20. OnJanuary 1, 2016, Maria Enterprises issued 10% bonds dated January 1, 2016,
ID: 2588478 • Letter: 2
Question
20. OnJanuary 1, 2016, Maria Enterprises issued 10% bonds dated January 1, 2016, with a face amount of $19.9 million. The bonds mature in 2025 (10 years). For bonds of similar risk and maturity, the market yield is8%. Interest is paid somannually on Jure 30 and December 31. EyotSL Pyors1. EVAofS1. PA of S1. EVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided. Enter your answers in whole dollars.) 1. Determine the price of the bonds at January 1,2016. 2. Prepare the journal entry to reoord the bond issuance by Mania on January 1, 2016. (If no entry is required for a transactionlevent, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the issuance of bonds by Mania Note: Enter debilts before credits Da General Journal Debit Credit January 01, 2016 MacBook Air esc F2 F3 F4 FS F7Explanation / Answer
A) SEMI ANNUALLY INTEREST 995000 (19.9*1000000*10*6/12) PV Annuity factor i=4%, n = 20 13.59033 Pv of interest payments 13522378 Bonds payable at end 19900000 PV $1 i=4% . N = 20 0.45639 Pv value of bond payments 9082161 Issue piece of bond 22604539 (13522378+9082161) B) PERIOD ENDING NET BV OF BOND PAYABLE INTREST EXPENSE AMOUNT OF PAYMENT PREMIUM ON BOND NET BOOK VALUE 30/6/16 22604539 904182 995000 -90818 22513721 31/12/16 22513721 900549 995000 -94451 22419270 30/6/17 22419270 896771 995000 -98229 22321041 JOURNAL ENTRY 31/1/16 CASH 22604539 10% BOND 13522378 PREMIUM ON BOND 9082161 30/6/16 INTREST EXPENSE 904182 PREMIUM ON INTREST 90818 CASH 995000
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