Req 1. | ||||||
Price of Bonds: | ||||||
Maturity value of bonds | 2020000 | |||||
Cash interest aid annually (2020000*10%) | 202000 | |||||
Annuity PVf at 9% fr 10 years | 6.417656 | |||||
PVf at 9% for 10th period | 0.42241 | |||||
Present value of maturity value | 853268.2 | |||||
Present value of interest payment | 1296367 | |||||
Price of bonds | 2149635 | |||||
Journal entry: | ||||||
Cash account | 2149635 | |||||
Bonds payable | 2020000 | |||||
Premium on bonds payable | 129635 | |||||
Req 2. | ||||||
Amort Chart: | ||||||
Date | Cash Int | Int exp | Premium | Carrying | ||
amortized | Amount | |||||
01.01.16 | 2149635 | |||||
01.01.17 | 202,000 | 193467.15 | 8,533 | 2,141,102 | ||
01.01.18 | 202,000 | 192699.19 | 9,301 | 2,131,801 | ||
01.01.19 | 202,000 | 191862.12 | 10,138 | 2,121,663 | ||
01.01.20 | 202,000 | 190949.71 | 11,050 | 2,110,613 | ||
Req 3. | ||||||
Journal entries: | ||||||
Date | Accounts title and explanations | Debit $ | Credit $ | |||
01.07.19 | Interest expense | 53262.5 | ||||
Premium on Bonds payable (11050/2 *6/12) | 2762.5 | |||||
Cash account (2020000/2*6/12*10%) | 50500 | |||||
01.07.19 | Bonds payable | 1010000 | ||||
Premium on bonds payable | 48069 | |||||
Loss on retirement of bonds | 21231 | |||||
Cash | 1079300 | |||||
Note: Loss on retirement of bonds: | ||||||
Amount paid on bonds | 1079300 | |||||
Less: Book value of bonds | ||||||
Par value of bonds (2020000/2) | 1010000 | |||||
Add: Unamortized premium | 48069 | |||||
(129635-8533-9301-10138) /2 - 2762.50 | ||||||
Book value of bonds | 1058069 | |||||
Loss on retirement of bonds | 21231 | |||||
Metlock Co. is building a new hockey arena at a cost of $2,510,000. It received a...
Martinez Co. is building a new hockey arena at a cost of $2,510,000. It received a downpayment of $490,000 from local businesses to support the project, and now needs to borrow $2,020,000 to complete the project. It therefore decides to issue $2,020,000 of 10%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 9% Prepare the journal entry to record the issuance of the bonds on January 1,...
Tamarisk Co. is building a new hockey arena at a cost of $2,370,000. It received a downpayment of $520,000 from local businesses to support the project, and now needs to borrow $1,850,000 to complete the project. It therefore decides to issue $1,850,000 of 10%, 10-year bonds. These bonds were issued on January 1, 2016, and pay interest annually on each January 1. The bonds yield 9% Prepare the journal entry to record the issuance of the bonds on January 1,...
Flint Co. is building a new hockey arena at a cost of $2,660,000. It received a downpayment of $450,000 from local businesses to support the project, and now needs to borrow $2,210,000 to complete the project. It therefore decides to issue $2,210,000 of 11%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 10%. Your answer is partially correct. Prepare the journal entry to record the issuance of...
Sunland Co. is building a new hockey arena at a cost of $2,620,000. It received a downpayment of $530,000 from local businesses to support the project, and now needs to borrow $2,090,000 to complete the project. It therefore decides to issue $2,090,000 of 11%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 10%. Your answer is partially correct. Assume that on July 1, 2022, Sunland Co.redeems half...
Pina Co. is building a new hockey arena at a cost of $2,360,000. It received a downpayment of $510,000 from local businesses to support the project, and now needs to borrow $1,850,000 to complete the project. It therefore decides to issue $1,850,000 of 11%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 10%. Prepare the journal entry to record the issuance of the bonds on January 1,...
Flounder Co. is building a new hockey arena at a cost of $2,460,000. It received a downpayment of $500,000 from local businesses to support the project, and now needs to borrow $1,960,000 to complete the project. It therefore decides to issue $1,960,000 of 10%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 9%. Prepare the journal entry to record the issuance of the bonds on January 1,...
Please show all work. Thanks in advance! Metlock Co. is building a new hockey arena at a cost of $2,460,000. It received a downpayment of $500,000 from local businesses to support the project, and now needs to borrow $1,960,000 to complete the project. It therefore decides to issue $1,960,000 of 10%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 9%. Your answer is partially correct. Try again....
Venezuela Co. is building a new hockey arena at a cost of $2,500,000. It received a downpayment of $500,000 from local businesses to support the project, and now needs to borrow $2,000,000 to complete the project. It therefore decides to issue $2,000,000 of 10.5%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 10%. List Of Accounts Accumulated Depreciation-Equipment Accumulated Depreciation-Machinery Accumulated Depreciation-Plant and Equipment Allowance for Doubtful...
Problem 14-02 Riverbed Co. is building a new hockey arena at a cost of $2,620,000. It received a downpayment of $480,000 from local businesses to support the project, and now needs to borrow $2,140,000 to complete the project. It therefore decides to issue $2,140,000 of 12%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 11%. Prepare the journal entry to record the issuance of the bonds on...
Flounder Co. is building a new hockey arena at a cost of $2,550,000. It received a downpayment of $450,000 from local businesses to support the project, and now needs to borrow $2,100,000 to complete the project. It therefore decides to issue $2,100,000 of 11%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 10%. Prepare the journal entry to record the issuance of the bonds on January 1,...