Question

E10-14 (Algo) (Chapter Supplement) Recording and Reporting a Bond Issued at a Premium (without Premium Account) LO10-5 Park Corporation is planning to issue bonds with a face value of $2,013,000 and a coupon rate of 10 percent. The bonds mature in 15 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Park uses the effective-interest amortization method and does not use a premium account. Assume an annual market rate of interest of 8.5 percent. (FV of $1. PV of $1. FVA of $1. and PVA of $t) (Use the appropriate factor(s) from the tables provided. Round your final answers to whole dollars.) Required: 1.82. Prepare the journal entry to record the issuance of the bonds and the Interest payment on June 30 of this year. 3. What bonds payable amount will Park report on its June 30 balance sheet? Complete this question by entering your answers in the tabs below. Req 1 and 2 Req3 Prepare the journal entry to record the issuance of the bonds and the Interest payment on June 30 of this year. (If no entry is required for a transaction/event, select "No journal entry required in the first account field.) View transaction list Journal entry worksheet

Answer 1

principal repayment table factor present value principal repayment $ 2,013,000 0.28689 $ 577,510 cash received on issue of bonds payable $ 2,266,318 required 1 Date Accounts Debit Credit 1-Jan $ 2,266,318 cash bonds payable (to record issue of bonds) $ 2,266,318

required 2 Date Accounts Debit Credit 30-Jun $ 96,319 $ 4,331 interest expense bonds payable cash (to record interest expense) $ 100,650 required 3 PARK CORPORATION Balance Sheet (Partial) At June 30 Long term liabilities Bonds Payable $ 2,261,987 note - the table factors have been used rounded to 5 decimal places

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