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Sample Bond Questions Lerner Corporation wholesales repair products to equipment manufacturers Lerner Corporation issued $12,
Table 3 Present Value of 1 (n) Periods Imep 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 96154 95238 94340 0.93458 92593 91743 90909 900
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Answer #1
Semi-annual Interest payment 12000000*10%/2 600000
Present value of bond interest payment coupon payment*PVAF at 4% for 10 semiannual period 600000*8.1109 4866540
coupon payment 600000
PVAF at 4% for 10 semiannual period 8.1109
present value of bond face amount face value * PVF at 4% at 10th period 12000000*.67556 8106720
face value 12000000
PVF at 4% for 10th period 0.67556
Bond price 12973260
Journal entries
date explanation debit credit
1-Apr cash 12973260
bonds payable 12000000
premium on bonds 973260
1-Oct interest expense 502674
premium on bonds payable 97326
cash 600000
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