Week 10 Debt Set , Zero Coupon Bond Company B sold a $100,000, 10 year zero coupon (zero interest paid) bond on January 1, 2010 to yield a 4.5 % effective annual effective interest rate. Calculate the sale price of the bond. Prepare a 10 year amortization schedule. Make any required entries on December 31, 2010 and on Dec. 31, 2011. 2. Serial Bond Company C sold a $400,000 serial bond on January 1, 2010 with $100,000 of bonds due each year starting December 31, 2010. The bonds have a stated interest rate of 4%, but were sold to yield a 4.5% annual effective rate. Prepare an amortization schedule based on the stated rate. Prepare an effective interest amortization table. Make all required entries on December 31, 2010 and December 31, 2011 Note with unreasonable terms (funny money) Company D purchased a truck for an agreed price of $40,000 on January 1, 2010, paid $5,000 down and financed the balance with the dealer at an annual interest rate of 9%. Payments were due each quarter end, for 12 quarters, starting March 31, 2010. It is clear that the truck could have been purchased for $37,000 cash. Calculate the required payment under the note signed. Calculate the effective interest rate, as implied by the cash price of the truck. Make the following entries: Purchase of the truck For the first payment The entries if the debt is retired after 4 periods The actual effective interest rate if the debt is retired after the forth payment is made. 4.Troubled debt A Company E has an unpaid note for $60,000 on January 1, 2018. The note was written at 9% annual interest. There is also accrued unpaid interest of $6,000. Company E transfers a piece of land to the bank in partial satisfaction of the note. The land has a cost of $16,000 and a market value of 20,000 The bank reduces the loan by the value of the land and agrees to forgive the accrued interest. The bank then requires four annual future payments of $12,500, due each December 31, starting on December 31, 2018. For the debtor, make entries on the date of restructure (January 1, 2018), prepare an amortization table (if needed) and make the entry on December 31, 2018 For the bank, make entries on the date of restructure, prepare an amortization table and make the entry on December 31, 2018. 5. Troubled debt B Company E has an unpaid note for $60,000 on January 1, 2018. The note was written at 9% annual interest. There is also accrued unpaid interest of $6,000. Company E transfers a piece of land to the bank in partial satisfaction of the note. The land has a cost of $16,000 and a market value of 20,000. The bank reduces the loan by the value of the land and agrees to forgive the accrued interest and to reduce the loan balance to $33,000. The bank then requires four annual future payments of $11,000, due each December 31, starting on December 31, 2018 For the debtor, make entries on the date of restructure (January 1, 2018), prepare an amortization table (if needed) and make the entry on December 31, 2018 For the bank, make entries on the date of restructure, prepare an amortization table and make the entry on December 31, 2018. Week 10 Debt Set , Zero Coupon Bond Company B sold a $100,000, 10 year zero coupon (zero interest paid) bond on January 1, 2010 to yield a 4.5 % effective annual effective interest rate. Calculate the sale price of the bond. Prepare a 10 year amortization schedule. Make any required entries on December 31, 2010 and on Dec. 31, 2011. 2. Serial Bond Company C sold a $400,000 serial bond on January 1, 2010 with $100,000 of bonds due each year starting December 31, 2010. The bonds have a stated interest rate of 4%, but were sold to yield a 4.5% annual effective rate. Prepare an amortization schedule based on the stated rate. Prepare an effective interest amortization table. Make all required entries on December 31, 2010 and December 31, 2011 Note with unreasonable terms (funny money) Company D purchased a truck for an agreed price of $40,000 on January 1, 2010, paid $5,000 down and financed the balance with the dealer at an annual interest rate of 9%. Payments were due each quarter end, for 12 quarters, starting March 31, 2010. It is clear that the truck could have been purchased for $37,000 cash. Calculate the required payment under the note signed. Calculate the effective interest rate, as implied by the cash price of the truck. Make the following entries: Purchase of the truck For the first payment The entries if the debt is retired after 4 periods The actual effective interest rate if the debt is retired after the forth payment is made. 4.Troubled debt A Company E has an unpaid note for $60,000 on January 1, 2018. The note was written at 9% annual interest. There is also accrued unpaid interest of $6,000. Company E transfers a piece of land to the bank in partial satisfaction of the note. The land has a cost of $16,000 and a market value of 20,000 The bank reduces the loan by the value of the land and agrees to forgive the accrued interest. The bank then requires four annual future payments of $12,500, due each December 31, starting on December 31, 2018. For the debtor, make entries on the date of restructure (January 1, 2018), prepare an amortization table (if needed) and make the entry on December 31, 2018 For the bank, make entries on the date of restructure, prepare an amortization table and make the entry on December 31, 2018. 5. Troubled debt B Company E has an unpaid note for $60,000 on January 1, 2018. The note was written at 9% annual interest. There is also accrued unpaid interest of $6,000. Company E transfers a piece of land to the bank in partial satisfaction of the note. The land has a cost of $16,000 and a market value of 20,000. The bank reduces the loan by the value of the land and agrees to forgive the accrued interest and to reduce the loan balance to $33,000. The bank then requires four annual future payments of $11,000, due each December 31, starting on December 31, 2018 For the debtor, make entries on the date of restructure (January 1, 2018), prepare an amortization table (if needed) and make the entry on December 31, 2018 For the bank, make entries on the date of restructure, prepare an amortization table and make the entry on December 31, 2018