Download Accounting Principles II by Elizabeth A. Minbiole PDF

By Elizabeth A. Minbiole

Semesters of accounting are required via so much company, economics, finance, and actuarial technology courses ñ- and on common, there are a few 700,000 scholars taking accounting every year! Are you considered one of them? CliffsQuickReview Accounting rules II offers every thing you must speedy comprehend complicated accounting fundamentals ñ- from budgeting to price accounting.

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The amount of discount amortized for the last payment is equal to the balance in the discount on bonds payable account. As with the straight-line method of amortization, at the maturity of the bonds, the discount account’s balance will be zero and the bond’s carrying value will be the same as its principal amount. See Table 2-2 for interest expense and carrying values over the life of the bond calculated using the effective interest method of amortization. ACCOUNTING PRINCIPLES II 31 32 9,377 9,377 9,396 9,416 9,437 9,459 9,482 9,506 9,531 9,558 9,586 9,615 7/1/X0 (A) 12/31/X0 6/30/X1 12/31/X1 6/30/X2 12/31/X2 6/30/X3 12/31/X3 6/30/X4 12/31/X4 6/30/X5 12/31/X5 Table 2-2: Date Beginning Carrying Value (1) 481 479 478 477 475 474 473 472 471 470 469 450 450 450 450 450 450 450 450 450 450 450 31 29 28 27 25 24 23 22 21 20 19 385 414 442 469 494 518 541 563 584 601 623 354 385 414 442 469 494 518 541 563 584 604 Interest Method of Amortization of Discount Interest Interest Discount Beginning Ending Expense Payment Amortized Discount Discount (2) (3) (4)=(2)-(3) (5) (6)=(5)-(4) 9,646 9,615 9,586 9,558 9,531 9,506 9,482 9,459 9,437 9,416 9,396 Ending Carrying Value (7)=(1)+(3) LONG-TERM LIABILITIES CLIFFSQUICKREVIEW ACCOUNTING PRINCIPLES II 9,712 9,748 9,785 9,824 9,865 9,908 9,953 6/30/X7 12/31/X7 6/30/X8 12/31/X8 6/30/X9 12/31/X9 6/30/X10 450 450 9,000 497 9,623 450 450 450 450 450 450 450 Interest Payment (3) 495 493 491 489 487 486 484 482 Interest Expense (2) At issue, carrying value = $10,000 face value – $623 discount.

The withdrawal account is also closed to the capital account in the closing process. Asset contributions to partnerships When a partnership is formed or a partner is added and contributes assets other than cash, the partnership establishes the net realizable or fair market value for the assets. For example, if the Walking Partners company adds a partner who contributes accounts receivable and equipment from an existing business, the partnership evaluates the collectibility of the accounts receivable and records them at their net realizable value.

At maturity, the General Journal entry to record the principal repayment is shown in the entry that follows Table 2-4. ACCOUNTING PRINCIPLES II 39 Effective Interest Method of Amortizing the Premium Interest Premium Ending Interest Beginning Ending Expense Amortized Payment Premium Carrying Premium (2) (3)=(4)-(2) (4) (5) (6)=(5)-(3) Value (7)=(1)−(3) CLIFFSQUICKREVIEW 7/1/X0 (A) 11,246 12/31/X0 11,246 562 38 600 1,246 1,208 11,208 6/30/X1 11,208 560 40 600 1,208 1,168 11,168 12/31/X1 11,168 558 42 600 1,168 1,126 11,126 6/30/X2 11,126 556 44 600 1,126 1,082 11,082 12/31/X2 11,082 554 46 600 1,082 1,036 11,036 6/30/X3 11,036 552 48 600 1,036 988 10,988 12/31/X3 10,988 549 51 600 988 937 10,937 6/30/X4 10,937 547 53 600 937 884 10,884 12/31/X4 10,884 544 56 600 884 828 10,828 6/30/X5 10,828 541 59 600 828 769 10,769 12/31/X5 10,769 539 61 600 769 708 10,708 6/30/X6 10,708 535 65 600 708 643 10,643 LONG-TERM LIABILITIES 40 Table 2-4: Date Beginning Carrying Value (1) ACCOUNTING PRINCIPLES II Date Beginning Carrying Value (1) Interest Expense (2) Premium Amortized (3)=(4)-(2) Interest Payment (4) Beginning Premium (5) Ending Premium (6)=(5)-(3) 12/31/X6 10,643 532 68 600 643 575 10,575 6/30/X7 10,575 529 71 600 575 504 10,504 12/31/X7 10,504 525 75 600 504 429 10,429 6/30/X8 10,429 521 79 600 429 350 10,350 12/31/X8 10,350 518 82 600 350 268 10,268 6/30/X9 10,268 513 87 600 268 181 10,181 12/31/X9 10,181 91 600 181 90 10,090 6/30/X10 10,090 90 600 90 0 10,000 1,246 12,000 509 * 510 10,754 * * Ending Carrying Value (7)=(1)−(3) Due to rounding.

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