Chapter 10 Homework Saved Help Save & Exit Submi Check my work Hartford Research

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Chapter 10 Homework Saved Help Save & Exit Submi Check my work Hartford Research issues bonds dated January 1, 2017, that pay interest s emiannually on June 30 and December 31. The bonds have a Toble B.4) (Use O par value and an annual contract rate of 12%, and they mature in 10 years. Table B1, Table B.2. Table B.3, and appropriate factor(s) from the tables provided. Round all table values to 4 decimal places, and use the rounded table values in calculations.) 5 points Required: Consider each of the following three separate situations. eBook 1. The market rate at the date of issuance is 10% (a) Complete the below table to determine the bonds' issue price on January 1, 2017. (b) Prepare the journal entry to record their issuance 2. The market rate at the date of issuance is 12%. (a) Complete the below table to determine the bonds' issue price on Januery 1, 2017 (b) Prepare the journal entry to record their issuance. 3. The market rate at the date of issuance is 14%. (a) Complete the below table to determine the bonds' issue price on January 1, 2017 (b) Prepare the journal entry to record their issuance Ask Print References Complete this question by entering your answers in the tabs below Required 1A Required 1B Required 2A Required 2B Required 3A Required 38 ine the bonds' issue price on January 1, 2017, if the market rate at the date of issuance is Complete'the below table to determ 10%. Mc Graw Prey 1 of 7 Next >

Explanation / Answer

Req 1: Stated rate 12% par value 26000 Cash interest (26000*12%*6/12) 1560 Market rate of interest 10% PV factor for period 20 for maturity 0.3769 Annuity factor f or interest 12.4622 Present value of maturity 9799.4 Present value of interest 19441.03 Issue price 29240.43 Par value 26000 Premium 3240 Journal entry: Cash Account Dr. 29240      Bonds payable 26000      Premium on bonds payable 3240 Req 2: Stated rate of interest market rate of interest When both the interest rate are equal, Issue price is equal to Par value i.e. $ 26,000 Journal entry: Cash Account Dr. 26000            Bonds payable 26000 Req 3: Stated rate 12% par value 26000 Cash interest (26000*12%*6/12) 1560 Market rate of interest 14% PV factor for period 20 for maturity 0.2584 Annuity factor f or interest 10.594 Present value of maturity 6718.4 Present value of interest 16526.64 Issue price 23245.04 Par value 26000 Discount 2755 Journal entry: Cash Account Dr. 23245 Discount on Bonds payable Dr. 2755           Bonds payable 26000

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