Solution 1: | |||||
Chart Values are based on: | |||||
n= (4 Years*2) | 8 | Half years | |||
i= (5%/2) | 2.50% | Semi annual | |||
Cash Flow | Table Value | * | Amount | = | Present Value |
Principal | 0.82075 | * | $660,000 | = | $541,695 |
Interest (Annuity) [$660,000*4%*6/12] | 7.17014 | * | $13,200 | = | $94,646 |
Price of Bonds | $636,341 |
Solution 2: | |||
Patey Pontoons | |||
Journal Entries | |||
Date | Particulars | Debit | Credit |
01-Jan-21 | Cash A/c Dr | $636,341 | |
Discount on Bond Payable | $23,659 | ||
To bonds payable | $660,000 | ||
(Being bond issued at Discount) |
Solution 3: | |||||
Bond Amortization Schedule | |||||
Date | Cash interest | Interest Expense | Discount amortization | Unamortized discount | Carrying value |
01-Jan-21 | $23,659 | $636,341 | |||
30-Jun-21 | $13,200 | $15,909 | $2,709 | $20,951 | $639,049 |
31-Dec-21 | $13,200 | $15,976 | $2,776 | $18,174 | $641,826 |
30-Jun-22 | $13,200 | $16,046 | $2,846 | $15,329 | $644,671 |
31-Dec-22 | $13,200 | $16,117 | $2,917 | $12,412 | $647,588 |
30-Jun-23 | $13,200 | $16,190 | $2,990 | $9,422 | $650,578 |
31-Dec-23 | $13,200 | $16,264 | $3,064 | $6,358 | $653,642 |
30-Jun-24 | $13,200 | $16,341 | $3,141 | $3,217 | $656,783 |
31-Dec-24 | $13,200 | $16,417 | $3,217 | $0 | $660,000 |
Solution 4: | |||
Journal Entries | |||
Date | Particulars | Debit | Credit |
30-Jun-21 | Interest Expense Dr | $15,909 | |
To Discount on bond payable | $2,709 | ||
To Cash | $13,200 | ||
(To record Interest on June 30, 2021) |
Solution 5: | |||
Bonds reported on December 31, 2021 = | 641826 | ||
Solution 6: | |||
Interest expense to be reported in Income statement = | 31885 | ||
Solution 7: | |||
Journal Entries | |||
Date | Particulars | Debit | Credit |
31-Dec-24 | Interest Expense Dr | $16,417 | |
To Discount on bond payable | $3,217 | ||
To Cash | $13,200 | ||
31-Dec-24 | Bond Payable Dr | $660,000 | |
To Cash | $660,000 |
When Patey Pontoons issued 4% bonds on January 1, 2021, with a face amount of $660,000,...
When Patey Pontoons issued 4% bonds on January 1, 2021, with a face amount of $660,000, the market yield for bonds of similar risk and maturity was 5%. The bonds mature December 31, 2024 (4 years). Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price of the bonds...
When Patey Pontoons issued 4% bonds on January 1, 2021, with a face amount of $520,000, the market yield for bonds of similar risk and maturity was 5%. The bonds mature December 31, 2024 (4 years). Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price of the bonds...
When Patey Pontoons issued 8% bonds on January 1, 2021, with a face amount of $540,000, the market yield for bonds of similar risk and maturity was 11%. The bonds mature December 31, 2024 (4 years). Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price of the bonds...
When Patey Pontoons issued 4% bonds on January 1, 2021, with a face amount of $820,000, the market yield for bonds of similar risk and maturity was 5%. The bonds mature December 31, 2024 (4 years). Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price of the bonds...
When Patey Pontoons issued 10% bonds on January 1, 2021, with a face amount of $800,000, the market yield for bonds of similar risk and maturity was 11%. The bonds mature December 31, 2024 (4 years). Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price of the bonds...
When Patey Pontoons issued 10% bonds on January 1, 2021, with a face amount of $640,000, the market yield for bonds of similar risk and maturity was 11%. The bonds mature December 31, 2024 (4 years). Interest is paid semiannually on June 30 and December 31(EV of 51, PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price of the bonds at...
When Patey Pontoons issued 4% bonds on January 1, 2021, with a face amount of $820,000, the market yield for bonds of similar risk and maturity was 5%. The bonds mature December 31, 2024 (4 years). Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price of the bonds...
When Patey Pontoons issued 10% bonds on January 1, 2021, with a face amount of $880,000, the market yield for bonds of similar risk and maturity was 11%. The bonds mature December 31, 2024 (4 years). Interest is paid semiannually on June 30 and December 31. EV $1. PV of $1. EVA of $1. PVA $1. EVAD of S1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price of the bonds at January...
When Patey Pontoons issued 10% bonds on January 1, 2021, with a face amount of $640,000, the market yield for bonds of similar risk and maturity was 11%. The bonds mature on December 31, 2024 (4 years). Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price of the...
When Patey Pontoons issued 10% bonds on January 1, 2021, with a face amount of $640,000, the market yield for bonds of similar risk and maturity was 11%. The bonds mature December 31, 2024 (4 years). Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price of the bonds...