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2. On July 1, 2020 Turnage Corporation issued $2,000,000, 10%, 10-year bonds for $2,271,813. This price was calculated using

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Answer #1
In the Present question :-
Principal $2,000,000.00
Coupon rate 5.00% (10/2)
Period 20
Yeild Rate 4.00% (8/2)
Yearly Interest $100,000.00 (2000000*12%)
Payment and Discounting Chart is as follows:-
1 0.96154 $100,000.00 $96,154.00
2 0.92456 $100,000.00 $92,456.00
3 0.88900 $100,000.00 $88,900.00
4 0.85480 $100,000.00 $85,480.00
5 0.82193 $100,000.00 $82,193.00
6 0.79031 $100,000.00 $79,031.00
7 0.75992 $100,000.00 $75,992.00
8 0.73069 $100,000.00 $73,069.00
9 0.70259 $100,000.00 $70,259.00
10 0.67556 $100,000.00 $67,556.00
11 0.64958 $100,000.00 $64,958.00
12 0.62460 $100,000.00 $62,460.00
13 0.60057 $100,000.00 $60,057.00
14 0.57748 $100,000.00 $57,748.00
15 0.55526 $100,000.00 $55,526.00
16 0.53391 $100,000.00 $53,391.00
17 0.51337 $100,000.00 $51,337.00
18 0.49363 $100,000.00 $49,363.00
19 0.47464 $100,000.00 $47,464.00
20 0.45639 $2,100,000.00 $958,419.00
TOTAL $2,271,813.00
a.)
Date Account Titles & Explanation Debit Credit
1-Jul-20 Cash $2,271,813.00
            Premium on Bonds Ammortization $271,813.00
            Bonds Payable $2,000,000.00
(Cash Received for Bonds)
b.)
Bond Ammortization Schedule would be
A B C D E F G
Interest Pmt. Interest Premium Credit Bal. Credit Bal. Carrying Amount
Cash Paid Expense Ammortization in the account in the account of Bonds
    4% * Face 5 % * G C minus B Bond Premium Bonds Payable F Minus E
1-Jul-20 $0.00 $0.00 $0.00 -$271,813.00 $2,000,000.00 $2,271,813.00
1-Jan-21 $100,000.00 $90,872.52 -$9,127.48 -$262,685.52 $2,000,000.00 $2,262,685.52
1-Jul-21 $100,000.00 $90,507.42 -$9,492.58 -$253,192.94 $2,000,000.00 $2,253,192.94
1-Jan-22 $100,000.00 $90,127.72 -$9,872.28 -$243,320.66 $2,000,000.00 $2,243,320.66
1-Jul-22 $100,000.00 $89,732.83 -$10,267.17 -$233,053.48 $2,000,000.00 $2,233,053.48
1-Jan-23 $100,000.00 $89,322.14 -$10,677.86 -$222,375.62 $2,000,000.00 $2,222,375.62
1-Jul-23 $100,000.00 $88,895.02 -$11,104.98 -$211,270.65 $2,000,000.00 $2,211,270.65
1-Jan-24 $100,000.00 $88,450.83 -$11,549.17 -$199,721.48 $2,000,000.00 $2,199,721.48
1-Jul-24 $100,000.00 $87,988.86 -$12,011.14 -$187,710.33 $2,000,000.00 $2,187,710.33
1-Jan-25 $100,000.00 $87,508.41 -$12,491.59 -$175,218.75 $2,000,000.00 $2,175,218.75
1-Jul-25 $100,000.00 $87,008.75 -$12,991.25 -$162,227.50 $2,000,000.00 $2,162,227.50
1-Jan-26 $100,000.00 $86,489.10 -$13,510.90 -$148,716.60 $2,000,000.00 $2,148,716.60
1-Jul-26 $100,000.00 $85,948.66 -$14,051.34 -$134,665.26 $2,000,000.00 $2,134,665.26
1-Jan-27 $100,000.00 $85,386.61 -$14,613.39 -$120,051.87 $2,000,000.00 $2,120,051.87
1-Jul-27 $100,000.00 $84,802.07 -$15,197.93 -$104,853.95 $2,000,000.00 $2,104,853.95
1-Jan-28 $100,000.00 $84,194.16 -$15,805.84 -$89,048.10 $2,000,000.00 $2,089,048.10
1-Jul-28 $100,000.00 $83,561.92 -$16,438.08 -$72,610.03 $2,000,000.00 $2,072,610.03
1-Jan-29 $100,000.00 $82,904.40 -$17,095.60 -$55,514.43 $2,000,000.00 $2,055,514.43
1-Jul-29 $100,000.00 $82,220.58 -$17,779.42 -$37,735.01 $2,000,000.00 $2,037,735.01
1-Jan-30 $100,000.00 $81,509.40 -$18,490.60 -$19,244.41 $2,000,000.00 $2,019,244.41
1-Jul-30 $100,000.00 $80,755.59 -$19,244.41 $0.00 $2,000,000.00 $2,000,000.00
I have prepared for the full bond period, You can type accordingly as per the need.
c.)
31-Dec-20 Interest expense on Bonds $90,872.52
Premium on Bond Ammortization $9,127.48
Interest Payable $100,000.00
(Interest Accrued and Premium on
Bond Ammortized)
d.)
1-Jan-21 Interest Payable $100,000.00
Cash/Bank $100,000.00
(interest paid by bank)
e.)
1-Jul-21 Interest expense on Bonds $90,507.42
Premium on Bond Ammortization $9,492.58
Cash/Bank $100,000.00
(Interest Accrued and Premium on
Bond Ammortized)
f.)
31-Dec-21 Interest expense on Bonds $90,127.72
Premium on Bond Ammortization $9,872.28
Interest Payable $100,000.00
(Interest Accrued and Premium on
Bond Ammortized)
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