Table values are based on: | ||||
n= | 10 | |||
i= | 8.0% | |||
Cash Flow | Table Value | Amount | Present Value | |
Interest | 6.71008 | $4,00,000 | $26,84,032 | |
Principal | 0.46319 | $40,00,000 | $18,52,760 | |
Price of Bonds | $45,36,792 | |||
Date | Accounts and explanation | Debit(in $) | Credit(in $) | |
Jan 1,2018 | Cash | $45,36,792 | ||
Bonds Payable | $40,00,000 | |||
Premium Bonds Payable | $5,36,792 | |||
Since the Market Interest rate is 8% which is less than the stated interest rate of 10% hence the Bond is issued at Premium. | ||||
There seems to be no issue cost and hence the same has not been recorded | ||||
Amortization table-When the Bond is issued at premium | ||||
Col I | Col II | Col III | Col IV | |
Date | Interest Payment($4,000,000*10%) | Interest expenses(Col IV*8%) | Premium amorrtization(Col I -Col II) | Bond carrying amount |
01-Jan-18 | 45,36,792 | |||
01-Jan-19 | 4,00,000 | 3,62,943 | 37,057 | 44,99,735 |
01-Jan-20 | 4,00,000 | 3,59,979 | 40,021 | 44,59,714 |
01-Jan-21 | 4,00,000 | 3,56,777 | 43,223 | 44,16,491 |
explanation please enOVO Sprint Power Number AutoSave OB A S ACCT 3312 ch 14 hw 2019 FA EX Search ile Home Insert D...
Venezuela Co. is building a new hockey arena at a cost of $8,000,000 . It received a downpayment of $4,000,000 from local businesses to support the project, and now needs to borrow $4,000,000 to complete the project. It therefore decides to issue $4,000,000 of 10.00% 10 -year bonds. These bonds were issued on January 1, 2018, and pay interest annually on each January 1. The bonds yield 8.00% . . Instructions: (a) Prepare the journal entry to record the issuance...