Bond premium, entries for bonds payable transactions Instructions Present Value Tables Chart of Accounts Journal Final Questions Instructions Campbell Inc. produces and sells outdoor equipment. On July 1, 20Y1, Campbell issued $21,000,000 of 10-year, 12% bonds at a market (effective) interest rate of 11%, receiving cash of $22,254,809. 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, 20Y1." 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.) b. The interest payment on June 30, 2012, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar) 3. Determine the total interest expense for 20Y1. 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 $22,254,809 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 Two present value tables are provided: Present Value of $1 at Compound Interest Due in n Periods and Present Value of Ordinary Annuity of $1 per Period. Use them as directed in the problem requirements. Present Value of $1 at Compound Interest Due in n Periods 4.0% 4.5% 5% 5.5% 6% 6.5% Periods 7% 0.96154 0.92456 0.88900 0.85480 0.82193 0.95694 0.91573 0.87630 0.83856 0.80245 0.95238 0.90703 0.86384 0.82270 0.78353 0.94787 0.89845 0.85161 0.80722 0.76513 0.94340 0.89000 0.83962 0.79209 0.74726 0.93897 0.88166 0.82785 0.77732 0.72988 0.93458 0.87344 0.81630 0.76290 0.71299 0.79031 0.76790 0.74622 0.72525 0.70496 0.68533 0.66634 0.75992 0.73069 0.70259 0.67556 0.64958 0.62460 0.60057 0.57748 0.55526 0.53391 0.51337 0.73483 0.70319 0.67290 0.64393 0.61620 0.58966 0.56427 0.53997 0.51672 0.49447 0.47318 0.71068 0.67684 0.64461 0.61391 0.58468 0.55684 0.53032 0.50507 0.48102 0.45811 0.43630 0.68744 0.65160 0.61763 0.58543 0.55491 0.52598 0.49856 0.47257 0.44793 0.42458 0.40245 0.66506 0.62741 0.59190 0.55839 0.52679 0.49697 0.46884 0.44230 0.41727 0.39365 0.37136 0.64351 0.62275 0.60423 0.58201 0.56735 0.54393 0.53273 0.50835 0.50021 0.47509 0.46968 0.44401 0.441020.41496 0.41410 0.38782 0.38883 0.36245 0.36510 0.33873 0.34281 0.31657 Present Value Tables 0.49363 0.45280 0.41552 0.38147 0.47464 0.43330 0.39573 0.36158 0.45639 0.41464 0.37689 0.34273 0.43883 0.39679 0.35894 0.32486 0.42196 0.37970 0.34185 0.30793 0.40573 0.36335 0.32557 0.29187 0.39012 0.34770 0.31007 0.27666 0.37512 0.33273 0.29530 0.26223 0.36069 0.31840 0.28124 0.24856 0.346820.30469 0.26785 0.23560 0.33348 0.29157 0.255090.22332 0.32065 0.27902 0.24295 0.21168 0.30832 0.267000.23138 0.20064 0.29646 0.25550 0.22036 0.19018 0.28506 0.24450 0.20987 0.18027 0.27409 0.23397 0.19987 0.17087 0.26355 0.22390 0.19035 0.16196 0.25342 0.21425 0.18129 0.15352 0.208290.17193 0.14205 0.11746 0.17120 0.13796 0.11130 0.08988 0.14071 0.11071 0.08720 0.06877 0.35034 0.32189 0.33051 0.30224 0.31180 0.28380 0.29416 0.26648 0.27751 0.25021 0.26180 0.23494 0.24698 0.22060 0.23300 0.20714 0.21981 0.19450 0.20737 0.18263 0.19563 0.17148 0.18456 0.16101 0.17411 0.15119 0.16425 0.14196 0.15496 0.13329 0.14619 0.12516 0.13791 0.11752 0.130110.11035 0.09722 0.08054 0.07265 0.05879 0.05429 0.04291 0.29586 0.27651 0.25842 0.24151 0.22571 0.21095 0.19715 0.18425 0.17220 0.16093 0.15040 0.14056 0.13137 0.12277 0.11474 0.10723 0.10022 0.09366 0.06678 0.04761 0.03395 Present Value Tables Present Value of Ordinary Annuity of $1 per Period Periods 4.0% 4.5% 5% 5.5% 6% 6.5% 7% 0.96154 0.95694 0.95238 0.94787 0.94340 0.93897 0.93458 1.886091.87267 1.85941 1.84632 1.83339 1.82063 1.80802 3 2.775092.74896 2.72325 2.69793 2.67301 2.64848 2.62432 4 3.62990 3.58753 3.54595 3.50515 3.46511 3.42580 3.38721 4.45182 4.38998 4.32948 4.27028 4.21236 4.15568 4.10020 6 5.24214 5.157875.07569 4.99553 4.91732 4.84101 4.76654 6.00205 5.89270 5.78637 5.68297 5.58238 5.58238 5.48452 5.38929 8 6.73274 6.595896.46321 6.33457 6.209796.089755.97130 7.43533 7.26879 7.10782 6.95220 6.80169 6.65610 6.51523 10 8.11090 7.91272 7.721737.537637.360097.18883 7.02358 11 8.76048 8.52892 8.30641 8.09254 7.886877.68904 7.49867 12 9.38507 9.11858 8.86325 8.61852 8.38384 8.158737.94269 9.98565 9.68285 9.39357 9.11708 8.85268 8.59974 8.35765 10.56312 10.22283 9.89864 9.589659.29498 9.01384 8.74547 11.11839 10.73955 10.37966 10.03758 9.71225 9.40267 9.10791 11.65230 11.23402 10.83777 10.46216 10.105909.76776 9.44665 12.16567 11.7071911.27407 10.86461 10.47726 10.11058 9.76322 12.65930 12.15999 11.6895911.24607 10.82760 10.43247 10.05909 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 Present Value Tables 19 20 21 1 3.13394 12.59329 13.59033 13.00794 14.02916 13.40472 14.4511213.78442 14.85684 14.14777 15.24696 14.49548 15.62208 14.82821 15.98277 15.14661 12.08532 11.60765 12.46221 11.95038 12.82115 12.27524 13.16300 12.58317 13.48857 12.87504 13.79864 13.15170 14.09394 13.41393 14.3751913.66250 11.15812 11.46992 11.76408 12.04158 12.30338 12.55036 12.78336 13.00317 10.73471 11.01851 11.28498 11.53520 11.77014 11.99074 12.19788 12.39237 10.33560 10.59401 10.83553 11.06124 11.27219 11.46933 11.65358 11.82578 25 16.32959 15.45130 14.64303 13.89810 13.21053 12.57500 11.98671 32 16.66306 16.98371 17.29203 17.58849 17.87355 18.14765 18.41120 18.66461 19.79277 20.72004 21.48218 15.74287 16.02189 16.28889 16.54439 16.78889 17.02286 17.24676 17.46101 18.40158 19.15635 19.76201 14.89813 14.1214213.40616 15.14107 14.33310 13.59072 15.37245 14.53375 13.76483 15.59281 14.72393 13.92909 15.80268 14.90420 14.08404 16.00255 15.07507 14.23023 16.19290 15.23703 14.36814 16.3741915.39055 14.49825 17.15909 16.04612 15.04630 17.77407 16.54773 15.45583 18.25593 16.93152 15.76186 12.74648 12.90749 13.05868 13.20063 13.33393 13.45909 13.57661 13.68696 14. 14553 14.48023 14.72452 12.13711 12.27767 12.40904 12.53181 12.64656 12.75379 12.85401 12.94767 13.33171 13.60552 13.80075 Journal Shaded cells have feedback.* How does grading work? PAGE 10 JOURNAL Score: 62/75 ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY Jul. 1 Cash 22,254,809.00 Premium on Bonds Payable 1,254,809.00 21,000,000.00 Bonds Payable Dec. 31 Interest Expense Premium on Bonds Payable Cash Points: 11.57 / 14 Journal Shaded cells have feedback.* Question not attempted. PAGE 11 JOURNAL Score: 0/37 ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY Points: 077 Feedback Check My Work Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. PL . - 1.. ! 1!.- - -IL I - E - .-. - .1 - 1 . . . - .. . 1. Elle Bond premium, entries for bonds payable transactions Instructions Present Value Tables Chart of Accounts ! Journal Final Questions Final Questions Shaded cells have feedback. X 3. Determine the total interest expense for 20Y1. Enter amount as a positive number. $ Points: 0/1 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 O No Points: 0/1 5. Compute the price of $22,254,809 received for the bonds by using the 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 Points: 0/3