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Homework Answers
| a. | |||||||
| Proceeds from bond is calculated as present value of coupon amount and present value of par value of bond | |||||||
| Proceeds from bond | (15 million*9%*PV of annuity of $1(i=10%,n=40) + $15 million*PV of $1 (i=10%, n=40) | ||||||
| Proceeds from bond | (1350000*9.7791)+(15000000*0.0221) | ||||||
| Proceeds from bond | $13,533,285 | ||||||
| b. | |||||||
| Calculate total subscription revenue during 2019 | |||||||
| Revenue earned during August | $340 | 48*85*(1/12) | |||||
| Revenue earned from Sept-Dec | $2,560 | (48*160)*4*(1/12) | |||||
| Total subscription revenue earned | $2,900 | ||||||
| b. | |||||||
| Record journal entry on 30th June for premium amortization | |||||||
| Interest expense (1350000-10525) | $1,339,475 | ||||||
| Premium on bonds payable (421000/40) | $10,525 | ||||||
| Cash (15000000*9%) | $1,350,000 | ||||||
| Record journal entry on 30th June for discount amortization | |||||||
| Interest expense (414000+3083) | $417,083 | ||||||
| Discount on bonds payable (37000/12) | $3,083 | ||||||
| Cash ($4.6 million*9%) | $414,000 | ||||||
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