De Anza College Accounting 1B Bond In Class Practice Problems SCENARIO 1 Practice Co. needs to borrow money. On January 1, 20X1 the company issued $500,000 of five year, 4% bonds at an effective interest rate of 5% Interest is payable semiannually on January 1 and July 1 Prepare journal entries to record the following: a) Sale of the bonds on January 1, 20X1. Use the attached tables to determine the bond proceeds b) First interest payment on July 1, 20X1, and the amortization of bond premium or discount for the first six months. Use the straight line method of amortization. SCENARIO2 Practice Co. needs to borrow money. On January 1, 20X2 the company issued $600,000 of five year, 5% bonds at an effective interest rate of 4%. Interest is payable semiannually on January 1 and July 1. Prepare journal entries to record the following a) Sale of the bonds on January 1, 20X2. Use the attached tables to determine the bond proceeds. b) First interest payment on July 1, 20X2, and the amortization of bond premiumm or discount for the first six months. Use the straight line method of amortization. Future Present Future Present Value of Value of Value of Value of $1 Ordinary Ordinary Future Present Future Present Value of Value of Value of Value of $1 Ordinary Ordinary Annuity of Annuity of Annuity of Annuity of 1.04000 0.96154 1.12486 0.88900 3.12160 2.77509 1.21665 0.82193 5.41632 4.45182 315930.75992 7.89829 6.00205 1.42331 1.05000 0.95238 1.00000 0.95238 1.15763 0.86384 3.15250 2.72325 1.27628 0.78353 5.52563 4.32948 1.40710 0.71068 8 14201 578837 .551330.64461 11.0 1.00000 0.96154 0.70259 10.58280 7.43533 02656 7,10782 2.0% Rate per c n per 1.020000.98039 1.00000 0.98039 1.06121 0.94232 3.06040 288388 5 1.10408 0.90573 5.20404 4.71346 1.025000.97561 1.00000 0.97561 1.07689 0.92860 3.07563 2.85602 1.13141 0.88385 5.25633 464583 4869 0.87056 7.43428 6.47199 7 1.18869 0.84127 7.54743 634939 9 1.24886 0.80073 9.95452 7.97087 1.19509 0.83676 9.75463 8.16224