# Accounting 8 | Accounting homework help

· After reading the information on accounting for long-term debt in Chapter 14 from your Intermediate Accounting text, use a Word or an Excel document to address the following problems:

o P 14-1, “Determining the Price of Bonds; Discount and Premium; Issuer and Investor,” page 817.

§ This problem tests your knowledge of bond issuance pricing.

o P 14-10, “Notes Exchanged for Assets; Unknown Effective Rate,” page 819.

§ This problem tests your knowledge of exchanging notes for assets.ï»¿

o P 14-21, “Concepts; Terminology,” page 822.

§ This problem tests your knowledge of the concepts and terminology associated with long-term debt instruments. List each of the numbers from list A, followed by the correct matching letter from list B. No calculations are necessary for this problem.

P 14–1
Determining the price of bonds; discount and premium; issuer and investor

• LO14–2

On January 1, 2018, Instaform, Inc., issued 10% bonds with a face amount of \$50 million, dated January 1. The bonds mature in 2037 (20 years). The market yield for bonds of similar risk and maturity is 12%. Interest is paid semiannually.

Required:

1. Determine the price of the bonds at January 1, 2018, and prepare the journal entry to record their issuance by Instaform.

2. Assume the market rate was 9%. Determine the price of the bonds at January 1, 2018, and prepare the journal entry to record their issuance by Instaform.

3. Assume Broadcourt Electronics purchased the entire issue in a private placement of the bonds. Using the data in requirement 2, prepare the journal entry to record the purchase by Broadcourt.

P 14–10
Notes exchanged for assets; unknown effective rate

• LO14–3

At the beginning of the year, Lambert Motors issued the three notes described below. Interest is paid at year-end.

1. The company issued a two-year, 12%, \$600,000 note in exchange for a tract of land. The current market rate of interest is 12%.

2. Lambert acquired some office equipment with a fair value of \$94,643 by issuing a one-year, \$100,000 note. The stated interest on the note is 6%.

3. The company purchased a building by issuing a three-year installment note. The note is to be repaid in equal installments of \$1 million per year beginning one year hence. The current market rate of interest is 12%.

P 14–21
Concepts; terminology

• LO14–1 through LO14–5

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A with the item from List B (by letter) that is most appropriately associated with it.

List A

List B

•   1. Effective rate times balance
•   2. Promises made to bondholders
•   3. Present value of interest plus        present value of principal
•   4. Call feature
•   5. Debt issue costs
•   6. Market rate higher than stated rate
•   7. Coupon bonds
•   8. Convertible bonds
•   9. Market rate less than stated rate
•   10. Stated rate times face amount
•   11. Registered bonds
•   12. Debenture bond
•   13. Mortgage bond
•   14. Materiality concept
•   15. Subordinated debenture
1. Straight-line method
2. Discount
3. Liquidation payments after other claims satisfied
4. Name of owner not registered