Reporting Financial Statement Effects of Bond Transactions On January 1, 2016, M

Question

Reporting Financial Statement Effects of Bond Transactions

On January 1, 2016, McKeown, Inc., issued $400,000 of 10%, 9-year bonds for $356,688, yielding a market (yield) rate of 12%. Semiannual interest is payable on June 30 and December 31 of each year.

Need answers to blank areas. Also, If there is a way to break down Questions "A" that would be great.

QUESTION 2 Partlally correct Mark 0.50 out of 1.00 Flag questlon Reporting Financial Statement Effects of Bond Transactions On January 1, 2016, McKeown, Inc., issued $400,000 of 10%, 9-year bonds for s356688, yielding a market yield) rate of 1 2%, Semiannual interest is payable on June 30 and December 31 of each year. Required a. Show computations to confirm the bond issue price. (Use a calculator or Excel for your calculations. Round your answers to the nearest dollar.) Present value of principal repayment $0>x Present value of interest payments Selling price of bonds b. Record the bond issuance, semi-annual interest payment and discount amortization onjune 30, 2016 and the semi-annual interest payment and bond amortization on Decerm ber 31, 2016 in the financial stater effects template. ent Income Statement Balance Sheet Transaction Cash Asset Noncash AssetsLiabilitiesContra-Liabilities Contrib. Capital Earned Capital Revenue Expenses Net Income 1/1/16 Issue bonds at a discount 6/30/16 Interest payment on bonds 12/31/16 Interest paynent on 400,00 x + X + x + 0 0 x

Explanation / Answer

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Present value of principal 0.35034*400000 $ 140,136 Present value of Interest Payaments 10.82761*400000*5% $ 216,552 Selling price of Bonds $ 356,688

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