Illustration #1 BOND issued @ PAR

Collandra Co. issues $100,000 Bond on Jan 1, 2020, due in 5 years on Dec 31, 2024 with 7% stated interest rate payable annually at year-end. At the time of issue, the market rate for such bonds is also 7 %.

1. Compute the present value of the bond

PV of the principal:
PV of the interest payments:
PV(selling price) of the bonds

2. Interest Computation & Amortization of Discounts or Premiums.

Interest Computation		Discount or Premium

3. Prepare Bond Amortization Schedule

Bond Amortization Schedule Annual Interest Payment 5-Year, 7% Stated Interest Bond Sold to Yield market rate 7%
Date	Cash Paid	Interest Expense	Discount or Premium Amortized	Bonds Payable	Discount or Premium Balance	Carrying Value
Jan 1, 2020
Dec 31, 2020
Dec 31, 2021
Dec 31, 2022
Dec 31, 2023
Dec 31, 2024

4. Prepare the Journal entry for the issuance of the bond, subsequent payments of interest and amortization of discounts, and final payment of the principal

Date	Accounts	Debit	Credit
Jan 1, 2020
Dec 31, 2020
Dec 31, 2021
Dec 31, 2022
Dec 31, 2023
Dec 31, 2024