Question

PROBLEM On January 1, 2019, Pons, Inc. issued a 296 installment note to Green Bank in the amount of 10,000. The not require annual payment for 4 years Determine the amount of the animal payment, and write your answer on this line Round to the nearest whole dollar when necessary You must show your work in the space provided below for any credit to be awarded Use the present value table provided in class (also posted in our course D2L shell with the CH14 materials) to make the calculation (Use the numbers ictly as they appear in the table.) Record the annual payments that will be made each December 31

Answer 1

Ans:

2. Pens Inc. Issued a 2% installment note to green bank in the amount of $190,000.

Payment to made for 4 years annually.

For calculating annual equal payment for 4 years we require annuity factor for 4 years at 2% rate.

From the table given below: Annuity factor for 4 Years at 2% : 3.80773

Amount of annual payment to be made: Note Value/ Annuity Factor

: 190,000/3.80773= $49,898

So Payment to be made on each December for 4 years starting from December 2019: $49,898.

3. On 28th feb, Bonds payable for Bamboo Corporation: $180,000

Discount on Bonds payable : $19,000

On redemption following journal entry will be passed:

Bonds Payable Dr. $45,000

Loss on redemption of bonds    Dr.    $450

To Bank Account $45,450.

(Being bonds redeemed at a premium of 1%)

Working:

Total Bonds: $180,000

Redemption: $45,000 (One quarter of total)

Redemption price: 101

Redemption premium: 1%

Loss on Premium: $45,000*1%= $450.

Net payment made for redemption: $45,000+$450=$45,450.