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Company A To: Glenda Weber, Accounting Director Shawn Grayson, Finance Director From: Robert Fleming, Treasury Director Date: January 5, Year 1 Subject: Purchase of Bonds

Company A

To:

Glenda Weber, Accounting Director

Shawn Grayson, Finance Director

From:

Robert Fleming, Treasury Director

Date:

January 5, Year 1

Subject:

Purchase of Bonds from Company B

Glenda/Shawn,

On January 1, Year 1, 50 bonds, each valued at $1,000, 8% stated rate, were purchased from Company B. These bonds are expected to mature on December 31, Year 3, paying interest annually on December 31st.

Bonds were purchased to yield 5%. Please classify these bonds as held-to-maturity securities.

Let me know if you have any questions.

-Robert Fleming

PRESENT VALUE OF $1

RATE PER PERIOD

Period

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

1

0.9901

0.9804

0.9709

0.9615

0.9524

0.9434

0.9346

0.9259

2

0.9803

0.9612

0.9426

0.9246

0.9070

0.8900

0.8734

0.8573

3

0.9706

0.9423

0.9151

0.8890

0.8638

0.8396

0.8163

0.7938

4

0.9610

0.9239

0.8885

0.8548

0.8227

0.7921

0.7629

0.7350

5

0.9515

0.9057

0.8626

0.8219

0.7835

0.7473

0.7130

0.6806

6

0.9421

0.8880

0.8375

0.7903

0.7462

0.7050

0.6663

0.6302

7

0.9327

0.8706

0.8131

0.7599

0.7107

0.6651

0.6228

0.5835

8

0.9235

0.8535

0.7894

0.7307

0.6768

0.6274

0.5820

0.5403

9

0.9143

0.8368

0.7664

0.7026

0.6446

0.5919

0.5439

0.5003

10

0.9053

0.8204

0.7441

0.6756

0.6139

0.5584

0.5084

0.4632

PRESENT VALUE OF AN ORDINARY ANNUITY OF $1

RATE PER PERIOD

Period

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

1

.9901

.9804

.9709

.9615

.9524

.9434

.9346

.9259

2

1.9704

1.9416

1.9135

1.8861

1.8594

1.8334

1.8080

1.7833

3

2.9410

2.8839

2.8286

2.7751

2.7232

2.6730

2.6243

2.5771

4

3.9020

3.8077

3.7171

3.6299

3.5460

3.4651

3.3872

3.3121

5

4.8534

4.7135

4.5797

4.4518

4.3295

4.2124

4.1002

3.9927

6

5.7955

5.6014

5.4172

5.2421

5.0757

4.9173

4.7665

4.6229

7

6.7282

6.4720

6.2303

6.0021

5.7864

5.5824

5.3893

5.2064

8

7.6517

7.3255

7.0197

6.7327

6.4632

6.2098

5.9713

5.7466

9

8.5660

8.1622

7.7861

7.4353

7.1078

6.8017

6.5152

6.2469

10

9.4713

8.9826

8.5302

8.1109

7.7217

7.3601

7.0236

6.7101

Scroll down to complete all parts of this task.

Using the information provided in the exhibits, enter the appropriate amounts in the designated cells below. Enter all amounts as positive values. Round all amounts to the nearest dollar. If no entry is necessary, enter a zero (0).

Items

Amount

The amount Company A paid for the bonds.

The amount of premium on the bonds on January 1, Year 1.

The amount of cash interest received by Company A during Year 1.

The amount of interest revenue recognized in the Year 1 income statement.

The amount of bond premium amortized in Year 1.

The carrying amount of the bonds presented in the December 31, Year 1, financial statements.

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