Question

5. What is the present value of $7,560 due 8 periods hence, discounted at 6%? (Round factor values to 5 decimal places, e.g. 1.253420 and final answer to 0 decimal places, e.g. 497,782.)

6. What is the future value of 17 periodic payments of $7,560 each made at the end of each period and compounded at 10%? (Round factor values to 5 decimal places, e.g. 1.25342 and final answer to 0 decimal places, e.g. 497,782.)

7. What is the present value of $7,560 to be received at the end of each of 17 periods, discounted at 5% compound interest? (Round factor values to 5 decimal places, e.g. 1.253420 and final answer to 0 decimal places, e.g. 497,782.)

8. Bluehouse Company issued $396,000 of 10%, 20-year bonds on January 1, 2020, at 102. Interest is payable semiannually on July 1 and January 1. Bluehouse Company uses the effective-interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%.

Prepare the journal entries to record the following. (Round intermediate calculations to 6 decimal places, e.g. 1.253420 and final answer to 0 decimal places, e.g. 78,547. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(a) The issuance of the bonds.

(b) The payment of interest and related amortization on July 1, 2020.

(c) The accrual of interest and the related amortization on December 31, 2020.

Answer 1

5)	Present value = PVF (6%,8 years) * Amount
	=0.62741*$7560
	$               4,743
6)	Future value = FVAIF(17 periods,10%)* Periodic payment
	=40.54469*$7560
	$         3,06,518
7)	Future value = PVAIF(17 periods,5%)* Periodic payment
	=11.27407*$7560
	$             85,232
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