Chart Values are based on: | |||||
n= (4 Years*2) | 8 | Half years | |||
i= (11%/2) | 5.50% | Semi annual | |||
Cash Flow | Table Value | * | Amount | = | Present Value |
Principal | 0.651599 | * | $6,40,000 | = | $4,17,023 |
Interest (Annuity) [$640,000*10%*6/12] | 6.334566 | * | $32000 | = | $2,02,706 |
Price of Bonds | 619729 | ||||
Solution 2
Patey Pontoons | |||
Journal Entries | |||
Date | Particulars | Debit | Credit |
01-Jan-21 | Cash A/c Dr | 619729 | |
Discount on Bond Payable | 20271 | ||
To bonds payable | 640000 | ||
(Being bond issued at Discount) | |||
Solution 3
Solution 3: | ||||
Bond Amortization Schedule | ||||
Date | Cash interest | Interest Expense | Discount amortization | Carrying value |
01-Jan-21 | $6,19,730 | |||
30-Jun-21 | $32,000 | $34,085 | $2,085 | $6,21,815 |
31-Dec-21 | $32,000 | $34,200 | $2,200 | $6,24,014 |
30-Jun-22 | $32,000 | $34,321 | $2,321 | $6,26,335 |
31-Dec-22 | $32,000 | $34,448 | $2,448 | $6,28,784 |
30-Jun-23 | $32,000 | $34,583 | $2,583 | $6,31,367 |
31-Dec-23 | $32,000 | $34,725 | $2,725 | $6,34,092 |
30-Jun-24 | $32,000 | $34,875 | $2,875 | $6,36,967 |
31-Dec-24 | $32,000 | $35,033 | $3,033 | $6,40,000 |
4.
Journal Entries | |||
Date | Particulars | Debit | Credit |
30-Jun-21 | Interest Expense Dr | 34085 | |
To Discount on bond payable | 2085 | ||
To Cash | 32000 | ||
(To record Interest on June 30, 2021) |
5.
Bond reported in Balance Sheet Dec 31, 2021 = $6,24,013 |
See in Amortiztion table |
6.
Interest Expense reported in Income statement = $34085 + $34200 = $68285 |
7.
Journal Entries | |||
Date | Particulars | Debit | Credit |
31-12-2024 | Interest Expense Dr | $35,033 | |
To Discount on bond payable | $3,033 | ||
To Cash | $32,000 | ||
31-12-2024 | Bond Payable Dr | $6,40,000 | |
To Cash | $6,40,000 |
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