: Instructor

Class: McGraw-Hill/Irwin
Problem 14-03
Requirement 1:
BRADLEY RECREATIONAL PRODUCTS
Amortization Table at Effective Interest Rate

Payment
1
2
3
4
5
6
7
8*
*rounded

Cash
Interest
4.5%
4,500
4,500
4,500
4,500
4,500
4,500
4,500
4,500
36,000
Correct!

Effective
Interest
5%
4,838
4,855
4,873
4,892
4,911
4,932
4,953
4,978
39,232
Correct!

Increase in
Balance

338
355
373
392
411
432
453
478
3,232

Outstanding
Balance
96,768
97,106
97,461
97,834
98,226
98,637
99,069
99,522
100,000

Correct!

Requirement 2:
BRADLEY RECREATIONAL PRODUCTS
Amortization Table Straight-Line Method

Payment
1
2
3
4
5
6
7
8

Cash
Payment
4.5%
100,000
4,500
4,500
4,500
4,500
4,500
4,500
4,500
4,500
36,000
Correct!

Recorded
Interest

4,904
4,904
4,904
4,904
4,904
4,904
4,904
4,904
39,232
Correct!

Increase in
Balance

404
404
404
404
404
404
404
404
3,232

Outstanding
Balance
96,768
97,172
97,576
97,980
98,384
98,788
99,192
99,596
100,000

Correct!

Requirement 3:
BRADLEY RECREATIONAL PRODUCTS
General Journal
Account
(effective interest)
Interest expense
Discount on bonds payable
Cash
(straight-line)
Interest expense
Discount on bonds payable
Cash

Debit

Credit

4,911

- Correct!

411
4,500
4,904

- Correct!

404
4,500

Given Data P14-03:

BRADLEY RECREATIONAL PRODUCTS
Bond issue
Bond issue - term (years)
Bond issue - interest rate
Bond annual rate of return
Bonds issued at

100,000
4
9%
10%
96,768

Student Name: Instructor

Class: McGraw-Hill/Irwin
Problem 14-05
Requirement 1:
Cromley Motor Products
Interest
Principal
Present value (price) of the bonds

$ 23,267,556
54,147,200
$ 77,414,756

- Correct!

Requirement 2:
CROMLEY MOTOR PRODUCTS
Amortization Schedule

1
2
3
4
5
6
7
8*
*rounded

Cash
Payment
4.5%

Effective
Interest
5%

3,600,000
3,600,000
3,600,000
3,600,000
3,600,000
3,600,000
3,600,000
3,600,000
28,800,000

3,870,738
3,884,275
3,898,488
3,913,413
3,929,084
3,945,538
3,962,815
3,980,893
31,385,244

Correct!

Correct!

Increase in
Balance
270,738
284,275
298,488
313,413
329,084
345,538
362,815
380,893
2,585,244

Outstanding
Balance
77,414,756
77,685,494
77,969,769
78,268,257
78,581,670
78,910,754
79,256,292
79,619,107
80,000,000

Correct!

BARNWELL INDUSTRIES
Amortization Schedule
Cash
Interest
4.5%
1
2
3
4
5
6
7
8*
*rounded

3,600
3,600
3,600
3,600
3,600
3,600
3,600
3,600
28,800
Correct!

Effective
Interest
5%
3,871
3,884
3,899
3,913
3,929
3,946
3,963
3,980
31,385
Correct!

Increase in
Balance
271
284
299
313
329
346
363
380
2,585
Correct!

Outstanding
Balance
77,415
77,686
77,970
78,269
78,582
78,911
79,257
79,620
80,000

Student Name: Instructor

Class: McGraw-Hill/Irwin
Problem 14-05
Requirement 3:
General Journal
Account
February 1, 2011 (Cromley)
Cash
Discount on bonds payable
Bonds payable
February 1, 2011 (Barnwell)
Bond investment
Discount on bond investment
Cash

Debit

Credit

77,414,756
2,585,244
80,000,000
80,000

- Correct!
- Correct!

2,585
77,415

Requirement 4:
General Journal
Account
July 31, 2011 (Cromley)
Interest expense
Discount on bonds payable
Cash
July 31, 2011 (Barnwell)
Cash
Discount on bond investment
Interest revenue
December 31, 2011 (Cromley)
Interest expense
Discount on bonds payable
Interest payable
December 31, 2011 (Barnwell)
Interest receivable
Discount bond on investment
Interest revenue
January 31, 2012 (Cromley)
Interest expense
Interest payable
Discount on bonds payable
Cash
January 31, 2012 (Barnwell)
Cash
Discount on bond investment
Interest receivable
Interest revenue

Debit

Credit

3,870,738

- Correct!

270,738
3,600,000
3,600
271
3,871
3,236,896

- Correct!
- Correct!

236,896
3,000,000
3,000
237
3,237

- Correct!

47,379
3,600,000

- Correct!

3,000
647

- Correct!

647,379
3,000,000

3,600
47

Student Name: Instructor

Class: McGraw-Hill/Irwin
Problem 14-05
July 31, 2012 (Cromley)
Interest expense
Discount on bonds payable
Cash
July 31, 2012 (Barnwell)
Cash
Discount on bond investment
Interest revenue
December 31, 2012 (Cromley)
Interest expense
Discount on bonds payable
Interest payable
December 31, 2012 (Barnwell)
Interest receivable
Discount on bond investment
Interest revenue
January 31, 2013 (Cromley)
Interest expense
Interest payable
Discount on bonds payable
Cash
January 31, 2013 (Barnwell)
Cash
Discount on bond investment
Interest receivable
Interest revenue

3,898,488

- Correct!

298,488
3,600,000
3,600
299
3,899
3,261,178

- Correct!
- Correct!

261,178
3,000,000
3,000
261
3,261

- Correct!

52,236
3,600,000

- Correct!

3,000
652

- Correct!

652,236
3,000,000

3,600
52

Given Data P14-05:

CROMLEY MOTOR PRODUCTS
Bond issue by Cromley Motor Products
Bond issue (years)
Bond issue interest rate
Bond annual yield
Long-term investment by Barnwell Industries

$ 80,000,000
4
9%
10%
$
80,000

Student Name: Instructor

Class: McGraw-Hill/Irwin
Problem 14-07
Requirement 1:
McWHERTER INSTRUMENTS
Interest
Principal
Present value (price) of the bonds

$ 274,545,440
56,820,000
$ 331,365,440

- Correct!

Requirement 2:
General Journal
Account
January 1, 2009 (McWherter)
Cash
Discount on bonds
Bonds payable
January 1, 2009 (Blanton)
Bond investment
Discount on bond investment
Cash

Debit

Credit

331,365,440
68,634,560
400,000,000
400,000

- Correct!
- Correct!

68,635
331,365

Requirement 3:
General Journal
Account
June 30, 2009 (McWherter)
Interest expense
Discount on bonds payable
Cash
June 30, 2009 (Blanton)
Cash
Discount on bond investment
Interest revenue

Debit

Credit

16,568,272

- Correct!

568,272
16,000,000
16,000
568
16,568

- Correct!

Requirement 4:
General Journal
Account
December 31, 2009 (McWherter)
Interest expense
Discount on bonds payable
Cash
December 31, 2009 (Blanton)
Cash
Discount on bond investment
Interest revenue

Debit

Credit

16,596,686

- Correct!

596,686
16,000,000
16,000
597
16,597

- Correct!

Given Data P14-07:

McWHERTER INSTRUMENTS
Bond issue by McWherter Instruments
$ 400,000,000
Bond issue (years)
20
Bond issue interest rate
8%
Bond annual yield
10%
Long-term investment by Blanton Technologies $
400,000

Student Name: Instructor

Class: McGraw-Hill/Irwin
Problem 14-13
A&G WAREHOUSERS
Amortization Schedule
Requirement 1 Present value (price) of note:
Interest
$
Principal
Present value (price) of the note
$

15,849
68,301
84,150

- Correct!

A&G WAREHOUSERS
General Journal
Account
Equipment
Discount on notes payable
Notes payable

Debit
84,150
15,850

Credit

100,000

- Correct!

Requirement 2:
Amortization Schedule

Dec.
31
2011
2012
2013
2014
*rounded

Cash
Payment
5,000
5,000
5,000
5,000
20,000
Correct!

Effective
Interest
10%

Increase in
Balance

8,415
8,757
9,132
9,546
35,850
Correct!

3,415
3,757
4,132
4,546
15,850

Outstanding
Balance
84,150
87,565
91,322
95,454
100,000

Correct!

Requirement 3:
A&G WAREHOUSERS
General Journal
Account
Interest expense
Discount on notes payable
Cash

Debit
9,132

Credit
- Correct!

4,132
5,000

Student Name: Instructor

Class: McGraw-Hill/Irwin
Problem 14-13
Requirement 4:
Loan Amount $
Multiplier
Installment Payment $

84,150
3.16987
26,547
Correct!

Requirement 5:
Amortization Schedule

Dec.
31
2009
2010
2011
2012
*rounded

Effective
Interest
10%

Cash
Interest
26,547
26,547
26,547
26,547
106,188
Correct!

Increase in
Balance

8,415
6,602
4,607
2,414
22,038
Correct!

18,132
19,945
21,940
24,133
84,150

Outstanding
Balance
84,150
66,018
46,073
24,133
-

Correct!

Requirement 6:
A&G WAREHOUSERS
General Journal
Account
Interest expense
Note payable
Cash

Debit
4,607
21,940

Credit

26,547

- Correct!

Given Data P14-13:

A&G WAREHOUSERS
Note issue
Term of note issue (years)
Note issue interest rate
Comparison interest rate

100,000
4
5%
10%