会计学原理19版练习答案：Chapter_14_Long-Term Liabilities

1、McGraw-Hill Companies, 2009Solutions Manual, Chapter 14739Chapter 14Long-Term LiabilitiesQUESTIONS1.A bond is a liability of the issuing company. A share of stock represents an ownership interest in the company.2.Notes payable generally involve borrowing from a single creditor, whereas bonds payable

2、 are usually sold to many different lenders (bondholders).3.Bonds can allow a companys owners to increase their return on equity without investing additional amounts. This result occurs as long as the rate of return on the assets acquired from the borrowed cash is greater than the interest rate paid

3、 on the bonds. Bonds also help the current owners remain in control of the company. There is also a tax advantage with bonds when issued by corporations.4.A trustee for bondholders has the responsibility of monitoring the issuers actions, financial performance, and financial condition to ensure that

4、 the obligations in the bond indenture are met.5.A bond indenture is a legal contract between the issuing company and the bondholders that identifies the obligations and rights of both parties. It specifies such items as the par value of the bonds, the contract interest rate, the due dates for inter

5、est payments, and the maturity date(s) of the bonds. It also may name a trustee, describe the bond issue in detail, and provide for a sinking fund.6.The contract rate (also known as the coupon rate, stated rate, or nominal rate) is the rate that is identified in the bond indenture. It is applied to

6、the par value to determine the size of the cash interest payments. The market rate is the consensus rate that a company is willing to pay and that investors are willing to accept for a specific bond.7.In general, the supply of and demand for bonds affect market rates. The market rate for a particula

7、r bond issue is also affected by risks unique to the issuer (e.g., financial performance and condition) and the length of time until the bonds mature.8.BThe effective interest method creates a constant rate of interest over a bonds life because the market rate at the time of issuance is multiplied b

8、y the beginning balance for each period. The straight-line method produces either an increasing or decreasing rate because it allocates the same amount of expense to each period, even if the liability balance is growing (a discount) or decreasing (a premium). 9.CWhen issuing bonds between interest d

9、ates, a company collects accrued interest from the purchasers to avoid keeping detailed records of bond purchasers and the dates when bonds are purchased. If the company did not collect accrued interest, individual checks would be needed to pay the correct amount of interest to each purchaser. By co

10、llecting in advance, the issuer merely distributes the same amount per check to all bondholders, regardless of when they purchased the bonds.10. The price of bonds can be computed by finding the present value of both the par value at maturity and the periodic cash interest payments discounted at the

11、 market rate of interest.11. The issue price of a $2,000 bond sold at 98 is 98.25% of $2,000, or $1,965. The issue price of a $6,000 bond priced at 101 is 101.5% of $6,000, or $6,090.12. The debt-to-equity ratio is calculated by dividing total liabilities by total equity. The higher a companys debt-

12、to-equity ratio, the higher proportion of a companys assets that are provided by creditors. If a company has a high debt-to-equity ratio, the company may be at risk during poor economic times, because it must still pay off creditors even though it may not be earning as much as it did in the past.13.

13、 An entrepreneur (owner) must repay the bondholders the principal (par value) according to the term of the bonds. He or she must also pay interest on the bonds per the amount and frequency cited in the bond indenture, and must adhere to any stipulations (covenants) specified in the bond contract.14.

14、 Best Buy shows long-term both “Long-term Liabilities” and “Long-Term Debt” on its balance sheet. To determine whether the long-term debt is comprised of bonds or other obligations we must read footnote 5 disclosing details of the Long-Term Debt of the company. The footnote reports that its long-ter

15、m debt is comprised of Convertible debentures (bonds), Lease Obligations, and other debt.15. Per Circuit Citys February 28, 2007, statement of cash flows (financing section), the company repaid $6,724,000 for the fiscal year ended February 28, 2007.16. RadioShacks long-term debt decreased by $149,10

16、0,000 ($494,900,000 - $345,800,000) during the year ended December 31, 2006.17. The financing section of the statement of cash flows of Apple indicates that for the year ended September 30, 2006, the company issued common stock totaling $318,000,000. For that same period, the company issued no addit

17、ional debt. 18.DIf a lease qualifies to be recorded as a capital lease, an asset account for the leased asset will be debited with an amount equal to the present value of the future lease payments. The corresponding credit will be to a lease liability account.19.DAn operating lease is a short-term o

18、r cancelable lease in which the lessor retains the risks and rewards of ownership. The lessee expenses operating lease payments when incurred and the lessee does not report the leased item(s) as an asset nor as a liability. A capital lease is a long-term or noncancelable lease in which the lessor tr

19、ansfers substantially all the risks and rewards of ownership to the lessee. The lessee records the leased item as its own asset along with a lease liability at the start of the lease termthe amount recorded equals the present value of all lease payments.20.DPension plans can be designed as defined b

20、enefit plans or defined contribution plans. In a defined benefit plan the employer estimates the contribution necessary to pay a pre-defined benefit amount to its retirees. For example, an employees monthly pension benefit may be set at $1,000 per month. The employer must contribute the amount neces

21、sary to the pension plan to fund the $1,000 a month to the employee when the employee retires. Alternatively, with a defined contribution plan, the pension contribution is defined and the employer or employee contributes the amount specified in the pension agreement. For example, a defined contribut

22、ion plan might specify that the employer will contribute 2% of an employees annual salary to the pension plan every year.McGraw-Hill Companies, 2009Solutions Manual, Chapter 14741QUICK STUDIESQuick Study 14-1 (10 minutes)1.Bonds cash proceeds: $150,000 x 0.9325 = $139,875 2.Twenty semiannual interes

23、t payments of $5,250* .$105,000Plus bond discount ($150,000 - $139,875). 10,125Total bond interest expense .$115,125*$150,000 x 0.07 x = $5,2503.Bond interest expense on first payment date:$115,125 / 20 semiannual periods = $5,756.25 (or $5,756 rounded)Quick Study 14-2B (10 minutes)1. Bonds cash pro

24、ceeds: $350,000 x 1.0975 = $384,1252.Thirty semiannual interest payments of $12,250*.$367,500Less premium ($384,125 - $350,000). (34,125)Total bond interest expense .$333,375*$350,000 x 0.07 x = $12,2503.Bond interest expense on first payment date:$384,125 x 3% = $11,523.75 (or $11,524 rounded)Quick

25、 Study 14-3 (10 minutes)2009Jan. 1Cash .139,875Discount on Bonds Payable.10,125 Bonds Payable .150,000 To record issuing bonds at a discount.Jan. 1Cash .384,125 Bonds Payable .350,000 Premium on Bonds Payable.34,125 To record issuing bonds at a premium.Quick Study 14-4 (10 minutes)a. Using facts in

26、QS 14-1, the bonds cash proceeds for the bond selling at a discount are computed as followsCash FlowTable ValuePresent Value$150,000 par (maturity) value. 0.4564$ 68,460$ 5,250 interest payment. 13.5903 71,349 Price of Bond. $139,809*Agrees with $139,875 as given in QS 14-1, except for rounding diff

27、erence. (Instructor note: The price in QS 14-1 is adjusted to 93 from 93.21, yielding the $66 difference.)b.Using facts in QS 14-2, the bonds cash proceeds for the bond selling at a premium are computed asCash FlowTable ValuePresent Value$350,000 par (maturity) value.0.4120$144,200$ 12,250 interest

28、payment.19.6004 240,105 Price of Bond.$384,305*Agrees with $384,125 as given in QS 14-2, except for rounding difference.(Instructor note: The price in QS 14-2 is adjusted to 109 from 109.8 yielding the $180 difference.)Quick Study 14-5 (15 minutes)2008(a)Dec. 31Cash .92,277Discount on Bonds Payable.

29、7,723 Bonds Payable .100,000 Sold bonds at discount.2009(b)June 30Bond Interest Expense.4,772 Discount on Bonds Payable*.772 Cash*.4,000 Paid semiannual interest and record amor-tization. *$7,723 - $6,951 *$100,000 x 8%/2(c)Dec. 31Bond Interest Expense.4,772 Discount on Bonds Payable*.772 Cash*.4,00

30、0 Paid semiannual interest and record amor-tization. *$6,951 - $6,179 *$100,000 x 8%/2McGraw-Hill Companies, 2009Solutions Manual, Chapter 14743Quick Study 14-6 (10 minutes)2009July 1Bonds Payable .200,000Premium on Bonds Payable.8,000 Gain on Retirement of Bonds*.4,000 Cash .204,000To record retire

31、ment of bonds before maturity. *$4,000 = $208,000 - $204,000Quick Study 14-7 (10 minutes)2009Jan. 1Bonds Payable.1,000,000 Common Stock*.500,000 Paid-In Capital in Excess of Par Value.500,000 To record retirement of bonds by stock conversion. *500,000 shares x $1.00Quick Study 14-8 (10 minutes)Amoun

32、t of annual payment = a. 4%: Payment = $600,000 / 4.4518 = $134,777b. 6%: Payment = $600,000 / 4.2124 = $142,437c. 8%: Payment = $600,000 / 3.9927 = $150,274Quick Study 14-9 (10 minutes)1.EConvertible bond5.ARegistered bond2.DBond Indenture6.CSerial bond3.GSinking fund bond7.HSecured bond4.BDebentur

33、e8.FBearer bondInitial cash proceeds from noteTable B.3 present value for 5 paymentsQuick Study 14-10 (10 minutes)Ratio of debt to equityNLF CompanyABL CompanyTotal liabilities.$615,000$ 480,000Total equity .$820,000$1,500,000Debt-to-equity ratio .0.750.32Analysis and interpretation: NLF Companys de

34、bt-to-equity ratio of 0.75 implies a riskier financing structure than ABL Companys 0.32 debt-to-equity ratio.Quick Study 14-11C (10 minutes)2009Mar. 1Cash . 202,000 Interest payable* .2,000 Bonds payable.200,000 Sold $200,000 of bonds with two months accrued interest. *($200,000 x .06 x 2/12)Quick S

35、tudy 14-12D (10 minutes)Rental Expense .400 Cash (or Payable).400 To record rental expense for car lease.Quick Study 14-13D (10 minutes)Leased AssetOffice Equipment.13,500 Lease Liability .13,500 To record capital lease of office equipment.McGraw-Hill Companies, 2009Solutions Manual, Chapter 14745EX

36、ERCISESExercise 14-1 (15 minutes)1. Semiannual cash interest payment = $3,650,000 x 10% x 1/2 = $182,5002.Journal entries2009(a)Jan. 1Cash .3,650,000 Bonds Payable .3,650,000 Sold bonds at par.(b)June 30Bond Interest Expense.182,500 Cash .182,500 Paid semiannual interest on bonds.(c)Dec. 31Bond Inte

37、rest Expense.182,500 Cash .182,500 Paid semiannual interest on bonds.3.2009(a)Jan. 1Cash*.3,577,000Discount on Bonds Payable.73,000 Bonds Payable .3,650,000 Sold bonds at 98. *($3,650,000 x 0.98)(b)Jan. 1Cash*.3,832,500 Premium on Bonds Payable.182,500 Bonds Payable .3,650,000 Sold bonds at 105. *($

38、3,650,000 x 1.05)Exercise 14-2 (30 minutes)1.Discount = Par value - Issue price = $175,000 - $165,523 = $9,4772.Total bond interest expense over the life of the bondsAmount repaid Six payments of $3,500*.$ 21,000 Par value at maturity. 175,000 Total repaid.196,000Less amount borrowed. (165,523)Total

39、 bond interest expense.$ 30,477*175,000 x 0.04 x = $3,500or:Six payments of $3,500 . $ 21,000Plus discount . 9,477Total bond interest expense. $ 30,4773.Straight-line amortization table ($9,477/6 = $1,580 rounded)Semiannual Period-EndUnamortized Discount Carrying Value(0) 1/01/2009.$9,477$165,523(1)

40、 6/30/2009. 7,897 167,103(2)12/31/2009. 6,317 168,683(3) 6/30/2010. 4,737 170,263(4)12/31/2010. 3,157 171,843(5) 6/30/2011. 1,577 173,423(6)12/31/2011. 0 175,000McGraw-Hill Companies, 2009Solutions Manual, Chapter 14747Exercise 14-3B (30 minutes)1.Discount = Par value - Issue price = $300,000 - $277

41、,872 = $22,1282.Total bond interest expense over the life of the bondsAmount repaid Six payments of $13,500*. $ 81,000 Par value at maturity. 300,000 Total repaid.381,000Less amount borrowed . (277,872)Total bond interest expense. $103,128*$300,000 x 0.09 x = $13,500 orSix payments of $13,500 . $ 81

42、,000Plus discount . 22,128Total bond interest expense. $103,1283.Effective interest amortization tableSemiannualInterest Period-End(A) Cash Interest Paid4.5% x $300,000(B) Bond Interest Expense6% x Prior (E)(C) Discount Amortization(B) - (A)(D)UnamortizedDiscountPrior (D) - (C)(E) Carrying Value$300

43、,000 - (D) 1/01/2009$22,128$277,872 6/30/2009$ 13,500$ 16,672$ 3,172 18,956 281,04412/31/200913,500 16,863 3,363 15,593 284,407 6/30/201013,500 17,064 3,564 12,029 287,97112/31/201013,500 17,278 3,778 8,251 291,749 6/30/201113,500 17,505 4,005 4,246 295,75412/31/2011 13,500 17,746 * 4,246 0 300,000$

44、 81,000$103,128$22,128*Adjusted for rounding.Exercise 14-4 (30 minutes)1.Premium = Issue price - Par value = $461,795 - $450,000 = $11,7952.Total bond interest expense over the life of the bondsAmount repaid Six payments of $20,250*.$121,500 Par value at maturity. 450,000 Total repaid.571,500Less am

45、ount borrowed. (461,795)Total bond interest expense.$109,705*$450,000 x 0.09 x = $20,250orSix payments of $20,250.$121,500Less premium. (11,795)Total bond interest expense.$109,7053.Straight-line amortization table ($11,795/6 = $1,966 rounded)SemiannualInterest Period-EndUnamortizedPremiumCarrying V

46、alue 1/01/2009$11,795$461,795 6/30/2009 9,829 459,82912/31/2009 7,863 457,863 6/30/2010 5,897 455,89712/31/2010 3,931 453,931 6/30/2011 1,965* 451,96512/31/2011 0 450,000*Adjusted for rounding.McGraw-Hill Companies, 2009Solutions Manual, Chapter 14749Exercise 14-5B (30 minutes)1.Premium = Issue pric

47、e - Par value = $461,795 - $450,000 = $11,7952.Total bond interest expense over the life of the bondsAmount repaid Six payments of $20,250*. $121,500 Par value at maturity. 450,000 Total repaid.571,500Less amount borrowed . (461,795)Total bond interest expense. $109,705*$450,000 x 0.09 x = $20,250or

48、Six payments of $20,250 . $121,500Less premium. (11,795)Total bond interest expense. $109,7053.Effective interest amortization tableSemiannualInterest Period-End(A) Cash Interest Paid4.5% x $450,000(B) Bond Interest Expense4% x Prior (E)(C) Premium Amortization(A) - (B)(D)UnamortizedPremiumPrior (D)

49、 - (C)(E) Carrying Value450,000 + (D) 1/01/2009$11,795$461,795 6/30/2009$ 20,250$ 18,472$ 1,778 10,017 460,01712/31/2009 20,250 18,401 1,849 8,168 458,168 6/30/2010 20,250 18,327 1,923 6,245 456,24512/31/2010 20,250 18,250 2,000 4,245 454,245 6/30/2011 20,250 18,170 2,080 2,165 452,16512/31/2011 20,

50、250 18,085* 2,165 0 450,000$121,500$109,705$11,795 *Adjusted for rounding.Exercise 14-6 (20 minutes)2008(a)Dec. 31Cash .107,720 Premium on Bonds Payable.7,720 Bonds Payable .100,000 Sold bonds at premium.2009(b)June 30Bond Interest Expense.3,228Premium on Bonds Payable*.772 Cash*.4,000 Paid semiannu

51、al interest and record amor-tization. *$7,720 - $6,948 *$100,000 x 8%/2(c)Dec.31Bond Interest Expense.3,228Premium on Bonds Payable*.772 Cash*.4,000 Paid semiannual interest and record amor-tization. *$6,948 - $6,176 *$100,000 x 8%/2Exercise 14-7 (20 minutes)2009(a)Dec. 31Cash .92,000Discount on Bon

52、ds Payable.8,000 Bonds Payable .100,000 Sold bonds at discount.2010(b)June 30Bond Interest Expense.6,000 Discount on Bonds Payable*.1,000 Cash*.5,000 Paid semiannual interest and record amor-tization. *$100,000 x 10%/2 *$8,000 - $7,000(c)Dec. 31Bond Interest Expense.6,000 Discount on Bonds Payable*.

53、1,000 Cash*.5,000 Paid semiannual interest and record amor-tization. *$100,000 x 10%/2 *$7,000 - $6,000McGraw-Hill Companies, 2009Solutions Manual, Chapter 14751Exercise 14-8 (35 minutes)2009(a)Dec. 31Cash .96,000Discount on Bonds Payable.4,000 Bonds Payable .100,000 Sold bonds at discount.(b)2010Ju

54、ne 30Bond Interest Expense.4,000 Discount on Bonds Payable*.1,000 Cash*.3,000 Paid semiannual interest and record amor-tization. *$4,000 - $3,000 *$100,000 x 6%/2Dec. 31Bond Interest Expense.4,000 Discount on Bonds Payable*.1,000 Cash*.3,000 Paid semiannual interest and record amor-tization. *$3,000

55、 - $2,000 *$100,000 x 6%/22011June 30Bond Interest Expense.4,000 Discount on Bonds Payable*.1,000 Cash*.3,000 Paid semiannual interest and record amor-tization. *$2,000 - $1,000 *$100,000 x 6%/2Dec. 31Bond Interest Expense.4,000 Discount on Bonds Payable*.1,000 Cash*.3,000 Paid semiannual interest a

56、nd record amor-tization. *$1,000 - $0 *$100,000 x 6%/2(c)Dec. 31Bonds Payable .100,000 Cash .100,000 Record maturity and payment of bonds.Exercise 14-9 (25 minutes)1.Semiannual cash interest payment = $950,000 x 10% x year = $47,5002.Number of payments = 15 years x 2 per year = 30 semiannual payment

57、s3.The 10% contract rate is less than the 12% market rate; therefore, the bonds are issued at a discount.4.Estimation of the market price at the issue dateCash FlowTableTableValue*AmountPresent ValuePar (maturity) value .B.1 0.1741$950,000$165,395Interest (annuity).B.313.7648 47,500 653,828Price of

58、bonds.$819,223* Table values are based on a discount rate of 6% (half the annual market rate) and 30 periods (semiannual payments).5.Cash .819,223Discount on Bonds Payable.130,777 Bonds Payable .950,000 Sold bonds at a discount on the stated issue date.Exercise 14-10 (25 minutes)1.Semiannual cash in

59、terest payment = $160,000 x 8% x year = $6,4002.Number of payments = 6 years x 2 per year = 12 semiannual payments3.The 8% contract rate is greater than the 6% market rate; therefore, the bonds are issued at a premium.4.Estimation of the market price at the issue dateCash FlowTableTableValue*AmountP

60、resent ValuePar (maturity) value .B.10.7014$160,000$112,224Interest (annuity).B.39.9540 6,400 63,706Price of bonds.$175,930* Table values are based on a discount rate of 3% (half the annual market rate) and 12 periods (semiannual payments).5.Cash .175,930 Premium on Bonds Payable.15,930 Bonds Payabl