Question

Bisbee Mountain Company Trial Balance 11/30/17 Cr 172,000 124,000 Cash Accounts Receivable Allowance for Doubtful Accounts Short Term Note Receivable Supplies Inventory Equipment Building Accumulated Depreciation Соруright Accounts Payable Dividends Payable Interest Payable Unearned Revenue ST Note Payable LT Mortgage Payable Bonds Payable Premium on Bonds Payable Common Stock - $1.25 par Paid In Capital In Excess of Par- CS Preferred Stock - $5 par Paid In Capital In Excess of Par - PS Treasury Stock Retained Earnings Dividends 1,000 50,000 55,000 62,000 75,000 32,000 94,000 12,000 0 0 24,000 22,500 300,000 26,840 105,000 86,000 1,000 50,000 0 3,500 2,000 390,160 Sales Revenue Sales Returns & Allowances Sales Discounts Cost of Goods Sold Bad Debts Expense Depreciation Expense Wages Expense Rent Expense Insurance Expense Supplies Expense Interest Revenue Interest Expense Gain on Sale of Equipment Income Tax Expense 7,000 3,000 46,000 5,000 16,000 167,500 98,000 25,000 16,000 1,000 6,500 15,000 46,000 1,070,000 1,070,000 Total

PLEASE ONLY ANSWER THE SUPPLEMENTAL QUESTIONS.

Answer 1

Requirement 1:

Balance in the Mortgage payable account at Jan. 31,2018 after the second monthly payment is made is $296,388

Calculations:

Date	Installment paid	Interest Expense	Reduction in principal	Outstanding Balance
12/01/2017				$300,000
12/31/2017	$3,800	$2,000	$1,800	$298,200
01/31/2018	$3,800	$1,988	$1,812	$296,388

• Interest expense = Preceding outstanding balance x 8% x (1/12)
• Reduction in capital = Installment paid - Interest expense
• Outstanding balance = Preceding outstanding balance - Reduction in principal

Requirement 2:

Coupon payment = $2,000,000 x 12% x (6/12) = $120,000

Present value of the coupon payments	$926,608
[$120,000 x 7.72173 Present value annuity factor (5%, 10 years)]
Present value of the face value	$1,227,820
[$2,000,000 x 0.61391 Present value factor (5%, 10 years)]
Expect to receive from the sale of bonds	$2,154,428

*Present value factors taken from PV table.