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Accounting question - 4dkids - 12-12-2008
Hello all! Would any bright accountant major be willing to tell me how the red $1,762 amount below is achieved? BIG THANK YOU in advance.
3/1/07 Cash........................................................................... 236,045
Discount on Bonds Payable.............................. 13,955*
Bonds Payable ............................................ 250,000
*Maturity value of bonds payable $250,000
Present value of $250,000 due in 7 periods at 6%
($250,000 X .66506) $166,265
Present value of interest payable semiannually
($12,500 X 5.58238) 69,780
Proceeds from sale of bonds (236,045)
Discount on bonds payable $ 13,955
9/1/07 Interest Expense................................................ 14,163
Discount on Bonds Payable ............... 1,663
Cash............................................................ 12,500
12/31/07 Interest Expense................................................ 9,508
Discount on Bonds Payable ............... 1,175
($1,762 X 4/6)
Interest Payable ($12,500 X 4/6)......... 8,333 3/1/07 Cash........................................................................... 236,045
Discount on Bonds Payable.............................. 13,955*
Bonds Payable ............................................ 250,000
*Maturity value of bonds payable $250,000
Present value of $250,000 due in 7 periods at 6%
($250,000 X .66506) $166,265
Present value of interest payable semiannually
($12,500 X 5.58238) 69,780
Proceeds from sale of bonds (236,045)
Discount on bonds payable $ 13,955
9/1/07 Interest Expense................................................ 14,163
Discount on Bonds Payable ............... 1,663
Cash............................................................ 12,500
12/31/07 Interest Expense................................................ 9,508
Discount on Bonds Payable ............... 1,175
($1,762 X 4/6)
Accounting question - categ - 12-12-2008
Do you need to know what the number represents or how the figure was computed?
I didn't go through all the computations to get to the figure but.... it represents full 6 months of the discount on the interest expense. Interest is paid every 6 months, it would be the next adjustment to the interest expense due to be paid in March 2008.
That figure must then be reduced by 2 months to come up with the amount attributable to the 4 months in 2007(ending in 12/07 for end of the year tax purposes). So the reduced amount represents Sept, Oct, Nov, and December
Did I get close to the answer you needed?
Accounting question - 4dkids - 12-12-2008
I just logged on to post that I figured it out but you are wonderful for taking the time in the case that I didn't. Your answer is what I came up with also.
Thank you, Cate! Marie
Accounting question - categ - 12-12-2008
no problem, i was in that position many times during my online accounting classes. sometimes all those numbers coming from all those directions gets overwhelming. glad i could help.