Homework Answers
| Question-1.1 | ||||
| Semi Annual Periods | Interest Paid | Interest Expense | Amortization Amount | Carrying Value |
| Date of Issue 01/01/2018 | $ - | $ - | $ - | $ 1,60,890.00 |
| 1/7/2018 | $ 9,000.00 | $ 6,435.60 | $ (2,564.40) | $ 1,58,325.60 |
| 31/12/2018 | $ 9,000.00 | $ 6,333.02 | $ (2,666.98) | $ 1,55,658.62 |
| 1/7/2019 | $ 9,000.00 | $ 6,226.34 | $ (2,773.66) | $ 1,52,884.97 |
| 31/12/2019 | $ 9,000.00 | $ 6,115.03 | $ (2,884.97) | $ 1,50,000.00 |
| $ 36,000.00 | $ 25,110.00 | $ (10,890.00) | ||
| Question-1.2 | ||||
| Total Cost of Borrowing = $ 25,110 |
| Date | Particulars | Debit | Credit |
| Question-1.3 | |||
| 1/7/2018 | Interest Expense | $ 6,435.60 | |
| 12% 2 Years Bonds | $ 2,564.40 | ||
| Cash | $ 9,000.00 | ||
| Question-1.4 | |||
| 31/12/2018 | Interest Expense | $ 6,333.02 | |
| 12% 2 Years Bonds | $ 2,666.98 | ||
| Interest Payable | $ 9,000.00 | ||
| Question-1.5 | |||
| Balance Sheet | |||
| Current Liabilities | |||
| Interest Payable | $ 9,000.00 | ||
| 12% 2 Year Bonds | $ 1,55,658.62 | ||
| Question No 1.6: | |||
| Interest Expense for the Year 2018 = 6435.60 + 6333.02 = $12,768.62 | |||
| Date | Particulars | Debit | Credit |
| Question-1.7 | |||
| 1/1/2019 | Interest Payable | $ 9,000.00 | |
| Cash | $ 9,000.00 | ||
| Question-1.8 | |||
| 1/1/2019 | 12% 2 Year Bonds | $ 1,55,658.62 | |
| Cash | $ 1,55,000.00 | ||
| Gain on retirement of Bonds | $ 658.62 | ||
| Date | Particulars | Debit | Credit |
| Question-2.1 | |||
| 1/1/2019 | 10% 5 Year Bonds | $ 90,000.00 | |
| Cash | $ 89,500.00 | ||
| Gain on retirement of Bonds | $ 500.00 | ||
| Question-2.2 | |||
| 1/1/2019 | Gain on retirement of Bonds | $ 500.00 | |
| Income Statement | $ 500.00 | ||
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