Question

Analyzing and Reporting Financial Statement Effects of Bond Transactions On January 1 of the current year, Shields Inc. issued $1,000,000 of 9%, 20-year bonds for $1,098,964, yielding a market (yield) rate of 8%. Semiannual interest is payable on June 30 and December 31 of each year. a. Show Excel inputs to confirm the bond issue price. Note: Round your answer to two decimal places. rate = 0 nper = 0 0 pmt = FV = 0 0 Answer = $ b. Indicate the financial statement effects using the template for (1) bond issuance, (2) semiannual interest payment and premium amortization on June 30 of the current year, and (3) semiannual interest payment and premium amortization on December 31 of the current year. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount. Note: Round your answers to the nearest whole dollar.

Answer 1

a.
rate = 4%
nper = 40
pmt = $45000
FV = $1000000
Answer = $1098963.87 or ($1098963.87)

b.

	Cash Asset	Noncash Asset	Liabilities	Contri. Capital	Earned Capital	Revenues	Expenses	Net Income
1	$      1,098,964		$      1,098,964
	Cash	N/A	Bonds Payable	N/A	N/A	N/A	N/A	N/A
2	$          (45,000)		$            (1,041)		$          (43,959)		$           43,959	$           (43,959)
	Cash	N/A	Bonds Payable	N/A	Retained Earnings	N/A	Interest Expense
3	$          (45,000)		$            (1,083)		$          (43,917)		$           43,917	$           (43,917)
	Cash	N/A	Bonds Payable	N/A	Retained Earnings	N/A	Interest Expense

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