ACCT 303 Handout | 2014 Fall Topic: Long Term Notes Receivables and Long Term Debt Interest Bearing Note Illustration 1: igelow Corp. lends Scandinavian Imports $10,000 in exchange for 2 $10,000, three-year note bearing interest at 10 percent anmually. The market rate of interest for a note of similar risk is 10 percent. How does Bigelow record the receipt of the note? - (0 Takevest -. (ooo x [VF - 0A © 3 8f>) Soop x 2. 476 RE = pgs. 8S Primes ped: (2,000 K PLE - S90 2. fofe) (8,886 OD 5132 Totod PY ag ge. shag, r= foo Date oj [Ssureurce MR feose Cash = e0Ne Neer} Cagh jove T# Rey oo Year? Cach (ovo dnt Rey yu Cash po, 080 VR fy,090 1ACCT 303 Handout! 20:4 Iustration 2: Bigelow Corp. lends Scandinavian inports $10,000 in exchange for a $10,000, three-year note-bearing interest at 10 percent annually. ‘The market rate of interest for a note of similar risk is 8 percent. How does Bigelow record the reccipt of the note? os 30 19,099 - i e e vot _ Prennren fee oO | 2 3 1909X PYE CAC 2, 87>) TL stevest Cash flew: = poWKASTT(0> 2ST {I 10,280 ¢ PvF-58(3, 8 Fo) precios Cosh flow - 2,90 OTB 7458.3. Pv of pote 2B T1947 F303 = 195154 10,000 Dede of Laser Jesu, Gor Ve Prema SPS Cagh basis eg Cesk Recon Tae Rev Bremen Amys Covefis umant ofa Date of Iowe po5is.4- Jeur | ove dy 232 158.78 (o3Sh632 Year 2 poo? 828 5% 7h deyed JOU hore yecw3 poo’ gaged {35 18] 1008 yew | Coal joe? Precmiaen MF 59-768 TA Rev Yat 232, Yeeir 2, Cass ioe [reprane Gn Wer pOL 127 iM Rey 84h “i eo? caoh 3 a MidACCT 303 Handout Mlustration 3: Bigelow Corp. lends Scandinavian Imports $10,000 in exchange for a $10,000, three-year note beating interest at 10 percem annually. ‘The market rate of interest for a note of similar risk is 12 percent. How does Bigelow record the receipt of the note? TL atevedt [ovo cB PVE ~OA C3, 127) Dis out = 90d K 2. H01P3 = 2 yod jo.csex PVE-$s C3127) = 79, O88 K OTN T1128 Pr Aa esp —petolpy aqere PUI se GF178 Pete of 196ue, Gomele Leg form Mite. [0,08 Dreet OA pute. 4 go.S Cod ee 955 Corry i Cash Receiied dst Rev Dis Amortiral oe of Date of (50g Move srg, Yecer | fooe {42 BTh 142.376 Gi4, year & foao 115946 1$4.46 98 21.424 years food 1128-62 178.69 foooo 8. Gy19.8 12% eer |: Coch fpev Pisco ow MR Jy2.376 Yeur 3. Coch pve ‘Loe Rev 1 142.376 rd 178.69 Coch 9,000 Tet Reo, {78 6% NR 59.0%ACCT 303 Handout | 2014 | Fall Zero Interest Bearing Note rearing note ah record the Mlustration 4: Jeremiah Company receives a three-year, $10,000 zero-inte The market rate of interest for a note of similar risk is 9 percent, How does J receipt of the note? rv 10.9% X PYF ss c3.9h%) = (00% 0. M218 = 772/.8 cace ruccl) Cash Received Tet Rev DB Ruotioed Grryig tonaut Date of fcarance T1218 Yeocwr { o 694.162 CI4962 340.762 757.5053 257. S088 4 4124 .21058 yeor 2 © : a 82,04 82. Bae T9909 v year 3. J ft Pate of (ssuyoing, MR 79.028 Dee 2278.2 Cash 7712/8 \euir | Dise 694.962 - Tot Rev 6494.96 Your 3 (2c 82.6844 Lit Rey BY 2. Gh4y Codh’ (0,00 MR 12,0ACCT 303 Handout | 2! Long-term Debt Illustration 5: Clancey Inc. issues $2,000,000 of,2% bonds due in 10 years with interest payable at year-end. ‘The current market rate of interest for bonds of similar risk is 8%. What amount lee aul Pv Doe VXI X Pub-oac jo, SB) Bex pao xv 6 7loe} = 739412 [Precppet Pu = 2,999, vooy Put - $86 w 2%) = 2090 009K U463IG > h 2638 Toth pv 9294.24 926380 2 Laer gir Pate Of Lepwrenee will Clancey receive when it issues the bonds? Cav 186 THD Dist {242088 Debe ove osv Cass Pash Uh BP Dice Aaneet — Connyingy Anvoek of Debt Racca . (gor TH. Var | fyv92® 1 49263.96 G 263.296 Seas al ‘Lat DP: 1492 63-296 Dine. Amat 268 496 Cash — 1gaeesACCT 303 Handout Mlustration 6; Clancey Ine. issues $2,000,000 of 7% bonds due in 10 years with interest payable at year-end. The current market rate of interest for bonds of similar risk is 6%. What amount will Clancey receive when it issues the bonds? Tut = Doe K]Jox peE-oA cv, ohne = I4oose X 7.26029 = (03 04/2.6 Priveapat oH OWK PYF - Ss (yo, 670) = 200VVIK V, Hep y = 11167 Tet. fodoyj26t M1618 = 4752.6 Tssurave Dwe. Cash 2(41152.6 fies (471425 Debt = 22,0 Cash Ta Bp Premiun f\nevt Corrgig amoost Lesuemoe Dade 24411626 Yeor | Jgv0e f2BASsb ps tb8 Yay 2126024, 16 @& Ub imp (2833l os Prenitrr Amort Pipes 444 Cash gyasseACCT 303 Handout | 2014 Hlustration 7: Clancey Inc. issues $2,000,000 of 7% bonds due in 10 years with interest payable at year-end. The current market rate of interest for bonds of similar risk is 7%, What amount will Clancey receive when it issues the bonds? Date oF Lepuirace Cate gov, 08 C wglermn Dest — 2 oww,0% Yeor f Yet Expense [eeo,o [ash { 40 os? eer 3. Lat Emp. 149,08 Cadh 1efy, 09° Lew term lest 2,ov ove Cash Zeer. own: