Question

Question Help noe was 10%, and the bonds pay interest P14AB-37A (similar to) Nathan Renick, Inc. issued $100,000 of 12%, five your bonde payable on January 1, 2018. The market interest rate of the date of semiannual Click the icon to view Present Value of 31 table) Click the icon to view Present Value of Ordinary Annuity of $1 table) 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 regu 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 al currency amounts to the nearest dollar) Upon issuance of the bonds payable, the company received Enter any number in the edit fields and then click Check Answer. A A parts ing Clear All Check Answer

Answer 1

1) Present value of Principal= $100000*0.614= $61400

Present value of Interest= $100000*12%*6/12*7.722= $46332

Present value of bonds= Present value of Interest+Present value of Principal

= $46332+61400= $107732

Upon issuance of the bonds payable, the company received $107732

2)

Date	Cash paid	Interest expense	Premium amortized	Carrying amount
January 1,2018				$107732
June 30, 2018	($100000*12%*6/12)= $6000	(107732*10%*6/12)= 5387	(6000-5387)= 613	(107732-613)= 107119
December 31, 2018	6000	(107119*10%*6/12)= 5356	(6000-5356)= 644	(107119-644)= 106475

3)

Date	Account titles and explanation	Debit	Credit
January 1, 2018	Cash	$107732
	Premium on bonds payable		$7732
	Bonds payable (107732-100000)		$100000
	(To record issuance of bonds)
June 30, 2018	Interest expense	$5387
	Premium on bonds payable	$613
	Cash		$6000
	(To record first payment of interest)
December 31, 2018	Interest expense	$5356
	Premium on bonds payable	$644
	Cash		$6000
	(To record second payment of interest)