Question

Chapter 10 Homework Saved Citywide Company issues bonds with a par value of $83,000 on their stated issue date. The bonds mature in nine years and pay 11% annual interest in semiannual payments. On the issue date, the annual market rate for the bonds is 10%. (Table B.1, Table B.2. Table B.3, and Table B.4 (Use appropriate factor(s) from the tables provided.) points 1. What is the amount of each semiannual interest payment for these bonds? 2. How many semiannual interest payments will be made on these bonds over their life? 3. Use the interest rates given to select whether the bonds are issued at par, at a discount, or at a premium. 4. Compute the price of the bonds as of their issue date. 5. Prepare the journal entry to record the bonds' issuance. eBook Complete this question by entering your answers in the tabs below. Hint Req 1 to 3 Reg 4 Reg 5 Print What is the amount of each semiannual interest payment for these bonds? How many semiannual interest payments will be made on these bonds over their life? Use the interest rates given to select whether the bonds are issued at par, at a discount, or at a premium. References Par (maturity) value Semiannual Rate Semiannual cash interest payment Number of payments Whether the bonds are issued at par, at a discount, or at a premium? Req 1 to 3 Reg 4 >

Answer 1

Par(maturity)value			Semiannual		Semiaanual
			rate		cash payment
83,000		*	5.5%	=	4565
Number of payments			18
whether the bonds are issued at par ,at a					Premium
discount ,or at a premium?
Table values are Based on
n=	18
i=	5%
Cash flow		table value		Amount		present value
Par(maturity)value		0.4155	*	83,000	=	34487
interest (annuity)		11.6896	*	4565	=	53363
price of bonds						87850
TR	General journal				Debit	Credit
	Cash				87850
	premium on bonds payable					4850
	bonds payable					83,000