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When Patey Pontoons issued 8% bonds on January 1, 2021, with a face amount of $540,000, the market yield for bonds of similarWhen Patey Pontoons issued 8% bonds on January 1, 2021, with a face amount of $540,000, the market yield for bonds of similarWhen Patey Pontoons issued 8% bonds on January 1, 2021, with a face amount of $540,000, the market yield for bonds of similarWhen Patey Pontoons issued 8% bonds on January 1, 2021, with a face amount of $540,000. the market yield for bonds of similarWhen Patey Pontoons issued 8% bonds on January 1, 2021, with a face amount of $540,000, the market yield for bonds of similarWhen Patey Pontoons issued 8% bonds on January 1, 2021, with a face amount of $540,000, the market yield for bonds of similar

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Answer #1
Solution 1:
Chart Values are based on:
n= (4 Years*2) 8 Half years
i= (11%/2) 5.50% Semi annual
Cash Flow Table Value * Amount = Present Value
Principal 0.65160 * $5,40,000 = $3,51,864
Interest (Annuity) [$540,000*8%*6/12] 6.33457 * $21,600 = $1,36,827
Price of Bonds $4,88,691
Solution 2:
Patey Pontoons
Journal Entries
Date Particulars Debit Credit
01-Jan-21 Cash A/c Dr $4,88,691
Discount on Bond Payable $51,309
      To bonds payable $5,40,000
(Being bond issued at Discount)
Solution 3:
Bond Amortization Schedule
Date Cash interest Interest Expense Discount amortization Unamortized discount Carrying value
01-Jan-21 $51,309 $4,88,691
30-Jun-21 $21,600 $26,878 $5,278 $46,031 $4,93,969
31-Dec-21 $21,600 $27,168 $5,568 $40,463 $4,99,537
30-Jun-22 $21,600 $27,475 $5,875 $34,588 $5,05,412
31-Dec-22 $21,600 $27,798 $6,198 $28,391 $5,11,609
30-Jun-23 $21,600 $28,139 $6,539 $21,852 $5,18,148
31-Dec-23 $21,600 $28,498 $6,898 $14,954 $5,25,046
30-Jun-24 $21,600 $28,878 $7,278 $7,677 $5,32,323
31-Dec-24 $21,600 $29,277 $7,677 $0 $5,40,000
Solution 4:
Journal Entries
Date Particulars Debit Credit
30-Jun-21 Interest Expense Dr $26,878
      To Discount on bond payable $5,278
      To Cash $21,600
(To record Interest on June 30, 2021)
Solution 5:
Bonds reported on December 31, 2021 = 499537
Solution 6:
Interest expense to be reported in Income statement = 54046
Solution 7:
Journal Entries
Date Particulars Debit Credit
31-Dec-24 Interest Expense Dr $29,277
      To Discount on bond payable $7,677
      To Cash $21,600
31-Dec-24 Bond Payable Dr $5,40,000
      To Cash $5,40,000
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