On January 1, 2018, Fox Co. issued $400,000, 12%, 2-year bonds that pay interest

Question

On January 1, 2018, Fox Co. issued $400,000, 12%, 2-year bonds that pay interest semi-annually, July 1, and January 1. When issued, investors required 6% interest, and the bonds are due January 1, 2020. Using the effective interest method, what is the bond liability that appears on the Fox Co. quarterly balance sheet dated 6/30/2019? Use the appropriate present value factors below to answer this Question: Present Value FactorsTable2%3%4%6%12% Single sum-2 periods.96117 .94260 .92456 .89000 .79719 Single sum-4 periods.92385 .88849 .85480 .79209 .63552 Ordinary annuity-2 periods1.94156 1.91347 1.88609 1.83339 1.69005 Ordinary annuity-4 periods3.80773 3.71710 3.62990 3.46511 3.03735 Annuity due-2 periods1.98039 1.97087 1.96154 1.94340 1.89286 Annuity due-4 periods3.88388 3.82861 3.77509 3.67301 3.40183 $411,651 $433,944 $422,963 $409,758 On January 1, 2018, Fox Co. issued $400,000, 12%, 2-year bonds that pay interest semi-annually, July 1, and January 1. When issued, investors required 6% interest, and the bonds are due January 1, 2020. Using the effective interest method, what is the bond liability that appears on the Fox Co. quarterly balance sheet dated 6/30/2019? Use the appropriate present value factors below to answer this Question: Present Value FactorsTable2%3%4%6%12% Single sum-2 periods.96117 .94260 .92456 .89000 .79719 Single sum-4 periods.92385 .88849 .85480 .79209 .63552 Ordinary annuity-2 periods1.94156 1.91347 1.88609 1.83339 1.69005 Ordinary annuity-4 periods3.80773 3.71710 3.62990 3.46511 3.03735 Annuity due-2 periods1.98039 1.97087 1.96154 1.94340 1.89286 Annuity due-4 periods3.88388 3.82861 3.77509 3.67301 3.40183 $411,651 $433,944 $422,963 $409,758 On January 1, 2018, Fox Co. issued $400,000, 12%, 2-year bonds that pay interest semi-annually, July 1, and January 1. When issued, investors required 6% interest, and the bonds are due January 1, 2020. Using the effective interest method, what is the bond liability that appears on the Fox Co. quarterly balance sheet dated 6/30/2019? Use the appropriate present value factors below to answer this Question: Present Value FactorsTable2%3%4%6%12% Single sum-2 periods.96117 .94260 .92456 .89000 .79719 Single sum-4 periods.92385 .88849 .85480 .79209 .63552 Ordinary annuity-2 periods1.94156 1.91347 1.88609 1.83339 1.69005 Ordinary annuity-4 periods3.80773 3.71710 3.62990 3.46511 3.03735 Annuity due-2 periods1.98039 1.97087 1.96154 1.94340 1.89286 Annuity due-4 periods3.88388 3.82861 3.77509 3.67301 3.40183 $411,651 $433,944 $422,963 $409,758

Explanation / Answer

Amount PV factor Present value Semi-annual interest 24000 3.7171 89210 Pirincipal 400000 0.88849 355396 Issue price 444606 Date Cash interest paid Interest expense Premium amortization Carrying value Jan-1-18 444606 June-30-18 24000 13338 10662 433944 Jan-1-19 24000 13018 10982 422962 June-30-19 24000 12689 11311 411651 Bond liability dated 6/30/2019 = $411651

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