Question

Exercise 14-17A Computing bond interest and price; recording bond issuance LO C2 Citywide Company issues bonds with a par value of $150,000. The bonds mature in five years and pay 10% annual interest in semiannual payments. The annual market rate for the bonds is 8%. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided.) 1. Compute the price of the bonds as of their issue date. 2. Prepare the journal entry to record the bonds' issuance. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the price of the bonds as of their issue date. (Round intermediate calculations to the nearest dollar amount.) Table Values are Based on: n = Table Value Amount Present Value Cash Flow Par (maturity) value Interest (annuity) Price of bonds

Answer 1

Table

Table values are based on
n	10
i	4%
Cash flow	Table value	*	Amount	=	Present value
Par value	150000		0.6756		101340
Interest	7500		8.1109		60832
Price of bonds					162172

Journal entry

date	account and explanation	Debit	Credit
	Cash	162172
	Bonds payable		150000
	Premium on bonds payable		12172