24. rosenberg land development (rld) is a developer of condominium properties in the southwest united states. rld has recently acquired a 40.625-acre site outside phoenix, arizona. zoning restrictions allow at most eight units per acre. three types of condominiums are planned: one-, two-, and three-bedroom units. the average construction costs for each type of unit are $450,000, $600,000, and $750,000, respectively. these units will generate a net profit of 10%. the company has equity and loans totaling $180 million dollars for this project. from prior development projects, senior managers have determined that there must be a minimum of 15% one-bedroom units, 25% two-bedroom units, and 25% three-bedroom units. evans, james r.. business analytics (p. 513). pearson education. kindle edition.

cash 216,000

  bond payable 216,000

interest expense 4,320

   cash                               4,320

interest expense 4,320

   interest payable            4,320

cash 178,080

       bond payable 168,000

     interest payable 10,080

interest payable   10,080

   cash                              10,080

interest expense 10,080

   interest payable           10,080

Explanation:

Monty

issuance will receive the same amount as face value, as it was issued at par

July 1st payment: 216,000 x 8%/4 = 4,320

we divide by 4 as the payment are quarterly and there are 4 quarter per year

we recognize this interest expense and pay it.

accrued interest at December 31th:

we will recognize the interest accrued form october 1st to december 31th

we put a payable account as there is no cash payment

Flounder

issuance will receive the same amount as face value, and the interest accrued from Jan 1st to June 30th as the bonds were issued with delay

168,00 x 12%/2 = 10,080 interest payable

(the payment are semiannually so we split the rate in two)

The sum of these payable and the face value will be the cash proceeds to Flounder

july 1st payment

we "pay" the interest agains the payable account

accrued interest at December 31th:

168,00 x 12%/2 = 10,080 interest expense

we will recognize the nterest accrued form July 1st to december 31th

we put a payable account as there is no cash payment