Question

On January 1, 2018, Bishop Company issued 10% bonds dated January 1, 2018, with a face amount of $19.3 million. The bonds mature in 2027 (10 years). For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1and PVAD of $1) (Use appropriate factor(s) from the tables provided. Round your intermediate calculations to the nearest whole dollar.)

Required:
1. Determine the price of the bonds at January 1, 2018.
2. Prepare the journal entry to record the bond issuance by Bishop on January 1, 2018.
3. Prepare the journal entry to record interest on June 30, 2018, using the effective interest method.
4. Prepare the journal entry to record interest on December 31, 2018, using the effective interest method.

1. Determine the price of the bonds at January 1, 2018. (Round your answer to 2 decimal places.)

bond value

2. Prepare the journal entry to record the bond issuance by Bishop on January 1, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to 2 decimal places.)

Journal entry worksheet

• Record the issuance of bonds by Bishop.

Note: Enter debits before credits.

	Date General Journal Debit Credit January 01, 2018

Journal entry worksheet

• 3. Record the interest on June 30, 2018, using the effective interest method.

Note: Enter debits before credits.

	Date General Journal Debit Credit June 30, 2018

journal entry worksheet

• 4. Record the interest on December 31, 2018, using the effective interest method.

Note: Enter debits before credits.

	Date General Journal Debit Credit December 31, 2018

Answer 1

B7 face amount semiannual interest payment semiannual periods S 19,300,000 ş 965,000 20 price of the bonds $ 17,086,194 Date General Journal Debit Credit January 1, 2018 Cash 17,086,194 10 Discount on Bonds Payable $2,213,807 Bonds Payable (Bonds Payable issued) $ 19,300,000 12 13 14 15 16 17 18 19 20 21 date opening balance June 30, 2018 $ December 31, 2018 $ 17,086,194 $1,025,172 $ 17,146,365 1,028,782 interest expense interest payment discount amortization closing balance 60,172 17,146,365 63,782 17,210,147 965,000 $ 965,000$ 1,028,782 $ Date General Journal Debit Credit June 30, 2018 Interest Expense 1,025,172 Discount on Bonds Payable Cash (Interest Expense recorded) 60,172 965,000 24 Date General Journal Debit Credit 26 December 31, 2018 Interest Expense $ 1,028,782 28 Discount on Bonds Payable Cash (Interest Expense recorded) 63,782 965,000 30 31

for formulas and calculations, refer to the next image -

B7 A B C face amount semiannual interest payment semiannual periods 19300000 |-E2*5% 20 price of the bonds E230.3118+E3 11.4699 2 Date General Journal Debit Credit 43101 Cash -E5 10 Discount on Bonds Payable F11-E9 Bonds Payable (Bonds Payable issued) 12 13 14 15 16 17 18 19 20 21 date 43281 -E5 43465 I-H15 opening balance interest expense interest payment discount amortization closing balance D15*696 E15-F15 E16-F16 D15+G15 D16+G16 D16*696 3 Date General Journal Debit Credit 43281 Interest Expense E15 Discount on Bonds Payable Cash (Interest Expense recorded) -G15 F15 4 Dat General Journal Debit Credit 26 27 28 43465 Interest Expense E16 Discount on Bonds Payable Cash (Interest Expense recorded) G16 F16 30 31