Instructions on July 1, Year 1, Danzer Industries Inc. Issued $35,400,000 of 10-year, 10% bonds at a market (effective) Interest rate of 12%, recelving cash of $31,339,478. 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. Joumalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.* 2. Joumalize the entries to record the following: a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) 3. Determine the total interest expense for Year 1. 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 $31,339,478 received for the bonds by using the tables shown in 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 Inn Periods and Present Value of Ordinary Annuity of $1 per Period. Use them as directed in the problem requirements. Periods 7% Present Value of $1 at Compound Interest Duo Inn 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 0.70259 0.67290 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 0.93458 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 = a 0.36245 renginiai langai literare ceg 0.33873 M e r -0.53391 0.49447 0.45817 0.42458 0.39365 0.51337 -0.47318 0.43630 0.40245 0.37136 0.49363 0.45280 -0.41552 0.38147 0.35034 0.47464 0.43330 0.39573 10.36158 | 0.33051 0.45639 0.41464 | 0.37689 10.34273 0.31180 0.43883 0.39679 0.35894 0.32486 0.29416 0.42196 -0.37970 0.34185 0.30793 0.2751 0.40573 - 0.36335 - 0.32557 10.29187 0.26180 0.39012 0.34770 10.31007 | 0.27666 0.24698 0.37512 10.33273 0.29530 0.26223 0.23300 0.36069 0.31840 0.28124 0.24856 0.21981 0.34662 0.30469 0.26785 0.23560 | 0.20737 0.33348 - 0.29157 0.25509 10.22332 - 0.19563 0.32065 0.27902 0.24295 021168 1 0.18456 0.30832 - 0.26700 0.23138 | 0.20064 1 0.1741 0.29646 - 0.25550 0.22036 | 0.19018 | 0.16425 0.28506 0.24450 0.20987 0.18027 0.15496 10.27409 0.23397 0.19987 10.17087 0.14619 026355 0.22390 -0.19035 0.16196 10.13791 20.25342 0.21425 0.18129 10.153520.13017| 0.36510 0.33873 0.34281 - 0.31657 0.32189 0.20586 0.30224 0.27651 0.28380 0.25842 0.26648 0.24151 0.25021 -0.225 0.23494 0.21095 0.22060 0.19715 0.20714 0.18425 0.19450 0.17220 0.18263 10.16093 0.17148 0.15040 0.16101 0.14056 10.15119 10.13137 0.14196 0.1227 0.1329||| 0.1474 10.12516 | 0.10723 0.17521 10.10022 0.1035 0.09366 -0.25342 0.20829 0.17120 - 0.14071 0.21425 0.17193 0.13796 0.11071 0.18129 0.14205 | 0.1130- 0.08720 0.15352 0.1301 0.11746 -0.09722 10.08988 10.07265 0.06877 0.05429 0.11035 0.08054 0.05879 0.04291 0.09366 0.06678 0.04761 0.03395 Periods 5% 0 0 on 4.0% 0.96154 1.88609 2.77509 3.62990 4.45182 5.24214 6.00205 6.73274 Present Value of Ordinary Annuity of S1 per Period 4.5% 5.5% 8% 6.5% 7% 0.95694 0.95238 0.94787 0.94340 0.93897 0.93458 1.87267 1.85941 1.84632 1.83339 1.82063 1.80802 2.74896 2.72325 2.69793 2.67301 2.84848 2.62432 3.58753 3.54595 3.50515 3.46511 3.42580 3.38721 4.38998 4.32948 4.27028 4.21236 4.15568 4.10020 5.15787 5.07569 4.91732 4.84101 4.76654 5.89270 5.78637 5.68297 5.58238 5.48452 5.38929 6.59589 6.46321 6.33457 6.20979 6.08875 5.97130 7.26879 7.10782 6.95220 6.80169 6.65610 6.51523 7.91272 7.72173 7.53763 7.36009 7.18883 7.02358 8.52892 8.30641 8.09254 7.88687 7.68904 7.49867 9.11858 8.86325 8.61852 8.38384 8.158737.94269 9.68285 9.39357 9.11708 8.85268 8.59974 8.35765 10.22283 9.89864 9.58965 9.29498 9.01384 8.74547 10.73955 10.37966 10.03758 9.71225 9.40267 9.10791 11.23402 10.83777 10.46216 10.10590 9.76776 9.44665 11.70719 11.27407 10.86461 10.47726 10.11058 9.76322 12.15999 11.68959 11.24607 10.82760 10.43247 10.05909 12.59329 12.08532 11.60765 11.15812 10.73471 10.33560 13.00794 12.46221 11.95038 11.46992 11.01851 10.59401 7.43533 8.11090 8.76048 9.38507 9.98565 10.56312 11.11839 11.65230 12.16567 12.65930 13.13394 13.59033 &S 2 T m & 14,02916 14:4112 14.85684 16.24696 15.62208 15,9827 16.32959 16.66306 16.98371 17.29203 [1110201 13.40472 12.62115 12.27624 11.7640811.2B49 | 10.63553 13.7B44212.163oo 12.58317| 120168 11.53520 1.06124 14.147713.48857 12.87604 / 12.30338 11.77014 11.27219 14,4958 13.79864 13.15170/ 12.55036 11.99674 11.46933 14,828211409394 13,41393 12.78336 | 121978 11.65359 15.14661 14.3751 13.66250 13.00374 12.39237: H.B2578 15.45130 14,64303 | 13.8910 13.21053 12.57500.11.33671 15,74297 14.89813 14.12142 1:| 13.4061612.74648 12.1311 16.0218915.141071:14.333io 13.5907212.30749 112.27767 16.28899 | 15.37245 14.53376 13,7648313.05868 12.40904 16.54439 15.5921 1472393 13.92909 13.20063 12.531a1 16,7BB89 15,20268114.90420 14.08404 13.33393/ 12.64656 17.022B6 16,00255 16.07507 14.23023 13,45909:12.75379 17.24676 16.19290 15,23703 14.36814 13.57661 12.85401 17.46101 16,37419 1:|: 15.39055 14.49825 13.68696 12.94767 18.40158 17.15909 16.04612 15.04630 14.1455313.3377 19.15635 1777407 16.54773 15.45583 14.48023 13.60552 1976261 13.25593 16.93152 15.761881472452 13.80075 7.68849 17.87355 18.14765 18.41120 18.66461 19.79277 20.72004 21.49218 Danzer Industries Inc. General Ledger ASSETS REVENUE 410 Sales 610 Interest Revenue 611 Gain on Redemption of Bonds 110 Cash 111 Petty Cash 121 Accounts Receivable 122 Allowance for Doubtful Accounts 126 Interest Receivable 127 Notes Receivable 131 Merchandise Inventory 141 Office Supplies 142 Store Supplies 151 Prepaid Insurance 191 Land EXPENSES 510 Cost of Merchandise Sold 515 Credit Card Expense 516 Cash Short and Over 521 Sales Salaries Expense 522 Office Salaries Expense 531 Advertising Expense 532 Delivery Expense 533 Repairs Expense 534 Selling Expenses 535 Rent Expense 536 Insurance Expense 537 Office Supplies Expense 538 Store Supplies Expense 192 Store Equipment 193 Accumulated Depreciation-Store Equipment 194 Office Equipment 195 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable nem 221 Salaries Payable 231 Sales Tax Payable 232 Interest Payable 541 Bad Debt Expense 561 Depreciation Expense-Store Equipment 562 Depreciation Expense-Office Equipment 590 Miscellaneous Expense 710 Interest Expense 711 Loss on Redemption of Bonds 241 Notes Payable 251 Bonds Payable 252 Discount on Bonds Payable 253 Premium on Bonds Payable 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 390 Income Summary 1. Journalize the entry to record the amount of cash proceeds from the i c e of the bands on Any 1 Year 1. Refer to the Chart of Accounts for exact wording of account Wies JOURNAL PAGE 10 ACCOUNTING EQUATION DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY / 20. Journalize the entry to record the first semiannual interest payment on December 31, Year 1 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 a PAGE 10 ACCOUNTING EQUATION DATE DESCRIPTION DEBIT read ASSETS LIABILITIES EQUITY Final Questions 3. Determine the total interest expense for Year 1. S 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? O Yes O No 5. Compute the price of $31,339,478 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