Tugas Ch.14 [PDF]

Citation preview

Nama : Aldini Nurul Aidha NPM : 0119101068 Kelas : A Mata Kuliah : Akuntansi Instrumen Keuangan P14.2 (LO 1, 3) (Issuance and Retirement of Bonds) Venzuela Co. is building a new hockey arena at a cost of $2,500,000. It received a down payment of $500,000 from local businesses to support the project and now needs to borrow $2,000,000 to complete the project. It decides to issue $2,000,000 of 10.5%, 10-year bonds. These bonds were issued on January 1, 2021, and pay interest annually on each January 1. The bonds yield 10%. Instructions a. Prepare the journal entry to record the issuance of the bonds on January 1, 2021. b. Prepare a bond amortization schedule up to and including January 1, 2025. c. Assume that on July 1, 2024, Venzuela Co. retires half of the bonds at a cost of $1,065,000 plus accrued interest. Prepare the journal entry to record this retirement. Answer: PV of Principal



$ 771.080



($ 2.000.000 x 0,38554 ) PV of Interest Payments



$ 1.290.360



( ($ 2.000.000 x 10,5%) x 0,614457 ) PV (selling price) of the bonds



$ 2.061.440



a. Journal entry on date of issue, January 1, 2021 Dr. Cash



$ 2.061.440



Cr. Bonds Payable



$ 2.061.440



b. VENZUELA COMPANY SCHEDULE OF BOND PREMIUM AMORTIZATION 10-YEAR, 10,5% BOND SOLD TO YIELD 10% DATE



CASH PAID



INTEREST EXPENSE



PREMIUM AMORTIZATION



1/1/202 1 1/1/202 1 1/1/202 2 1/1/202 3 1/1/202 4 1/1/202



-



-



-



CARRYING AMOUNT OF BONDS $ 2.061.440



210.000



206.144



3.856



2.057.584



210.000



205.758



4.242



2.053.342



210.000



205.342



4.658



2.048.684



210.000



204.868



5.132



2.043.552



210.000



204.355



5.645



2.037.907



5 c. 1/1/2024 2.043.552



Carrying amount as of



$



Less: Amortization of bond premium 2.566 ($5.132 / 2) 1/7/2024 2.046.986



Carrying amount as of



$



Reacquisition price 1.065.000 1/7/2024 (1.020.493)



$



Carrying amount as of ($2.046.110 / 2) Loss



$ 44.507



Journal entry for accrued interest Interest expense ($ 204.868 x ½ x ½ ) Bonds payable Cash ($210.000 x ½ x ½ ) Journal entry for reacquisition Bonds Payable Loss on extinguishment of Debt Cash



51.217 1.283 52.500



1.020.493 * 44.507 1.065.000



*premium as of 1/7/2024 to be written off (2.046.110 - 2.000.000 ) x ½ = 23.055 The loss is reported as other income and expense P14.4 (LO 1) (Effective-Interest Method) Samantha Cordelia, an intermediate accounting student, is having difficulty amortizing bond premiums and discounts using the effectiveinterest method. Furthermore, she cannot understand why IFRS requires that this method be used. She has come to you with the following problem, looking for help. On June 30, 2022, Hobart SA issued R$2,000,000 face value of 11%, 20-year bonds at R$2,171,600, a yield of 10%. Hobart uses the effective-interest method to amortize bond premiums or discounts. The bonds pay semiannual interest on June 30 and December 31. Instructions Prepare the amortization schedule for four periods. Using the data for illustrative purposes, write a short memo (1–1.5 pages double-spaced) to Samantha, explaining what the effectiveinterest method is, why it is preferable, and how it is computed. (Do not forget to include an amortization schedule, referring to it whenever necessary.)



Answer: a. Harga Obligasi Harga Jual Obligasi Interest Payout R$ 2.000.000 x 11% = R$ 220.000 : 6/12 Interest Expense R$ 2.171.600 x 10% = R$ 217.160 : 6/12 Jurnal Transaction :



= R$ 2.171.600 = R$ 110.000 = R$ 108.580



Date Description Debit Credit June, 30 2022 Cash R$ 2.171.600 Bond Payable R$ 2.171.600 HOBART COMPANY SCHEDULE OF BOND PREMIUM AMORTIZATION EFFECTIVE-INTEREST METHOD- SEMIANNUAL INTEREST PAYMENTS 11% BOND ISSUED TO YIELD 10% DATE Jun/30/202 2 Dec/31/2022 Jun/30/202 3 Dec/31/2023 Jun/30/202 4 Dec/31/2024



CASH PAID



INTEREST EXPENSE



PREMIUM AMORTIZATION



-



-



-



CARRYING AMOUNT OF BONDS $ 2.171.600



110.000 110.000



108.580 108.509



1.420 1.491



2.170.180 2.168.689



110.000 110.000



108.434 108.356



1.566 1.644



2.167.123 2.165.479



110.000



108.274



1.173



2.163.753



P14.8 (LO 1, 3) (Comprehensive Bond Problem) In each of the following independent cases, the company closes its books on December 31. 1. Sanford Co. sells $500,000 of 10% bonds on March 1, 2022. The bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2025. The bonds yield 12%. Give entries through December 31, 2023. 2. Titania Co. sells $400,000 of 12% bonds on June 1, 2022. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2026. The bonds yield 10%. On October 1, 2023, Titania buys back $120,000 worth of bonds for $126,000 (includes accrued interest). Give entries through December 1, 2024. Instructions For the two cases, prepare all of the relevant journal entries from the time of sale until the date indicated. (Construct amortization tables where applicable.) Amortize premium or discount on interest dates and at year-end. (Assume that no reversing entries were made; round to the nearest dollar.) Answer:



a. Harga Obligasi ( 1 March 2022 ) PV Nilai Nominal



= $ 500.000 x 0,66506 = $ 332.530



(0,6651=PV7,6%)



PV Bunga Obligasi = $ 25.000 x 5,5824 = $ 139.560 (5,5824=PVOA7,6%) Harga Jual Obligasi = $ 472.090 $ 500.000 x 10 % Dat March, 01



Description Cash Bond Payable Sep, 01 2022 Interest Expense Bond Payable Cash Dec, 31 2022 Interest Expense Bond Payable Interest Payable March, 01 Interest Expense Interest Payable Bond Payable Cash Sep, 01 2023 Interest Expense Bond Payable Cash Dec, 31 2023 Interest Expense Bond Payable Interest Payable Jurnal Transaction :



Debit $ 472.090



= $ 50.000 : 6/12 = $ 25.000 Creadit $ 472.090



$ 28.325 $ 3.325 $ 25.000 $ 19.017 $ 2.350 $ 16.667 $ 9.508 $ 16.667 $ 1.175 $ 25.000 $ 28.736 $ 3.736 $ 25.000 $ 19.308 $ 2.641 $ 16.667



b. Nilai Discount Amortization Date March, 01 Sep, 01 2022 March, 01 Sep, 01 2023 March, 01 Sep, 01 2024 March, 01 Sep, 01 2025 a.



Cash Paid



$ 25.000 $ 25.000 $ 25.000 $ 25.000 $ 25.000 $ 25.000 $ 25.000 $ 175.000 Harga Obligasi ( 1 June 2022 )



PV Nilai Nominal



Discount Amortization Carrying $ 472.090 $ 3.325 $ 475.415 $ 3.525 $ 478.940 $ 3.736 $ 482.676 $ 3.961 $ 486.637 $ 4.198 $ 490.835 $ 4.450 $ 495.285 $ 4.717 $ 500.002 $ 27.912



Interest $ 28.325 $ 28.525 $ 28.736 $ 28.961 $ 29.198 $ 29.450 $ 29.717 $ 202.912



= $ 400.000 x 0,6768



= $ 270.720



(0,6768=PV8,5%)



PV Bunga Obligasi = $ 24.000 x 6,4632 = $ 155.167 (6,4632=PVOA8,5%) Harga Jual Obligasi = $ 425.887 $ 400.000 x 12 % Date Description June, 01 2022 Cash Bond Payable Dec, 01 2022 Interest Expense Bond Payable Cash Dec, 31 2022 Interest Expense Bond Payable Interest Payable June, 01 2023 Interest Expense Interest Payable Bond Payable Cash Jurnal Transaction :



= $ 48.000 : 6/12 = $ 24.000 Debit $ 425.887



Creadit $ 425.887



$ 21.294 $ 2.706 $ 24.000 $ 3.526 $ 474 $ 4.000 $ 17.632 $ 4.001 $ 2.367 $ 24.000



b. Nilai Premium Amortization Date Jun, 01 2022 Dec, 01 2022 Jun, 01 2023 Dec, 01 2023 Jun, 01 2024 Dec, 01 2024 Jun, 01 2025 Dec, 01 2025 Jun, 01 2026



Cash Paid $ 24.000 $ 24.000 $ 24.000 $ 24.000 $ 24.000 $ 24.000 $ 24.000 $ 24.000 $ 192.000



Interest $ 21.294 $ 21.159 $ 21.017 $ 20.868 $ 20.711 $ 20.547 $ 20.374 $ 20.193 $ 166.163



Premium Amortization Carrying $ 425.887 $ 2.706 $ 423.181 $ 2.841 $ 420.340 $ 2.983 $ 417.357 $ 3.132 $ 414.225 $ 3.289 $ 410.936 $ 3.453 $ 407.483 $ 3.626 $ 403.857 $ 3.807 $ 400.050 $ 25.837



Answer: Journal entries DATE 1/7/2022



DESCRIPTION Cash (900.000 x 12% x 6/12) Bonds payable Interest expense



DEBIT



CREDIT