CHAPTER 14
Long-Term Liabilities SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 14-1 Present value of the principal $500,000 X .37689 ........................................................ Present value of the interest payments $22,500 X 12.46221....................................................... Issue price .............................................................. $188,445 280,400 $468,845

BRIEF EXERCISE 14-2 (a) (b) (c) Cash ...................................................................... Bonds Payable ............................................ Interest Expense................................................... Cash ($300,000 X 10% X 6/12) .................... Interest Expense................................................... Interest Payable ........................................... 300,000 300,000 15,000 15,000 15,000 15,000

BRIEF EXERCISE 14-3 (a) Cash ($300,000 X 98%) ......................................... Discount on Bonds Payable ................................ Bonds Payable ............................................ Interest Expense................................................... Discount on Bonds Payable ($6,000 X 1/10 = $600)............................... Cash ($300,000 X 10% X 6/12) .................... 294,000 6,000 300,000 15,600 600 15,000

(b)

(c)

Interest Expense................................................... Discount on Bonds Payable ($6,000 X 1/10 = $600)............................... Interest Payable ...........................................

15,600 600 15,000

BRIEF EXERCISE 14-4 (a) Cash ($300,000 X 103%) ....................................... Bonds Payable ............................................ Premium on Bonds Payable ....................... Interest Expense................................................... Premium on Bonds Payable ($9,000 X 1/10 = $900)