Whiteside Corporation issues $567,000 of 9% bonds, due in 11 years, with interes

Question

Whiteside Corporation issues $567,000 of 9% bonds, due in 11 years, with interest payable semiannually. At the time of issue, the market rate for such bonds is 10%. Compute the issue price of the bonds. (Round answer to 0 decimal places, e.g. 38,548.) Issue price of the bonds The Colson Company issued $382,000 of 8% bonds on January 1, 2014. The bonds are due January 1, 2020, with interest payable each July 1 and January 1. The bonds were issued at 103. Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Colson Company records straight-line amortization semiannually. (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.)

Explanation / Answer

Ans 14-1 Whiteside Corporation Principal $         567,000.00 Coupon Rate 4.5% Number of Years 22 YTM 5% Interest $            25,515.00 Present Value of Principal Principal P.V Factor 5% for 22 years Present Value $                                 567,000.00 0.34185 $   193,828.95 Interest $                                   25,515.00 13.163 $   335,853.95 Issue Price $   529,682.90 Ans 14-4 Colson Company Bonds Issued $         382,000.00 Coupon Rate 4% Issue Price $                  103.00 Date Account Title and Explaination Debit Credit 1-Jan-14 Cash A/C $         393,460.00    Premium on Bonds $     11,460.00    Bonds Payable $   382,000.00 1-Jul-14 Interest Expense $            14,325.00 Premium on bonds Payable $                  955.00     Cash $     15,280.00 31-Dec-14 Interest Expenses $            14,325.00 Premium on Bonds Payable $                  955.00    Interest Payable $     15,280.00

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