for my financial and managerial 14th edition textbook where

for my financial and managerial 14th edition textbook where can I find the answers? It gives the basic answers in front if each chapter but not the example answers on chegg. which are around the end of each chapter. here\'s a picture with an example of a question from there

please show me where to find the answers

Solution

PB 11-2B

Solution:

Par Value = $65,000,000

Cash Proceeds Received i.e. Issue Price = $73,100,469

Here, Issue Price is higher than Par Value, it means bonds are issued at Premium.

Premium on Bonds Payable = Issue Price 73,100,469 – Par Value 65,000,000 = $8,100,469

Part 1 --- Entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1

Date

General Journal

Debit

Credit

July1, Year 1

Cash

$73,100,469

Bonds Payable

$65,000,000

Premium on Bonds Payable

$8,100,469

Part 2(A) – Entry to record first semiannual interest payment, using straight line method

Under straight line method, the amortization of bond premium or discount are calculated by dividing discount or premium amount by semiannual period to maturity of the bonds.

Here,

Semi annual period to maturity = 10 years x 2 = 20

Premium on Bonds Payable = $8,100,469

Semi Annual Amortization of Premium = Total Premium 8,100,469 / Semiannual period to maturity 20 = $405,023

Under straight line method, amortization amount will be same for each time.

Coupon Interest i.e. Cash Interest Payable = par Value x Coupon Rate = 65,000,000*12%*1/2 = $3,900,000

Date

General Journal

Debit

Credit

Dec.31, Year 1

Interest Expense (balancing figure)

$3,494,977

Premium on Bonds Payable (Amortization)

$405,023

Cash Interest

$3,900,000

Part 2(B) -- Entry to record first semiannual interest payment, using straight line method

Date

General Journal

Debit

Credit

June 30, Year 2

Interest Expense (balancing figure)

$3,494,977

Premium on Bonds Payable (Amortization)

$405,023

Cash Interest

$3,900,000

Part 3 – Total Interest Expense for Year 1

Total Interest Expense for Year 1 as calculated in Part 2(A) is $3,494,977

Part 4 –

Some basic rules which should be remembered with regard to bonds are:

Hence, The bonds proceeds will always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest.

Part 5 –

Semi Annual Coupon Interest = par Value x Coupon Rate = 65,000,000*12%*1/2 = $3,900,000

Semiannual period to maturity = 10 years x 2 = 20

Semiannual market interest rate = 10%*1/2 = 5%

Present Value of Bonds = Semi Annual Coupon Interest x PVIFA (R,n) + Par Value x PVIF (R,n)

= (3,900,000*12.46221) + (65,000,000*0.37689)

= 48,602,619 + 24,497,850

= 73,100,469

Cash Proceeds = Present Value of Bonds Payable at market interest rate 10% = $73,100,469

Note -- Calculation of Present Value Factor

PVIFA (R, n) = Present Value interest factor for ordinary annuity at R% for n periods = (1 – 1/(1+R)ⁿ) / R

PVIFA (5%,20) = (1 – 1/(1+0.05)²⁰) / 0.05 = 12.46221

PVIF (R, n) = Present Value interest factor for ‘n’ period at ‘R’% = 1/(1+R)ⁿ

PVIF (5%, 20) = 1/(1+0.05)²⁰ = 0.37689

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

Pls ask separate question for remaining parts.

Date	General Journal	Debit	Credit
July1, Year 1	Cash	$73,100,469
	Bonds Payable		$65,000,000
	Premium on Bonds Payable		$8,100,469