1)

PV of $1
n/i	5%	8%	10%
1	0.95238	0.92593	0.90909
2	0.90703	0.85734	0.82645
3	0.86384	0.79383	0.75131

PV of Annuity of $1
n/i	5%	8%	10%
1	0.95238	0.92593	0.90909
2	1.85941	1.78326	1.73554
3	2.72325	2.57710	2.48685

On January 1, 2017, Claire Corp. issued $100,000 face value, 5%, 3-year bonds. At that time, market interest rate is 10%. Claire Corp. uses effective-interest method to amortize bond premium or discount. The bonds pay annual interest at December 31. Claire Corp. redeems the bond on maturity.

Prepare the journal entry on December 31, 2017.

a)

Dr) Interest Expense 7,381

Cr) Cash 5,000

Discount on Bonds Payable 2,381

b)

Dr) Interest Expense 5,000

Cr) Cash 5,000

c)

Dr) Interest Expense 8,757

Cr) Cash 5,000

Discount on Bonds Payable 3,757

d)

Dr) Interest Expense 9,089

Premium on Bonds Payable 911

Cr) Cash 10,000

2)

PV of $1
n/i	5%	8%	10%
1	0.95238	0.92593	0.90909
2	0.90703	0.85734	0.82645
3	0.86384	0.79383	0.75131

PV of Annuity of $1
n/i	5%	8%	10%
1	0.95238	0.92593	0.90909
2	1.85941	1.78326	1.73554
3	2.72325	2.57710	2.48685

On January 1, 2017, Claire Corp. issued $100,000 face value, 5%, 3-year bonds. At that time, market interest rate is 10%. Claire Corp. uses effective-interest method to amortize bond premium or discount. The bonds pay annual interest at December 31. Claire Corp. redeems the bond on maturity.

Prepare the journal entry on January 1, 2017.

a)

Dr) Cash 87,565

Discount on Bonds Payable 12,435

Cr) Bonds Payable 100,000

b)

Dr) Cash 92,268

Discount on Bonds Payable 7,732

Cr) Bonds Payable 100,000

c)

Dr) Cash 113,617

Cr) Bonds Payable 100,000

Premium on Bonds Payable 13,617

d)

Dr) Cash 100,000

Cr) Bonds Payable 100,000

3)