Bond discount, entries for bonds payable transactions Instructions Present Value Tables Chart of Accounts Journal LII Instructions On July 1, Year 1, Danzer Industries Inc. issued $26,600,000 of 10-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $25,010,623. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1. Year 1." 2. Journalize the entries to record the following a. The first semiannual interest payment on December 31, Yoar 1, and the amortization of the bond discount, using the straight line method. (Round to the nearest dotar) b. The interest payment on June 30, Yoar 2, and the amortization of the bond discount, using the straight-ine method (Round to the nearest dollar) 3. Determine the total interest expense for Year 1 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? 5. Compute the price of $25,010,623 received for the bonds by using the present value tables. (Round to the nearest dollar) *Refer to the Chart of Accounts for exact wording of account titles. Present Value Tables Present Value Tables Two present value tables are provided: Present Value of $1 at Compound Interest Due in n Periods and Present Value of Ordinary Annuity of S1 per Period. Use them as directed in the problem requirements. Periods Present Value of $1 at Compound Interest Due in n Periods 4.0% 4.5% 5% 5.5% 6% 6.5% 0.96154 0.95694 0.95238 0.94787 0.94340 0.93897 7% 1 0.93458 2 0.92456 0.91573 0.90703 0.89845 0.89000 0.88166 0.87344 3 0.88900 0.87630 0.86384 0.85161 0.83962 0.82785 0.81630 4 0.85480 0.83856 0.82270 0.80722 0.79209 0.77732 0.76290 5 0.82193 0.80245 0.78353 0.76513 0.74726 0.72988 0.71299 6 0.79031 0.76790 0.74622 0.72525 0.70496 0.68533 0.66634 7 0.75992 0.73483 0.71068 0.68744 0.66506 0,64351 8 0.73069 0.70319 0.67684 0.65160 0.62741 0.60423 0.62275 0.58201 0.54393 9 0.70259 0.67290 0.54461 0.61763 0.56735 0.59190 0.55839 10 0.64393 0.61391 0.58543 0.53273 0.50835 0.67556 0.64958 11 0.61020 0.58468 0.55491 0.52679 0.50021 0.47509 12 0.62460 0.58066 0.55684 0.52598 0.49697 0.46968 0.44401 13 0.00057 0.56427 0.49856 0.46884 0.44102 0.41496 0.63032 0.50507 14 0.57748 0.53997 0.47257 0.44230 0.41410 0.38782 15 0.55526 0.51672 0.48102 0.44793 0.41727 0.38883 0.36245 16 0.53391 0.49447 0.45811 0.42458 0.39365 0.36510 0.33873 17 0.51337 0.47318 0.43630 0.40245 0.37136 0.34281 0.31657 18 0.49363 0.45280 0.41552 0.38147 0.35034 0.32189 0.29586 19 0.47464 0.43330 0.39573 0.36158 0.33051 0.30224 0.27651 20 0.45639 0.41464 0.37689 0.34273 0.31180 0.28380 0.25842 21 0.43883 0.39679 0.35894 0.32486 0.29416 0.26648 0.24151 22 0.42196 0.37970 0.34185 0.30793 0.27751 0.25021 0.22571 23 0.40573 0.36335 0.32557 0.29187 0.26180 0.23494 0.21095 24 0.39012 0.34770 0.31007 0.27666 0.24698 0.22060 0.19715 25 0.37512 0.33273 0.29530 0.26223 0.23300 0.20714 0.18425 26 0.36069 0.31840 0.28124 0.24856 0.21981 0.19450 0.17220 27 0.34682 0.30469 0.26785 0.23560 0.20737 0.18263 0.16093 28 0.33348 0.29157 0.25509 0.22332 0.19563 0.17148 0.15040 29 0.32065 0.27902 0.24295 0.21168 0.18456 0.16101 0.14056 30 0.30832 0.26700 0.23138 0.20064 0.17411 0.15119 0.13137 31 0.29646 0.25550 0.22036 0.19018 0.16425 0.14196 0.12277 32 0.28506 0.24450 0.20987 0.18027 0.15496 0.13329 0.11474 33 0.27409 0.23397 0.19987 0.17087 0.14619 0.12516 0.10723 34 0.26355 0.22390 0.19035 0.16196 0.13791 0.11752 0.10022 25 25242 021425 18129 n 1525 n 12011 n 11025 0.09266 35 40 0.25342 0.21425 0.18129 0.15352 0.13011 0.11035 0.09366 0.208290.17193 0.14205 0.11746 0.09722 0.08054 0.06678 0.17120 0.13796 0.11130 0.08988 0.07265 0.05879 0.04761 0.14071 0.11071 0.08720 0.06877 0.05429 0.04291 0.03395 45 50 7% Periods 4.0% Present Value of Ordinary Annuity of $1 per Period 4.5% 5% 5.5% 6% 6.5% 0.95694 0.95238 0.94787 0.94340 0.93897 0.93458 0.96154 1.82063 1.80802 2 1.88609 1.83339 1.87267 1.85941 2.74896 2.67301 2.62432 3 1.84632 2.69793 3.50515 2.77509 2.72325 2.64848 3.62990 3.38721 4 3.58753 3.46511 3.54595 3.42580 5 4.45182 4.38998 4.32948 4.27028 4.10020 4.21236 4.15568 5.24214 5.15787 6 5.07569 4.99553 4.91732 4.84101 4.76654 7 6.00205 5.89270 5.78637 5.68297 5.38929 5.58238 5.48452 6.73274 8 6.59589 6.46321 6.33457 6.08875 5.97130 9 7.43533 7.26879 7.10782 6.95220 6.20979 6.80169 7.36009 6.65610 6.51523 10 8.11090 7.91272 7.72173 7.53763 7.18883 7.02358 11 8.76048 8.52892 8.30641 8.09254 7.88687 7.68904 7.49867 12 9.38507 9.11858 8.86325 8.38384 7.94269 8,61852 9.11708 8.15873 8.59974 13 9.98565 9.68285 9.39357 8.85268 8.35765 14 10.56312 10.22283 9.89864 9.58965 9.29498 9.01384 8.74547 15 11 11R2 10.73955 11 37966 1003758 971925 940267 9 10791 18 12.65930 12.15999 11.68959 11.24607 10.05909 10.82760 10.43247 19 13.13394 12.59329 12.08532 11.60765 11.15812 10.73471 10.33560 20 13.59033 13.00794 12.46221 11.95038 11.46992 11.01851 10.59401 21 14.02916 13.40472 12.82115 12.27524 11.76408 11.28498 10.83553 22 14.45112 13.78442 13.16300 12.58317 12.04158 11.53520 11.06124 23 14.85684 14.14777 13.48857 12.87504 12.30338 11.77014 11.27219 24 15.24696 14.49548 13.79864 13.15170 12.55036 11.99074 11.46933 25 15.62208 14.82821 14.09394 13.41393 12.78336 12.19788 11.65358 26 15.98277 15.14661 14.37519 13.66250 13.00317 12.39237 11.82578 27 16.32959 15.45130 14.64303 13.89810 13.21053 12.57500 11.98671 28 16.66306 15.74287 14.89813 14.12142 13.40616 12.74648 12.13711 29 16.98371 16.02189 12.90749 12.27767 15.14107 14.33310 13.59072 15.37245 14.53375 13.76483 30 17.29203 16.28889 13.05868 12.40904 31 17.58849 15.59281 14.72393 13.92909 13.20063 12.53181 32 17.87355 16.54439 16.78889 17.02286 15.80268 14.90420 14.08404 13.33393 12.64656 33 18.14765 16.00255 15.07507 14.23023 13.45909 12.75379 34 18.41120 17.24676 16.19290 15.23703 14.36814 13.57661 12.85401 35 18.66461 17.46101 16.37419 14.49825 13.68696 12.94767 15.39055 16.04612 40 19.79277 18.40158 17.15909 15.04630 14.14553 13.33171 45 20.72004 19.15635 17.77407 16.54773 15.45583 14.48023 13.60552 50 21.48218 19.76201 18.25593 16.93152 15.76186 14.72452 13.80075 Check My Work 1 more Check My Work uses remaining. 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1 2a. Journalize the entry to record the first semiannual interest payment on December 31, Year 1, and the amortization of the band discount, using the (Round to the nearest dollar) Refer to the Chart of Accounts for exact wording of account titles. How does grading work? JOURNAL Score: 73/75 ACCOUNTI DATE DESCRIPTION POST. REF DEBIT CREDIT ASSETS LIAB Jul 1 Cash 1 25,010,623.00 1,589,377.00 5 26,600,000.00 4 Discount on Bonds Payable Bonds Payable Dec 31 Interest Expense Discount on Bonds Payable Cash 1,250,531,00 79,469.00 1,330,000.00 Journalize the entry to record the interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. (Re bilar) How does seading work? Score: 35/37 ACCOUNTIN JOURNAL DEBIT CREDIT ASSETS LLARI POST RE DATE 1,250,53100 1 DESCRIPTION Jun 30 Interest Expense Discount on Bonds Payable Cash 79,469.00 1,330,000.00 Points Ferry Final Questions Shaded cells have feedback 3. Determine the total interest expense for Year 1. $1,250,531 X Points 011 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? Yes No Points 1/1 5. Compute the price of $25,010,623 received for the bonds by using the tables shown in Present Value Tables (Round to the nearest dollar) Present value of the face amount Present value of the semiannual interest payments Price received for the bonds $10,025,274 X 14,985,349 X $25,010,623 v Points 1/3