JenStar issues $900,000 of 8% bonds on July 1, 2008. Additional information on the bond issue is as follows:

Bond date		January 1, 2008
Maturity date		January 1, 2018
Yield rate		13%
Interest payment dates		June 30, December 31

How do I find the cash value of $230,250 for part b)?

a) Record the bond issue and the first interest payment under the effective-interest method. General Journal Page 1 Date Account/Explanation PR Debit Credit 1/Jul Cash 652,083.59 Bonds payable 652,083.59 issuance 31/Dec Interest expense 28,043.52 Bonds payable 7,956.48 Cash 36,000 interest payment Marking: Journal Entry 1 : bond issue 'Cash' should be debited for the amount of $658,469.02, but you have not done this. This will cost you 1 mark Cash = PV = (36,000 PMT, 6.50 1/4, 19 N, 900,000 FV) = $658,469.02 'Bonds payable should be credited for the amount of $658,469.02, but you have not done this. This will cost you 1 mark. Journal Entry 2: first interest payment 'Interest expense' should be debited for the amount of $42,800.49, but you have not done this. This will cost you 1 mark. Interest expense = $658,469.02 x 6.50% = $42,800.49 'Bonds payable' should be credited for the amount of $6,800.49, but you have not done this. This will cost you 1 mark. b) On September 1, 2013, the company called and cancelled 25% of the bonds for the market price of 101 plus accrued interest. Record the entry for the sale of the bond. (Note: interest was paid on June 30, 2013). General Journal Page 1 Date Account/Explanation PR Debit Credit 1/Sep Cash 738,251.32 Loss on bond sale 513,251.32 Bonds payable 225,000 cancelled bonds Marking: You have not included the 'Interest expense' account in this journal entry. This will cost you 2 marks 'Bonds payable should be debited for the amount of $187.559.41, but you have not done this. This will cost you 1 mark. Carrying value on June 30, 2013 = PV = (36,000 PMT, 6.50 1Y, 9 N. 900.000 FV) = $750,237.6558 Bonds payable cancelled = $750,237.6558 0.25 = $187,559.41 'Loss on bond sale' should be debited for the amount of $38.626.80, but you have not done this. This will cost you 1 mark. 'Cash' should be credited for the amount of $230,250, but you have not done this. This will cost you 1 mark Cash = (1.01 * $225,000) + $3,000 = $230,250