Instructions On July 1, 20Y1, Danzer Industries Inc. issued $48,800,000 of 10-year, 9% bonds at a market (effective) interest rate of 11%, receiving cash of $42,968,258. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1.* 2. Journalize the entries to record the following:* a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) b. The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) 3. Determine the total interest expense for 20Y1. 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? 5. Compute the price of $42,968,258 received for the bonds by using the present value tables. (Round to the nearest dollar.) *Refer to the Chart of Accounts for exact wording of account titles. Present Value Tables Two present value tables are provided: Present Value of $1 at Compound Interest Due in n Periods and Present Value of Ordinary Annuity of $1 per Period. Use them as directed in the problem requirements. Periods Present Value of $1 at Compound Interest Due in n Periods 4.0% 4.5% 5% 5.5% 6% 6.5% 0.96154 0.95694 0.95238 0.94787 0.94340 0.93897 0.92456 0.91573 0.90703 0.89845 0.89000 0.88166 0.88900 0.87630 0.86384 0.85161 0.83962 0.82785 0.85480 0.83856 0.82270 0.80722 0.79209 0.77732 0.82193 0.80245 0.78353 0.76513 0.74726 0.72988 0.79031 0.76790 0.74622 0.72525 0.70496 0.68533 0.75992 0.73483 0.71068 0.68744 0.66506 0.64351 0.73069 0.70319 0.67684 0.65160 0.62741 0.60423 0.702590.67290 0.64461 0.61763 0.59190 0.56735 0.67556 0.64393 0.61391 0.58543 0.55839 0.53273 0.64958 0.61620 0.58468 0.55491 0.52679 0.50021 0.62460 0.58966 0.55684 0.52598 0.49697 0.46968 0.60057 0.56427 0.53032 0.49856 0.46884 0.44102 0.57748 0.53997 0.50507 0.47257 0.44230 0.41410 0.55526 0.51672 0.48102 0.44793 0.41727 0.38883 0.53391 0.49447 0.45811 0.42458 0.39365 0.36510 0.51337 0.47318 0.43630 0.40245 0.37136 0.34281 7% 0.93458 0.87344 0.81630 0.76290 0.71299 0.66634 0.62275 0.58201 0.54393 0.50835 0.47509 0.44401 0.41496 0.38782 0.36245 0.33873 0.31657 13 15 17 19 20 21 22 23 25 26 27 0.49363 0.45280 0.47464 0.43330 0.45639 0.41464 0.43883 0.39679 0.42196 0.37970 0.40573 0.3635 0.39012 0.34770 0.37512 0.33273 0.36069 0.31840 0.34682 0.30469 0.33348 0.29157 0.32065 0.27902 0.30832 0.26700 0.29646 0.25550 0.28506 0.24450 0.27409 0.23397 0.26355 0.22390 0.25342 0.21425 0.20829 0.17193 0.17120 0.13796 0.14071 0.11071 0.41552 0.38147 0.35034 0.32189 0.29586 0.39573 0.36158 0.33051 0.30224 0.27651 0.37689 0.34273 0.31180 0.28380 0.25842 0.35894 0.32486 0.29416 0.26648 0.24151 0.34185 0.30793 0.27751 0.25021 0.22571 0.32557 0.29187 0.26180 0.23494 0.21095 0.31007 0.27666 0.24698 0.22060 0.19715 0.29530 0.26223 0.23300 0.20714 0.18425 0.28124 0.24856 0.21981 0.19450 0.17220 0.26785 0.23560 0.20737 0.18263 0.16093 0.25509 0.22332 0.19563 0.17148 0.15040 0.24295 0.2168 0.18456 0.16101 0.14056 0.23138 0.20064 0.17411 0.15119 0.13137 0.22036 0.19018 0.16425 0.14196 0.12277 0.20987 0.18027 0.15496 0.13329 0.11474 0.19987 0.17087 0.14619 0.12516 0.10723 0.19035 0.16196 0.13791 0.11752 0.10022 0.18129 0.15352 0.13011 011035 0.09366 0.14205 0.1746 0.09722 0.08054 0.06678 0.130 0.08988 0.07265 0.05879 0.04761 0.08720 0.06877 0.05429 0.04291 0.03395 29 30 132 34 35 40 Periods Present Value of Ordinary Annuity of $1 per Period 4.0% 4.5% 5% 5.5% 6% 6.5% 7% 0.96154 0.95694 0.95238 0.94787 0.94340 0.93897 0.93458 1.88609 1.87267 1.85941 1.84632 1.83339 1.82063 1.80802 2.77509 2.74896 2.72325 2.69793 2.67301 2.64848 2.62432 3.62990 3.58753 3.54595 3.50515 3.46511 3.42580 3.38721 4.45182 4.38998 4.32948 4.27028 4.21236 4.15568 4.10020 5.24214 5.157875.075694.99553 4.91732 4.84101 4.76654 6.00205 5.89270 5.78637 5.68297 5.58238 5.48452 5.38929 6.73274 6.595896.46321 6.33457 6.209796.08875 5.97130 7.435337.26879 7.10782 6.952206.80169 6.65610 6.51523 8.11090 7.91272 7.721737.537637.360097.18883 7.02358 8.76048 8.52892 8.30641 8.09254 7.88687 7.68904 7.49867 9.385079.11858 8.863258.61852 8.38384 8.158737.94269 9.98565 9.68285 9.39357 9.11708 8.852688.59974 8.35765 10.56312 10.22283 9.89864 9.58965 9.294989.01384 8.74547 11.11839 10.73955 10.37966 10.03758 9.71225 9.40267 9.10791 11.65230 11.23402 10.83777 10.46216 10.105909.76776 9.44665 12.16567 11.70719 11.27407 10.86461 10.47726 10.11058 9.76322 12.65930 12.15999 11.68959 11.24607 10.82760 10.43247 10.05909 13.13394 12.59329 12.08532 11.60765 11.15812 10.73471 10.33560 14 16 17 22 25 13.59033 13.00794 12.46221 1.95038 11.46992 11.01851 10.59401 | 14.02916 13.40472 12.82115 12.27524 1.76408 11.28498 10.83553 14.45112 13.78442 13.16300 12.58317 12.04158 11.53520 1.06124 14.85684 14.14777 13.48857 12.87504 12.30338 11.77014 11.27219 15.24696 14.49548 13.79864 13.15170 12.55036 11.99074 11.46933 15.62208 14.82821 14.09394 1341393 12.78336 12.19788 11.65358 15.98277 15.14661 14.37519 13.66250 13.00317 12.39237 | 11.82578 16.32959 15.45130 14.64303 13.89810 13.21053 12.57500 11.98671 16.66306 15.74287 14.89813 14.12142 13.40616 12.74648 12.13711 16.98371 16.02189 15.14107 14.33310 13.59072 12.90749 12.27767 17.29203 16.28889 15.37245 14.53375 13.76483 13.05868 12.40904 17.58849 16.54439 15.59281 14.72393 13.92909 13.20063 12.53181 17.87355 16.78889 15.80268 14.90420 14.08404 13.33393 12.64656 18.14765 17.02286 16.00255 15.07507 14.23023 1345909 12.75379 18.41120 17.24676 16.19290 15.23703 14.36814 1357661 12.85401 18.66461 17.46101 16.37419 15.39055 14.49825 13.68696 12.94767 19.79277 18.40 158 17.15909 16.04612 15.04630 14.14553 13.33171 20.72004 19.15635 17.77407 16.54773 15.45583 14.48023 13.60552 21.48218 19.7620118.25593 16.93152 15.76186 14.72452 13.80075 30 33 34 50 CHART OF ACCOUNTS Danzer Industries Inc. General Ledger ASSETS REVENUE 110 Cash 111 Petty Cash 410 Sales 610 Interest Revenue 611 Gain on Redemption of Bonds 121 Accounts Receivable 122 Allowance for Doubtful Accounts 126 Interest Receivable 127 Notes Receivable 131 Merchandise Inventory 141 Office Supplies 142 Store Supplies EXPENSES 510 Cost of Merchandise Sold 515 Credit Card Expense 516 Cash Short and Over 521 Sales Salaries Expense 522 Office Salaries Expense 151 Prepaid Insurance 191 Land 192 Store Equipment 193 Accumulated Depreciation-Store Equipment 531 Advertising Expense 532 Delivery Expense 533 Repairs Expense 534 Selling Expenses 535 Rent Expense 194 Office Equipment 195 Accumulated Depreciation Office Equipment LIABILITIES 210 Accounts Payable 536 Insurance Expense 537 Office Supplies Expense 538 Store Supplies Expense 541 Bad Debt Expense 561 Depreciation Expense-Store Equipment 562 Depreciation Expense-Office Equipment 221 Salaries Payable 231 Sales Tax Payable 232 Interest Payable 241 Notes Payable 251 Bonds Payable 252 Discount on Bonds Payable 253 Premium on Bonds Payable 590 Miscellaneous Expense 710 Interest Expense 711 Loss on Redemption of Bonds EQUITY 311 Common Stock 312 Paid-In Capital in Excess of Par-Common Stock 315 Treasury Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends 352 Stock Dividends 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 2a. Journalize the entry to record the first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) Refer to the Chart of Accounts for exact wording of account titles. PAGE 10 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 2b. Journalize the entry to record the interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-line method. Refer to the Chart of Accounts for exact wording of account titles. (Round to the nearest dollar.) PAGE 10 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY Final Questions 3. Determine the total interest expense for 20Y1. Enter amount as a positive number. $ 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? Yes O NO 5. Compute the price of $42,968,258 received for the bonds by using the tables shown in Present Value Tables (Round to the nearest dollar.) Present value of the face amount Present value of the semiannual interest payments Price received for the bonds