2ith Problem 1 Lons-Term Liabilities: 's marks YKF Corp decided to move into a new line of business that requires funding. For this reason, it decided to issue bonds on August 1, 2017 with a face value of $800,000. The bonds will mature on July 31, 2027: The annual coupon rte is 8% and interest is paid on annual basis on July 31 At the date of issuance the annual market rate was 6%; later in February 2018 it decreased to 5% and remained at that level. The fiscal year of YKF starts on January 1 and ends on December 31. YKF uses the effective interest method to amortize bond discounts and premiums. Reauired: Show your calculations and a) Calculate the issuance price of the bonds on August 1, 2017 and prepare the journal entry related to this transaction. Present value tables are found at the end of the examination sheet. (3 marks) Present Value Tables TABLE A.1 Present Value of $1, p. 1/(1 + i)" 4.25% 4% Periods 3% 2% 0.9304 09756 0.9612 09518 0.9423 09286 09218 9 .8 0.9238 09060 2.75% 0.9732 097090.9639 0.9615 0.9592 0.9472 0.9426 0.9290 0.9246 0.9201 0.9070 0.9218 091SI 0.894 0.8890 0.8826 0.8638 0.3s 0.8972 0.888 0.863 0.8548 0.8466 0.8227 o 2.5% 0.9524 0,8072 0.8839 0.8732 0.8626 0.8319 0.8219 0.8121 0.7835 0.7651 0.8880 0.8623 0.837 0018 0.7903 0.7790 0.7462 0.7252 0.8706 0.8413 0.8270 0.8131 0.728 0.759 0.7473 0.7107 0.6874 .8207 0.8049 0.7894 07449 0.7307 0.7168 0.6768 0.6516 0.8368 0.8007 0.7834 0.7664 0.7180 0.7026 0.6876 0.6446 0.6176 08203 0.7812 0.7624 0.7441 0.6920 0.6756 0.6595 0.6139 0.5854 0.6730 0.6103 0.5813 0.5534 0.4789 0.4564 0.4350 0.3769 0.3427 14% 7% 8% 9% 10% ii% 13% Periods 0.9434 09346 925909174 09091 09009 0.8929 0.8850 0.8900 08734 0.8573 08417 08264 0.8116 0.7972 0.7831 0.8396 0,8163 079380 0.7921 0.7629 0.7350 0.6830 0.7473 0.7130 0.772 0.7513 0.7312 0.718 0,6931 0.6750 0.7084 0,6830 0.6587 0.6355 0.6133 0.5921 0.6806 0.6499 0.6209 05935 0.5674 0.5428 0.5194 0.6663 0.6302 0.5963 0.5645 0.5346 0.5066 0.4803 04556 0.6227 0.5835 0.5470 0.5132 0.4817 0.4523 0.4251 0.3996 0.5820 0.5403 05019 0665 04339 0.4039 0.3762 0.3506 05439 0.5002 0.4604 04241 0.3909 0.3606 03329 0.3075 0.5584 0.5083 0.4632 0.2584 0.2145 0.2697 0.0728 Present Value of Annuity of S1, P-11-1I+ir Periods 2% 2.5% 2.75% 3.75% 09804 -0.9756 -0.9732 0,9709 09639 0.96 09s92 -0.9524 -09479 19416 1.9274 19204 L91 35 29 1.8861 1794 1x594 1.8463 2x839 2.8560 28423 2X286 2.7883 27751 27620 2.7232 2sy79 3.8077 3.7620 3.7394 3.7171 3.6514 3.6299 3,6086 3.5460 3.5052 .7135 4.6458 46126 45797 44833 4451 44207 43295 42703 56014 5,5081 5.4624 54172 285 .2421 51997 50757 4995ss 64720 63494 62894 6.2303 60579 60021 5.9470 .7864 5,6830 73255 7.1701 7.0943 7.0197 6.8028 6.7327 6.6638 64632 63346 8.1622 7.9709 7.8777 7.7861 7.5208 7.4353 73513 7.1078 69522 8.9826 8.7521 8.6401 &5302 62128 8.1109 80109 7.7217 75376 16.3514 15,5892 15.2273 148775 13.8962 13.5903 13.2944 12.4622 11904 3% 4% 425% s% 2 , 10 Periods 6% 7% 8% 9% 10% 11% 12% 13% 14% 0.9434 0.9346 0.9259 0.9174 0,9009 0.8929 0.8550 0,8772 1.8334 1.8080 1.7833 1.7591 173s 1.7125 1,6901 16681 1.6467 2.6730 2.6243 2.5771 2.5313 24869 2.4437 2.4018 23612 2.3216 3.4651 3,3872 33121 3.2397 3.1699 3.1024 30373 2.9745 2.9137 4.2124 4.1002 3.9927 3.8897 3.7908 3,6959 3,6048 3,5172 3.433 4.9173 4.7665 4.6229 4.4859 43553 4.2305 4.114 3.9975 3.8887 5.5824 5.3893 5.2064 5.0330 4.8684 4.7122 45638 4.4226 42883 62098 5.9713 .7466 5.5348 5.3349 5.1461 49676 4988 46389 6.8017 6.5152 62469 5.9952 .7590 5.5370 5.3282 4.1317 4.9464 73601 7.0236 6.7101 6.4177 6.1446 5.8892 5.6502 5.4262 5.2161 11.4699 10.5940 98181 9.1285 85136 7.9633 7.4694 7.0248 6,6231 10
