From Example 14.8 (Assume we use Straight Line Method) Example 14A.1: On January 1,2016, the Ruffin Corporation issued $40,000 par value, 4%, four-year bonds that mature on December 31, 2019. Ruffin will pay interest semiannually on June 30 and December 31. On the date Ruffin issued the bonds, the market rate of interest was 6%. The company's fiscal year ends on December 31. What is the issue price of this bond? Prepare the journal entry to record the issuance. Prepare an amortization schedule over the four year period using the STRAIGHT LINE method. Prepare the journal entries to record the interest entries for the first year. Prepare the journal entry to record the payment of the bonds at maturity. Prepare the accounts 7 for the bond payable and bond discount accounts for the life of the bond. 9 Since stated interest rate market interest rate 6%, we can predict and prove that these bonds will be issued at a discount Face Value) When we issue the Bonds payable, we promise to pay (1) Cash interest every semiannual year Face Value of the band's Payable (2) Principal of $60.000 the end of the year Every period we will pay cash interest 16 Annual Market interest Rate ette 18 Annual Started interest Rate Samiannual Suated interest Rate 20 Years Number of semiannual periods Face Value of the Band Payable ds payable issued at a discount Face Value Present of the lands Payable Present Value of the Bands Payable L M N Annual Stated interest Rate Semiannual Stated interest Rate Number of semiannual periods Face Value of the Bonds Payable 23 24 Present Value of the Bonds Payable The Bonds payable is issued at a discount Face Value - Present Value of the Bands Payable Period 0 Total interest ease-T Cantarest Total Interest Expense Discount Amortized (5-Method) Carrying Value (Prior CV +Discount amortired) Initial CVP of the Bonds Payable Date Cash interest 1 /1/2016 6/10/2016 2 12/28/2016 6/27/2017 4 12/25/2017 Balance Sheet Presentation Bonds Payable Less Discount on VP Carrying Value 6 12/22/2018 6/21/2010 12/19/2019 8