Legacy issues $670,000 of 6.0%, four-year bonds dated January 1, 2018, that pay interest semiannually on June 30 and December 31. They are issued at $624,896, and their market rate is 8% at the issue date.
Required:
1. Prepare the January 1, 2018, journal entry to record the bonds' issuance.
2. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life.
3. Prepare an effective interest amortization table for the bonds' first two years.
4. Prepare the journal entries to record the first two interest payments.
QUESTION 2
Required Required 2 Required 3 Required 4 Prepare the January 1, 2018, journal entry to record the bonds' issuance. View transaction list Journal entry worksheet Record the issue of bonds with a par value of $670,000 cash on January 1, 2018 at an issue price of $624,896. Note: Enter debits before credits. Date General Journal Debit Credit Jan 01, 2018 Required 1 Required 2 Required 3 Required 4 Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life. Total bond interest expense over life of bonds: Amount repaid payments of Par value at maturity Total repaid Less amount borrowed Total bond interest expense 0 Required 1Required 2 Required 3 Required 4 Prepare an effective interest amortization table for the bonds' first two years. Unamortized Discount Cash Interest Bond Interest Discount Interest Period-End 01/01/2018 06/30/2018 12/31/2018 06/30/2019 12/31/2019 Paid Expense Amortization Carrying Value Required 1 Required 2 Required 3Required 4 Prepare the journal entries to record the first two interest payments. View transaction list Journal entry worksheet 2 Record the first interest payment on June 30, 2018. Note: Enter debits before credits. Date General Journal Debit Credit Jun 30, 2018 On January 1, 2018, Eagle borrows $35,000 cash by signing a four-year, 7% installment note. The note requires four equal payments of $10,333, consisting of accrued interest and principal on December 31 of each year from 2018 through 2021(Table B1, Table B2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided. Round your intermediate calculations and final answers to the nearest dollar amount. Round all table values to 4 decimal places, and use the rounded table values in calculations.) Prepare the journal entries for Eagle to record the loan on January 1, 2018, and the four payments from December 31, 2018, through December 31, 2021. View transaction list Import a new list Eagle borrows $35,000 cash by signing a four-year, 7% installment note. Record the issuance of the note on January 1, 2018. 1 ote. Record the payment of the first installment payment of interest and principal on December 31, 2018 2 Record the payment of the second installment payment of interest and principal on December 31, 2019. 3 Credit 4 Record the payment of the third installment payment of interest and principal on December 31, 2020 s Record the payment of the fourth installment payment of interest and principal on December 31, 2021 TABLE B.1 Present Value of 1 Rate Periods 9% 2% 3% 6% 7% 8% 9% 10% 12% 15 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.90910.8929 0.8696 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.85730.8417 0.8264 0.7972 0.7561 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 0.8163 0.79380.7722 0.75130.7118 0.6575 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 0.5718 0.9515 0.9057 0.8626 0.82190.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.56740.4972 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5545 .566 04223 0.93270.8706 0.81310.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 0.3759 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.54030.5019 0.4665 0.4039 0.3269 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 0.2843 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220 0.2472 0.89630.8043 0.7224 0.64960.5847 0.5268 0.4751 0.4289 0.38750.3505 0.2875 0.2149 0.8874 0.7885 0.7014 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2567 0.1869 0.8787 0.7730 0.6810 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2292 0.1625 0.8700 0.7579 0.6611 0.57750.5051 0.44230.3878 0.3405 0.2992 0.2633 0.2046 0.1413 0.8613 0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.1827 0.1229 0.8528 0.7284 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1631 0.1069 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1456 0.0929 0.8360 0.7002 0.5874 0.49360.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.13000.0808 0.8277 0.6864 0.5703 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1161 0.0703 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1037 0.0611 0.77980.6095 0.4776 0.37510.2953 0.2330 0.18420.1460 0.1160 0.0923 0.0588 0.0304 0.7419 0.5521 0.4120 0.3083 0.2314 0.1741 0.1314 0.0994 0.0754 0.0573 0.0334 0.0151 0.7059 0.5000 0.3554 0.2534 0.1813 0.1301 0.0937 0.0676 0.0490 0.0356 0.0189 0.0075 0.67170.4529 0.3066 0.2083 0.1420 0.0972 0.06680.0460 0.0318 0.02210.0107 0.0037 Used to compute the resent value of a known future amount. Fr example: H w mu , would ou need to mest totv at 0% comp un emaannuall to accumulate SS 00 n years from today? Using the factors of n = 12 and 5( 12 semiannual penods and a semiannual rate of 5%), the factor is 05568. You would need to invest S2.784 today OS5000 05568) TABLE B.2 Future Value of 1 Rate Perlods 2% 3% 5% 6% 7% 8% 9% 10% 15% 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 .0000 1.0000 1.0000 .0100 1.0200 1.0300 1.0400 1.0500 .0600 1.0700 .0800 0900 .0201 0404 1.0609 .0816 1.1025 1236 1.1449 .0303 10612 1.0927 1.1249 1576 .1910 1.2250 1.2597 1.2950 .0406 .0824 1255 1.1699 .2155 1.0510 .1041 1.1593 12167 1.2763 1.3382 .4026 1.4693 1.5386 1.0615 .1262 1.1941 1.2653 .3401 1.41 .0721 1.1487 1.2299 1.3159 1.4071 1.5036 1.6058 .0829 1.1717 1.2668 1.3686 1.4775 1.5938 1.7182 .09371.1951 1.3048 1.42331.5513 1.68951.8385 1.1046 2190 1.3439 1.4802 1.6289 .79081.9672 2.1589 2.3674 .6105 1.7623 1.1268 12682 1.4258 6010 1.7959 2.0122 2.2522 2.5182 2.8127 .1381 12936 1.4685 1.6651 1.8856 2.1329 2.4098 2.7196 3.0658 .1495 13195 15126 1.73171.9799 2.2609 2.5785 2.9372 3.3417 1.1610 3459 15580 1.8009 2.0789 2.39662.7590 3.1722 3.6425 1.1726 .3728 6047 1.8730 2.1829 2.5404 2.9522 3.4259 3.9703 1.1843 1.4002 1.6528 1.9479 2.2920 2.6928 1.1961 1.4282 1.7024 2.0258 2.4066 2.8543 3.3799 3.9960 4.717 1.2081 1.4568 1.7535 2.1068 2.5270 3.0256 3.6165 4.3157 5.1417 1.2202 1.4859 1.8061 2.1911 2.6533 3.2071 1.2824 1.6406 2.0938 2.6658 3.3864 4.29195.4274 6.8485 8.623110.8347 17.0001 1.3478 1.8114 2.4273 3.24344.3219 1.4166 1.9999 2.8139 3.9461 5.5160 7.6861 10.6766 4.7853 20.4140 28.1024 52.7996 133.1755 1.4889 2.2080 3.2620 4.8010 7.0400 10.2857 14.9745 21.7245 31.4094 45.2593 93.0510 267.8635 5.5599 7.6900 12.3755 7.6123 10.0627 13.2677 7.4494 29.9599 Used to compute the future value of a known present amount. For example: what is the accumulated value of $3,000 invested today at 8% compounded quarterly for 5 years? Using the factors of n 20 and i = 2% (20 quarterly periods and a quarterly interest rate of 2%), the factor is 1.4859. The accumulated value is S4,457 .70 ($3,000 1.4859). TABLE B.3: Present Value of an Annuity of 1 Rate 2% 3% 6% 7% 8% 9% 10% 12% 15% 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 1.97041.9416 19135 18861 1.8594 18334 1.8080 .7833 759 17355 1.6901 1.6257 2.9410 2.8839 2.8286 775 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 2.2832 .9020 3.80773.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 2.8550 4.8534 4.7135 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048 3.3522 5.7955 5.6014 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.11143.7845 6.7282 6.47206.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.86844.56384.1604 7.6517 7.3255 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 4.4873 8.5660 8.1622 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7590 5.3282 4.7716 9.4713 8.98268.5302 8.1109 7.7217 7.3601 7.0236 6.71016.41776.14465.6502 5.0188 10.3676 9.7868 9.2526 8.7605 8.3064 7.8869 7.4987 7.1390 6.8052 6.49515.9377 5.2337 7.5361 7.1607 6.8137 6.1944 5.4206 2.1337 11.3484 10.6350 9.9856 9.39368.8527 8.3577 7.9038 7.4869 7.1034 6.4235 5.5831 3.0037 2.1062 11.2961 10.5631 9.8986 9.2950 8.7455 8.2442 7.7862 7.3667 6.6282 5.7245 3.8651 2.8493 11.9379 1.1184 10.3797 9.7122 9.1079 8.5595 8.0607 7.60616.8109 5.8474 16 14.7179 13.5777 12.5611 11.6523 10.8378 0.1059 9.4466 8.8514 8.3126 7.8237 6.9740 5.9542 15.5623 14.2919 13.16612.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.1196 6.0472 16.3983 14.9920 13.7535 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8.2014 7.2497 6.1280 17.2260 15.6785 14.3238 13.1339 12.0853 11.1581 10.3356 9.6036 8.95018.3649 7.3658 6.1982 18.0456 16.3514 14.8775 13.5903 12.4622 11.4699 10.5940 9.81819.1285 8.5136 7.4694 6.2593 22.0232 19.5235 17.4131 15.6221 14.0939 12.7834 11.6536 10.6748 9.8226 9.0770 7.8431 6.4641 25.8077 22.3965 19.6004 7.2920 15.3725 13.7648 12.4090 11.2578 10.2737 9.4269 8.0552 6.5660 29.4086 24.9986 21.4872 18.6646 16.374214.4982 12.9477 11.6546 10.5668 9.6442 8.1755 6.6166 32.834727.3555 23.1148 19.7928 17.1591 15.0463 13.3317 11.9246 10.7574 9.7791 8.2438 6.6418 0.9804 0.9709 0.9615 0.9524 0.9434 10 12551 10.5753 9.9540 8633 8.3838 7.9427 13 14 15 17 18 19 Used to calculate the present value of a series of equal payments made at the end of each period. For ex ample: What is the present value of $2,000 per year for 10 years assuming an annual interest rate of 9%. For (n : IO, = 9%), the PV factor is 6.4177. S2.000 per year for 10 years is the equivalent of $12,835 today ($2,000 x 6.4177) ABLE B.45 f= [(1 + i)"-i Vi Future Value of an Annuity of 1 Perlods 2% 3% 5% 7% 9% 10 12% .0000 0000 1.0000 1.0000 1.0000 .0000 1.0000 000 .0000 1.0000 1.0000 2.0100 2.0200 2.0300 2.0400 2.0500 2.0600 2.0700 2.0800 2.0900 2.1000 2.1200 3 3.0301 3.0604 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 31 4.6410 4.7793 4.0604 4.1216 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.57 5.1010 5.2040 5.3091 5.41635.5256 5.63715.7507 5.8666 5.9847 6.1051 6.3528 6.1520 6.30816.46846.6330 6.8019 6.9753 7.1533 7.3359 7.5233 .7156 8.1152 7.2135 7.4343 7.6625 7.89838.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 8.2857 8.5830 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.299713.7 9.3685 9.7546 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 16.7858 10 10.4622 10.9497 11.4639 12.006112.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487 20.3037 11.5668 12.1687 12.8078 13.4864 14.2068 14.9716 15.783616.6455 7.5603 18.5312 20.6546 24.3493 12 12.6825 13.4121 14.1920 15.0258 15.9171 16.8699 17.8885 18.9771 20.1407 21.3843 24.1331 29.0017 13.8093 14.6803 15.6178 16.6268 7.7130 18.8821 20.1406 21.4953 22.9534 24.5227 28.0291 4 14.9474 15.9739 17.0863 18.2919 19.5986 21.0151 22.5505 24.2149 26.0192 27.9750 15 16.0969 17.2934 18.5989 20.0236 21.5786 23.2760 25.1290 27.1521 29.3609 31.7725 37.2797 47.5804 16 17.2579 18.6393 20.1569 21.8245 23.6575 25.6725 27.888130.3243 33.003435.9497 42.753355.7175 17 18.4304 20.0121 21.7616 23.697525.8404 28.2129 30.8402 33.7502 36.973740.5447 48.883765.0751 18 1 75.8364 19 20.8109 22.8406 25.1169 27.6712 30.5390 33.7600 37.3790 41.4463 46.0185 51.1591 63.4397 20 22.0190 24.2974 26.8704 29.7781 33.0660 36.785640.9955 45.7620 51.1601 57.2750 72.0524 102.4436 25 28.2432 32.0303 36.4593 41.6459 47.7271 54.8645 63.2490 73.1059 84.7009 98.3471 133.3339 212.7930 32.3926 40.5047 9.614721.4123 23.4144 25.6454 28.1324 30.9057 33.9990 37.4502 41.3013 45.5992 55.7497 4.7849 40.5681 47.5754 56.0849 66.4388 79.0582 94.4608 113.2832 136.3075 164.4940 241.3327 434.7451 41.6603 49.9945 60.4621 73.6522 90.3203 111.4348 138.2369 172.3168 215.7108271.0244 431.6635 881.1702 40 48.886460.4020 75.4013 95.0255 120.7998 154.7620 199.6351 259.0565 337.8824 442.5926 767.0914 1,779.0903 Used to calculate the future value of a series of equal payments made at the end of each period For example: What is the future value of S4,000 per ear for 6 years assuming an annual interest rate of 8%. For (n 6, i 8%), the FV factor is 7.3359. $4,000 per year for 6 years accumulates to S29343.60 (S4,000 7.3359)
