Bond Premium, Entries for Bonds Payable Transactions

Campbell Inc. produces and sells outdoor equipment. On July 1, Year 1, Campbell issued $13,500,000 of 10-year, 11% bonds at a market (effective) interest rate of 9%, receiving cash of $15,256,035. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

Required:

If an amount box does not require an entry, leave it blank.

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, Year 1, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)

b. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)

3. Determine the total interest expense for Year 1. Round to the nearest dollar. 4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest? (yes or no)

5. Compute the price of $15,256,035 received for the bonds by using Exhibit 5 and Exhibit 7. (Round to the nearest dollar.) Your total may vary slightly from the price given due to rounding differences.

Present value of the face amount	$fill in the blank
Present value of the semi-annual interest payments	$fill in the blank
Price received for the bonds

Bond Premium, Entries for Bonds Payable Transactions Campbell Inc. produces and sells outdoor equipment. On July 1, Year 1, Campbell issued $13,500,000 of 10-year, 11% bonds at a market (effective) interest rate of 9%, receiving cash of $15,256,035. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: If an amount box does not require an entry, leave it blank. 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1. Cash Premium on Bonds Payable Bonds Payable 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.) b. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.) 3. Determine the total interest expense for Year 1. Round to the nearest dollar. 4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest? 5. Compute the price of $15,256,035 received for the bonds by using Exhibit 5 and Exhibit 7. (Round to the nearest dollar.) Your total may vary slightly from the price given due to rounding differences. Present value of the face amount $ Present value of the semi-annual interest payments $ Price received for the bonds $ Present Value of Ordinary Annuity of $1 per Period Periods 4.0% 4.5% 5% 5.5% 6% 6.5% 79% 1 0.96154 0.94340 0.95694 1.87267 0.95238 1.85941 0.94787 1.84632 0.93897 1.82063 2 1.88609 1.83339 3 2.77509 2.74896 2.72325 2.69793 2.67301 2.64848 0.93458 1.80802 2.62432 3.38721 4.10020 4 3.62990 3.58753 3.54595 3.50515 3.46511 3.42580 5 4.45182 4.38998 4.32948 4.27028 4.21236 4.15568 6 5.24214 5.15787 5.07569 4.91732 4.84101 4.76654 4.99553 5.68297 7 6.00205 5.78637 5.58238 5.48452 5.38929 5.89270 6.59589 8 6.73274 6.46321 6.33457 6.08875 5.97130 6.20979 6.80169 9 7.43533 7.26879 6.95220 6.65610 6.51523 7.10782 7.72173 10 8.11090 7.91272 7.53763 7.36009 7.18883 7.02358 11 8.76048 8.52892 8.30641 8.09254 7.88687 7.68904 7.49867 12 9.11858 8.86325 8.61852 8.38384 8.15873 7.94269 9.38507 9.98565 13 9.68285 9.39357 9.11708 8.85268 8.59974 8.35765 14 10.56312 10.22283 9.89864 9.58965 9.01384 8.74547 9.29498 9.71225 15 11.11839 10.73955 10.37966 10.03758 9.40267 9.10791 16 11.65230 11.23402 10.83777 10.46216 10.10590 9.76776 9.44665 17 12.16567 11.70719 11.27407 10.86461 10.47726 10.11058 9.76322 18 12.65930 12.15999 11.68959 10.82760 11.24607 11.60765 19 13.13394 12.59329 12.08532 11.15812 1043247 10.73471 11.01851 10.05909 10.33560 10.59401 20 13.59033 13.00794 12.46221 11.95038 11.46992 21 14.02916 13.40472 12.82115 12.27524 11.76408 11.28498 10.83553 22 14.45112 13.16300 12.58317 12.04158 11.53520 11.06124 13.78442 14.14777 23 14.85684 13.48857 12.87504 12.30338 11.77014 11.27219 11.46933 24 15.24696 14.49548 13.79864 13.15170 12.55036 11.99074 25 15,62208 14.82821 14.09394 1341393 12.78336 12.19788 11.65358 26 15.98277 14.37519 13.66250 13.00317 12.39237 15.14661 15.45130 11.82578 11.98671 27 16.32959 14.64303 13.89810 13.21053 12.57500 12.74648 28 16.66306 15.74287 14.89813 14.12142 13.40616 12.13711 29 16.98371 16.02189 15.14107 14.33310 13.59072 12.90749 12.27767 30 17.29203 16.28889 15.37245 14.53375 13.76483 13.05868 12.40904 31 17.58849 16.54439 15.59281 13.92909 13.20063 12.53181 14.72393 14.90420 32 16.78889 15.80268 14.08404 13.33393 12.64656 33 17.87355 18.14765 18.41120 17.02286 16.00255 15.07507 13.45909 12.75379 14.23023 14.36814 34 17.24676 16.19290 13.57661 12.85401 15.23703 15.39055 35 18.66461 17.46101 16.37419 1449825 13.68696 12.94767 40 19.79277 18.40158 17.15909 16.04612 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 Present Value of Ordinary Annuity of $1 per Period Periods 8% 9% 10% 11% 12% 13% 14% 1 0.92593 0.91743 0.90909 0.90090 0.89286 0.88496 0.87719 2 1.78326 1.73554 1.71252 1.69005 1.66810 1.64666 1.75911 2.53129 3 2.57710 2.48685 2.44371 2.40183 2.36115 2.32163 4 3.31213 3.23972 3.16987 3.10245 3.03735 2.97447 2.91371 3.43308 5 3.99271 3.88965 3.79079 3.69590 3.60478 3.51723 6 4.62288 4.48592 4.35526 4.23054 4.11141 3.99755 3.88867 7 5.20637 5.03295 4.86842 4.71220 456376 4.42261 4.28830 8 5.74664 5.53482 5.33493 5.14612 4.96764 4.79677 4.63886 9 6.24689 5.99525 5.75902 5.53705 5.32825 5.13166 4.94637 10 6.7 1008 6.41766 6.14457 5.88923 5.65022 5.42624 5.21612 11 7.13896 6.80519 6.49506 6.20652 5.93770 5.68694 5.45273 12 7.53608 7.16073 6.81369 6.49236 6.19437 5.91765 5.66029 13 7.90378 7.48690 7.10336 6.74987 6.42355 5.84236 14 8.22424 7.36669 6.96187 6.62817 6.12181 6.30249 6.46238 7.78615 8.06069 6.00207 15 8.55948 7.60608 7.19087 6.81086 6.14217 16 8.85137 8.31256 7.82371 7.37916 6.97399 6.60388 6.26506 17 9.12164 8.54363 8.02155 7.54879 7.11963 6.72909 6.37286 18 9.37189 8.75563 8.20141 7.70162 7.24967 6.83991 6.46742 19 9.60360 8.95011 8.36492 7.36578 6.93797 6.55037 7.83929 7.96333 20 9.81815 9.12855 8.51356 7.46944 7.02475 6.62313 21 10.01680 9.29224 8.64869 8.07507 756200 6.68696 7.10155 7.16951 22 10.20074 9.44243 8.77154 8.17574 7.64465 6.74294 23 10.37106 9.58021 8.26643 7.71843 7.22966 8.88322 8.98474 24 10.52876 9.70661 8.34814 7.78432 7.28288 6.79200 6.83514 6.87293 25 10.67478 9.82258 9.07704 8.42174 7,84314 7.32998 26 10.80998 9.92897 9.16095 8.48806 7.89566 7.37167 6.90608 27 10.93516 10.02658 9.23722 8.54780 7.94255 7.40856 6.93515 28 11.05108 10.11613 9.30657 8.60162 7.98442 7.44120 6.96066 29 11.15841 10.19828 9.36961 8.65011 8.02181 7.47009 6.98304 30 11.25778 10.27365 9.42691 8.69379 8.05518 7.49565 7.00266 31 11.34980 10.34280 9.47901 8.73315 8.08499 7.51828 7.01988 32 11.43500 10.40624 8.76860 8.11159 7.53830 7.03498 9.52638 956943 33 11.51389 10.46444 8.80054 8.13535 7.55602 7.04823 34 11.58693 9.60857 8.82932 8.15656 7.57170 7.05985 1051784 10.56682 35 11.65457 9.64416 8.85524 8.17550 7.58557 7.07005 40 11.92461 10.75736 9.77905 8.95105 8.24378 7.63438 7.10504 45 12.10840 10.88120 9.86281 9.00791 8.28252 7.66086 7.12322 50 12.23348 10.96168 9.91481 9.04165 8.30450 7.67524 7.13266 Present Value of $1 at Compound Interest Due Inn Periods Periods 4.0% 4.5% 5% 5.5% 6% 6.5% 7% 1 0.96154 0.94340 0.89000 0.93458 0.87344 2 0.92456 3 0.95694 0.91573 0.87630 0.83856 0.80245 0.88900 0.95238 0.90703 0.86384 0.82270 0.78353 0.93897 0.88166 0.82785 0.77732 0.94787 0.89845 0.85161 0.80722 0.76513 0.83962 0.81630 4 0.85480 0.76290 0.79209 0.74726 5 0.82193 0.72988 0.71299 6 0.79031 7 0.75992 0.73069 0.76790 0.73483 0.70319 0.74622 0.71068 0.67684 0.72525 0.68744 0.65160 0.61763 0.70496 0.66506 0.62741 0.68533 0.64351 0.60423 0.56735 0.66634 0.62275 0.58201 0.54393 8 9 0.67290 0.64461 0.59190 0.70259 0.67556 10 0.64393 0.61391 0.58543 0.55839 0.53273 0.50835 0.58468 11 12 13 0.61620 0.58966 0.55684 0.64958 0.62460 0.60057 0.57748 0.55526 0.52679 0.49697 0.46884 0.44230 0.56427 0.55491 0.52598 0.49856 0.47257 0.44793 0.53032 0.50021 0.46968 0.44102 0.41410 0.38883 0.47509 0.44401 0.41496 0.38782 0.36245 14 0.53997 0.51672 0.50507 0.48102 15 0.41727 16 0.39365 0.37136 0.36510 0.34281 17 0.53391 0.51337 0.49363 0.47464 0.45811 0.43630 0.41552 0.49447 0.47318 0.45280 0.43330 0.42458 0.40245 0.38147 0.36158 0.33873 0.31657 0.29586 18 0.35034 0.32189 19 0.39573 0.33051 0.30224 0.27651 20 0.45639 0.41464 0.37689 0.34273 0.31180 0.28380 0.25842 21 22 23 0.43883 0.42196 0.40573 0.39012 0.37512 0.39679 0.37970 0.36335 0.35894 0.34185 0.32557 0.31007 0.32486 0.30793 0.29187 0.27666 0.26223 0.29416 0.27751 0.26180 0.24698 0.26648 0.25021 0.23494 0.22060 0.24151 0.22571 0.21095 24 0.34770 0.19715 25 0.33273 0.29530 0.23300 0.20714 0.18425 26 0.21981 27 28 29 30 0.36069 0.34682 0.33348 0.32065 0.30832 0.31840 0.30469 0.29157 0.27902 0.28124 0.26785 0.25509 0.24295 0.24856 0.23560 0.22332 0.21168 0.20737 0.19563 0.18456 0.19450 0.18263 0.17148 0.16101 0.17220 0.16093 0.15040 0.14056 0.13137 0.26700 0.23138 0.20064 0.17411 0.15119 31 0.25550 0.22036 0.16425 0.14196 32 0.24450 33 34 35 0.29646 0.28506 0.27409 0.26355 0.25342 0.23397 0.22390 0.21425 0.20987 0.19987 0.19035 0.18129 0.19018 0.18027 0.17087 0.16196 0.15352 0.15496 0.14619 0.13791 0.13011 0.13329 0.12516 0.11752 0.11035 0.12277 0.11474 0.10723 0.10022 0.09366 40 0.20829 0.17193 0.14205 0.11746 0.09722 0.08054 0.06678 45 0.17120 0.13796 0.11130 0.08988 0.07265 0.05879 0.04761 50 0.14071 0.11071 0.08720 0.06877 0.05429 0.04291 0.03395 Present Value of $1 at Compound Interest Due in n Periods Periods 8% 9% 10% 11% 12% 13% 14% 1 0.92593 0.91743 0.90909 0.90090 0.89286 0.88496 0.87719 2 0.85734 0.84168 0.79719 0.78315 0.76947 0.82645 0.75131 0.81162 0.73119 3 0.79383 0.77218 0.71178 0.69305 0.67497 4 0.73503 0.70843 0.68301 0.65873 0.63552 0.61332 0.59208 5 0.68058 0.64993 0.62092 0.59345 0.56743 0.54276 0.51937 6 0.63017 0.59627 0.53464 0.50663 0.45559 0.56447 0.51316 0.48032 0.42506 7 0.58349 0.54703 0.48166 0.45235 0.39964 8 0.54027 0.50187 0.46651 0.43393 0.40388 0.37616 0.35056 9 0.50025 0.46043 0.42410 0.39092 0.36061 0.33288 0.30751 10 0.46319 0.42241 0.38554 0.35218 0.32197 0.29459 0.26974 11 0.42888 0.38753 0.35049 0.31728 0.28748 0.26070 0.23662 12 0.39711 0.35553 0.31863 0.25668 0.23071 0.20756 13 0.36770 0.32618 0.28966 0.22917 0.20416 0.18207 0.28584 0.25751 0.23199 0.20900 14 0.34046 0.26333 0.20462 0.18068 0.29925 0.27454 0.15971 0.14010 15 0.31524 0.23939 0.18270 0.15989 16 0.29189 0.25187 0.21763 0.18829 0.16312 0.14150 0.12289 17 0.27027 0.23107 0.19784 0.16963 0.14564 0.10780 18 0.25025 0.17986 0.15282 0.13004 0.12522 0.11081 0.09806 0.21199 0.19449 0.09456 19 0.23171 0.13768 0.11611 0.08295 0.16351 0.14864 20 0.21455 0.17843 0.12403 0.10367 0.08678 0.07276 21 0.19866 0.16370 0.13513 0.11174 0.09256 0.07680 0.06383 22 0.18394 0.15018 0.12285 0.10067 0.08264 0.06796 0.05599 23 0.17032 0.11168 0.07379 0.06014 0.13778 0.12640 0.09069 0.08170 0.04911 0.04308 24 0.15770 0.10153 0.06588 0.05323 25 0.14602 0.11597 0.09230 0.07361 0.05882 0.04710 0.03779 26 0.13520 0.10639 0.08391 0.06631 0.05252 0.04168 0.03315 27 0.12519 0.09761 0.07628 0.05974 0.04689 0.03689 0.02908 0.02551 28 0.11591 0.08955 0.05382 0.04187 0.03264 0.06934 0.06304 29 0.10733 0.08215 0.04849 0.03738 0.02889 0.02237 30 0.09938 0.07537 0.05731 0.04368 0.03338 0.02557 0.01963 31 0.09202 0.05210 0.03935 0.02980 0.02262 0.01722 0.06915 0.06344 32 0.08520 0.04736 0.02661 0.02002 0.01510 0.03545 0.03194 33 0.07889 0.05820 0.04306 0.02376 0.01772 0.01325 34 0.07305 0.05339 0.03914 0.02878 0.02121 0.01568 0.01162 35 0.06763 0.04899 0.03558 0.02592 0.01894 0.01388 0.01019 40 0.04603 0.03184 0.02209 0.01538 0.01075 0.00753 0.00529 45 0.03133 0.02069 0.01372 0.00913 0.00610 0.00409 0.00275 50 0.02132 0.01345 0.00852 0.00542 0.00346 0.00222 0.00143