Question

Really stuck on last part of my homework, please help. Thank you!

Hartford Research issues bonds dated January 1 that pay interest semiannually on June 30 and December 31. The bonds have a $32.000 par value and an annual contract rate of 12%, and they mature in 10 years. (Table B.1. Table B.2. Table B.3. and Table B. 4) (Use appropriate factor(s) from the tables provided. Round all table values to 4 decimal places, and use the rounded table values in calculations.) Required: Consider each separate situation 1. The market rate at the date of issuance is 10%. (a) Complete the below table to determine the bonds' issue price on January 1. (b) Prepare the journal entry to record their issuance. 2. The market rate at the date of issuance is 12%. (a) Complete the below table to determine the bonds'issue price on January 1. (b) Prepare the journal entry to record their issuance. 3. The market rate at the date of issuance is 14%. (a) Complete the below table to determine the bonds issue price on January 1 (b) Prepare the journal entry to record their issuance. Complete this question by entering your answers in the tabs below. Required 1A Required 18 Required 2A Required 28 Required 3A Required 38 Complete the below table to determine the bonds issue price on January 1 If the market rate at the date of issuance is 10% Table values are based on Table Value Amount Present Value Cash Flow Par (maturity) value Interest (annuity) Price of bonds Required 10 >

Answer 1

Part 1 A

table values are based on
n=	20
i=	5%
	table value	amount	present value
par maturity value	0.3769	32000	12061
interest (annuity)	12.4622	1920	23927
price of bonds			35988

PV factor of $1 @ i=5%, n = 20 is 0.3769

PVA factor of $1 @ i=5%, n = 20 is 12.4622

Part 1 B

No.	General journal	Debit	Credit
1	Cash	35988
	Premium on bonds payable		3988
	Bonds payable		32000

Part 2 A

table values are based on
n=	20
i=	6%
	table value	amount	present value
par maturity value	0.3118	32000	9978
interest (annuity)	11.4699	1920	22022
price of bonds			32000

PV factor of $1 @ i=6%, n = 20 is 0.3118

PVA factor of $1 @ i=6%, n = 20 is 11.4699

Part 2 B

No.	General journal	Debit	Credit
1	Cash	32000
	Bonds payable		32000

Part 3 A

table values are based on
n=	20
i=	7%
	table value	amount	present value
par maturity value	0.2584	32000	8269
interest (annuity)	10.5940	1920	20340
price of bonds			28609

PV factor of $1 @ i=7%, n = 20 is 0.2584

PVA factor of $1 @ i=7%, n = 20 is 10.5940

Part 3 B

No.	General journal	Debit	Credit
1	Cash	28609
	Discount of bonds payable	3391
	Bonds payable		32000