Question
I know how to get part A. It's part B & C that I don't know how to do. I need the breakdown/calculations for B.
I know how to get part A. It's part B & C that I don't know how to do. I need the breakdown/calculations for B. I have some idea of how to do it, but I want to make sure I'm doing it the right way. Thanks!
On January 1, 2015, Piper Co. issued ten-year bonds with a face value of $3,000,000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Table values are:
Present value of 1 for 10 periods at 10% .386
Present value of 1 for 10 periods at 12% .322
Present value of 1 for 20 periods at 5% .377
Present value of 1 for 20 periods at 6% .312
Present value of annuity for 10 periods at 10% 6.145
Present value of annuity for 10 periods at 12% 5.650
Present value of annuity for 20 periods at 5% 12.462
Present value of annuity for 20 periods at 6% 11.470
Instructions (Round all calculations to nearest dollar)
(a) Calculate the issue price of the bonds.
(b) Without prejudice to your solution in part (a), assume that the issue price was $2,652,000. Prepare the amortization table for 2015 and 2016, assuming that amortization is recorded on interest payment dates using the effective-interest method.
(c) Prepare journal entries from date of issuance for years 2015 and 2016 using part (b) answer.
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