Solution 1:
Computation of bond price | |||
Table values are based on: | |||
n= | 5 | ||
i= | 5.00% | ||
Cash flow | Table Value | Amount | Present Value |
Par (Maturity) Value | 0.78353 | $1,000,000.00 | $783,526 |
Interest (Annuity) | 4.32948 | $60,000.00 | $259,769 |
Price of bonds | $1,043,295 |
Solution 2:
Journal Entries - Andrew Corp. | |||
Date | Particulars | Debit | Credit |
2-Jan | Cash Dr | $1,043,295.00 | |
To Bond Payable | $1,000,000.00 | ||
To Premium on Bond Payable | $43,295.00 | ||
(To record issue of bond at premium) |
Solution 3:
Journal Entries - Andrew Corp. | |||
Date | Particulars | Debit | Credit |
31-Dec | Interest Expense Dr ($1,043,295*5%) | $52,165.00 | |
Premium on bond payable Dr | $7,835.00 | ||
To Cash | $60,000.00 | ||
(To record interest payment and premium amortization) | |||
31-Dec | Bond Payable Dr | $1,000,000.00 | |
To Cash | $1,000,000.00 | ||
(To record bond repayment) |
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