ASSIGNMENT \#2 Chapter 15 due March 20 ASSIGNMENT \#2 - continued PART ONE PART TWO (continued) On February 1, 2021, Kailua Corp. issued $800,000,20 year, 9% bonds, with interest 1. Record the capital lease on January 1,2022. payable semi-annually on July 31 and January 31 . At this time the market rate of 2. Record amortization expense for the equipment for 2022 interest was 10%. Kailua's year end is December 31 , and they use the effective interest 3. Record the first lease payment on December 31, 2022. method of amortizing bond premium or discount. KEY FIGURE: Interest expense at Dec 31$2,033 REQUIRED: SHOW ALL CALCULATIONS. ROUND ALL DOLLAR AMOUNTS TO THE NEAREST DOLLAR. ALL JOURNAL ENTRIES MUST BE IN GOOD FORM. NOTE: THIS ASSIGNMENT MUST BE DONE IN WORD OR EXCEL OR, IF YOU LIKE ON ACCOUNTING PAPER, IN PENCIL I WILL NOT ACCEPT THE WORK DONE ON 1. Calculate the selling price of the bonds. LOOSELEAF OR GRAPH PAPER. ALL CALCULATIONS MUST BE INCLUDED. YOU 2. Record the issuance of the bonds. WILL LOSE MARKS IF THEY ARE NOT. 3. Record the first interest payment on July 31, 2021. 4. Record the adjusting entry required for this bond on December 31, 2021. TO BE CONSIDERED COMPLETE, ALL PARTS OF THE ASSIGNMENT MUST BE 5. Prepare the Balance Sheet presentation for this bond at December 31, 2021. 6. Record the second interest payment on January 31, 2022. (Hint, at this point, calculate the balance in the Discount on Bonds Payable account) 7. After the interest payment was made on Jan 31, 2022, on the same day, Kailua purchased and retired 50% of this bond issue at 94.8 . Record this transaction. KEY FIGURES: Jan 31, 2022 Interest Expense $6,099 Loss on Retirement of Bonds $12,936 PART TWO On January 1, 2022, Kaneohe Corp. purchased new computer equipment under a capital lease arrangement with Kalakaua Corp. Kaneohe signed a $25,000 note, requiring five annual payments of $5,000 each, starting December 31,2022 . The interest rate for this type of financing is currently 11%. Kaneohe will use straight-line amortization for this asset, with a five-year service life and no residual value. REQUIRED: SHOW ALL CALCULATIONS. ROUND ALL DOLLAR AMOUNTS TO THE NEAREST DOLLAR. ALL JOURNAL ENTRIES MUST BE IN GOOD FORM. Continued