3. On January 1, 2016, Johnstone leased an office building. Terms of the lease require Johnstone to make 20 annual lease payments of $120,000 beginning on January 1, 2016. A 10% interest rate is implicit in the lease agreement. At what amount should Johnstone record the lease liability on January 1, 2016, before any lease payments are made?

Table or calculation function:

Payment $120,000 n = ______ i = _________ Liability: $1,123,790

1.

On June 30, 2016, Singleton Computers issued 6% stated rate bonds with a face amount of $200 million. The bonds mature on June 30, 2031 (15 years). The market rate of interest for similar bond issues was 5% (2.5% semiannual rate). Interest is paid semiannually (3%) on June 30 and December 31, beginning on December 31, 2016. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:

1.

Determine the price of the bonds on June 30, 2016. n = 30 i =______ Cash Flow Amount Present Value Interest ___________ ______________ Principal ___________ ______________ Price of bonds _______________ Calculate the interest expense Singleton reports in 2016 for these bonds using the effective interest method Period Ending Cash Interest Pd Bond Interest Expense Premium Amortization Carrying Value 6/30/2016 _____________ 12/31/2016 ______________ _______________ ______________ _____________