Question

Nathan Renick, Inc. issued $400,000 of 14%, 12-year bonds payable on January 1, 2018. The market interest rate at the date of issuance was 12%, and the bonds pay interest semiannually. (Click the icon to view Present Value of $1 table.) 3 (Click the icon to view Present Value of Ordinary Annuity of $1 table.) 2 (Click the icon to view Future Value of $1 table.) (Click the icon to view Future Value of Ordinary Annuity of $1 table.) Read the requirements. Requirement 1. How much cash did the company receive upon issuance of the bonds payable? (Round to the nearest dollar.) (Use the factor tables provided with factors rounded to three decimal places. Round all currency amounts to the nearest dollar.) Upon issuance of the bonds payable, the company received $ . Requirements 1. 2. Prer How much cash did the company receive upon issuance of the bonds payable? (Round to the nearest dollar.) Prepare an amortization table for the bond using the effective-interest method, through the first two interest payments. (Round to the nearest dollar.) Journalize the issuance of the bonds on January 1, 2018, and the first and second payments of the semiannual interest amount and amortization of the bonds on June 30, 2018, and December 31, 2018. Explanations are not required. Print [Done Print Done

Answer 1

Answer Page No ③ o nuance on bando Portable Par value of bond - $ 400.000 Semiannual interest orate of coupon = 4,2 -4%. Semiannual Market chfective interest rate = 1927. - 6% Discounted period = 10 x 2 = 24 Semiannual interest payment = $400,000 X 7% = $ 28000 1 (1+0:06)-24 PVAFC6%, 24) = 0.06 12.5504 Present value of interest payment= 28000 X 10.5504 = $ 351411 Resent value of Bond Pan value at end of 24 = $400,000 * C1467)24

- Page No ③ = 400,000 X 0.24698 = $98792 Total present value of bond - 351411 + 98792 = $ 450203 1. Issuance of the bonds = $ 450203 @ Amortization schedule Semiannual payment = $28000 Interest expense .= 6% X Carrying value of bond Prerniom n amortized = Semiannual payment - Inter est expense unamortiged premium = previous vnamoohiged premium – Premium vnamortiged. Carrying value of bond = Bonds par value of enamortized gremium de Semiannual Interestexpense Premium enamorfized carrying payment @ 6% un amortized premium I value of bond! 118 $50203 $450203 3016118 $28000 $27012. $988 $49215 $449215 (31/12/18 $28000 $ 26953 $1047 448168 $448168 Date

☺ Jowinal entries Page No ③ Date Particular Debil Credit 111118 Cash $ 450203 $400,000 Bonds payable Premiumon bond payable $50203 30/618 Interesf experise Premium on bond payable Cash $27012 $ 988 $28000 31/12/15 $ 26953 Interest expense Premium on bond payable . cash $1047 $28000