CH.14 Q.6 HW PROBLEMS

When Patey Pontoons issued 6% bonds on January 1, 2021, with a face amount of $600,000, the market yield for bonds of similar risk and maturity was 7%. The bonds mature December 31, 2024 (4 years). Interest is paid semiannually on June 30 and December 31. (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 at January 1, 2021.

2. Prepare the journal entry to record their issuance by Patey on January 1, 2021.

3. Prepare an amortization schedule that determines interest at the effective rate each period.

4. Prepare the journal entry to record interest on June 30, 2021.

5. What is the amount related to the bonds that Patey will report in its balance sheet at December 31, 2021? 6. What is the amount related to the bonds that Patey will report in its income statement for the year ended December 31, 2021? (Ignore income taxes.)

7. Prepare the appropriate journal entries at maturity on December 31, 2024.

Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Reg 3 Reg 4 Reg 5 and 6 Reg 7 Determine the price of the bonds at January 1, 2021. (Round final answers to the nearest who Table values are based on: n = 8 5.0% Cash Flow Amount Interest $ 600,000 $ Present Value 406,104 X 116,337 522,441 18,000 Principal $ Price of bonds $ Req 1 Req 2 Req3 Req 4 Reg 5 and 6 Req 7 Prepare the journal entry to record their issuance by Patey on January 1, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round intermediate calculations an answers to the nearest whole dollar.) No Date General Journal Debit Credit 1 January 01, 2021 Cash Discount on bonds payable Bonds payable Req 1 Req 2 Req3 Req 4 Reg 5 and 6 Req 7 Prepare an amortization schedule that determines interest at the effective rate each period. (Round i and final answers to the nearest whole dollar.) Cash Interest Bond Interest Expense Discount Amortization Carrying Value Semiannual Interest Period-End 01/01/2021 06/30/2021 $ 522,441 x $ $ 26,122 X $ 8,122 X 530,564 X 12/31/2021 8,528 X 06/30/2022 12/31/2022 06/30/2023 18,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000 144,000 26,528 X 26,955 X 27,402 X 27,872 X 28,366 28,884 X 29,429 221,558 $ 539,092 548,047 557,449 567,321 577,687 588,571 600,000 8,955 9,402 9,872 10,366 10,884 11,429 77,558 12/31/2023 06/30/2024 12/31/2024 Total $ $ Req 1 Reg 2 Reg 3 Reg 4 Req 5 and 6 Req 7 Prepare the journal entry to record interest on June 30, 2021. (If no entry is required for a transactic journal entry required" in the first account field. Round intermediate calculations and final answers to dollar.) No Date General Journal Debit Credit Req 1 Reg 2 Req 3 Req 4 Reg 5 and 6 Req 7 What is the amount(s) related to the bonds that Patey will report in its balance sheet at Decem statement for the year ended December 31, 2021? (Ignore income taxes.) (Round your interm answers to the nearest whole dollar.) 5. December 31, 2021 book value 6. Interest expense for 2021 Req 1 Reg 2 Req3 Req 4 Req 5 and 6 Req 7 Prepare the appropriate journal entries at maturity on December 31, 2024. (If no entry is required for a tra select "No journal entry required" in the first account field. Round intermediate calculations and final answer whole dollar.) No Date General Journal Debit Credit