Tugas Ch.14

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 INTEREST PREMIUM CARRYING
PAID EXPENSE AMORTIZATION AMOUNT OF
BONDS
1/1/202 - - - $ 2.061.440
1
1/1/202 210.000 206.144 3.856 2.057.584
1
1/1/202 210.000 205.758 4.242 2.053.342
2
1/1/202 210.000 205.342 4.658 2.048.684
3
1/1/202 210.000 204.868 5.132 2.043.552
4
1/1/202 210.000 204.355 5.645 2.037.907
5
c. 1/1/2024 Carrying amount as of $

2.043.552
Less: Amortization of bond premium
2.566
($5.132 / 2)
1/7/2024 Carrying amount as of $
2.046.986
Reacquisition price $
1.065.000
1/7/2024 Carrying amount as of
(1.020.493)
($2.046.110 / 2)
Loss $ 44.507
Journal entry for accrued interest
Interest expense 51.217

($ 204.868 x ½ x ½ )
Bonds payable 1.283
Cash 52.500
($210.000 x ½ x ½ )
Journal entry for reacquisition
Bonds Payable 1.020.493 *
Loss on extinguishment of Debt 44.507
Cash 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 effective-
interest 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$2,171,600, a yield of 10%. Hobart uses the effective-interest method to amortize bond
premiums or discounts. The bonds pay semiannual interest on June 30 and December 31.
Instructions
Prepare the amortization schedule for four periods. Using the data for illustrative purposes,
write a short memo (1–1.5 pages double-spaced) to Samantha, explaining what the effective-
interest method is, why it is preferable, and how it is computed. (Do not forget to include an
amortization schedule, referring to it whenever necessary.)
Answer:
a. Harga Obligasi
Harga Jual Obligasi = R$ 2.171.600
Interest Payout R$ 2.000.000 x 11% = R$ 220.000 : 6/12 = R$ 110.000
Interest Expense R$ 2.171.600 x 10% = R$ 217.160 : 6/12 = R$ 108.580
Jurnal Transaction :
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 CASH INTEREST PREMIUM CARRYING
PAID EXPENSE AMORTIZATION AMOUNT OF
BONDS
Jun/30/202 - - - $ 2.171.600
2
Dec/31/2022 110.000 108.580 1.420 2.170.180
Jun/30/202 110.000 108.509 1.491 2.168.689
3
Dec/31/2023 110.000 108.434 1.566 2.167.123
Jun/30/202 110.000 108.356 1.644 2.165.479
4
Dec/31/2024 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 % = $ 50.000 : 6/12 = $ 25.000
Dat Description Debit Creadit

March, 01 Cash $ 472.090
Bond Payable $ 472.090
Sep, 01 2022 Interest Expense $ 28.325
Cash $ 25.000
Dec, 31 2022 Interest Expense $ 19.017
Interest Payable $ 16.667
March, 01 Interest Expense $ 9.508
Cash $ 25.000
Sep, 01 2023 Interest Expense $ 28.736
Cash $ 25.000
b. Nilai Discount Amortization
Discount
Date Cash Paid Interest Amortization Carrying
March, 01 $ 472.090
Sep, 01 2022 $ 25.000 $ 28.325 $ 3.325 $ 475.415
March, 01 $ 25.000 $ 28.525 $ 3.525 $ 478.940
Sep, 01 2023 $ 25.000 $ 28.736 $ 3.736 $ 482.676
March, 01 $ 25.000 $ 28.961 $ 3.961 $ 486.637
Sep, 01 2024 $ 25.000 $ 29.198 $ 4.198 $ 490.835
March, 01 $ 25.000 $ 29.450 $ 4.450 $ 495.285
Sep, 01 2025 $ 25.000 $ 29.717 $ 4.717 $ 500.002
$ 175.000 $ 202.912 $ 27.912
a. Harga Obligasi ( 1 June 2022 )
PV Nilai Nominal = $ 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 % = $ 48.000 : 6/12 = $ 24.000
Date Description Debit Creadit

June, 01 2022 Cash $ 425.887
Cash $ 24.000
Bond Payable $ 474
June, 01 2023 Interest Expense $ 17.632
Cash $ 24.000
b. Nilai Premium Amortization
Premium
Date Cash Paid Interest Amortization Carrying
Jun, 01 2022 $ 425.887
Dec, 01 2022 $ 24.000 $ 21.294 $ 2.706 $ 423.181
Jun, 01 2023 $ 24.000 $ 21.159 $ 2.841 $ 420.340
Dec, 01 2023 $ 24.000 $ 21.017 $ 2.983 $ 417.357
Jun, 01 2024 $ 24.000 $ 20.868 $ 3.132 $ 414.225
Dec, 01 2024 $ 24.000 $ 20.711 $ 3.289 $ 410.936
Jun, 01 2025 $ 24.000 $ 20.547 $ 3.453 $ 407.483
Dec, 01 2025 $ 24.000 $ 20.374 $ 3.626 $ 403.857
Jun, 01 2026 $ 24.000 $ 20.193 $ 3.807 $ 400.050
$ 192.000 $ 166.163 $ 25.837
Answer:
Journal entries
DATE DESCRIPTION DEBIT CREDIT
1/7/2022 Cash
(900.000 x 12% x 6/12)
Bonds payable
Interest expense

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Nama : Aldini Nurul Aidha

c. 1/1/2024 Carrying amount as of $

Interest expense 51.217

*premium as of 1/7/2024 to be written off

The loss is reported as other income and expense

Date Description Debit Credit

P14.8 (LO 1, 3) (Comprehensive Bond Problem) In each of the following independent

Dat Description Debit Creadit

Date Description Debit Creadit

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