LO E9-48. Analysing and Reporting Financial Statement Effects of Bond Transactions On January 1, 2015, Lantau Corp. issued $600,000 of 20-year, 11% bonds for $554,860, yielding a market (yield) rate of 12%. Interest is payable semiannually on June 30 and December 31. a. Confirm the bond issue price. b. Prepare journal entries to record the bond issuance, semiannual interest payment and discount amortisation on June 30, 2015, and semiannual interest payment and discount amortisation on December 31, 2015. Use the effective interest rate. C. Post the journal entries from part 5 to their respective T-accounts. d. Lantau elected to report these bonds in its financial statements at fair value. On December 31, 2015, these bonds were listed in the bond market at a price of 101 (or 101% of par value). What entry is required to adjust the reported value of these bonds to fair value? e. Prepare a table summarising the effect of these bonds on earnings for 2015, including interest expense and any unrealised gain or loss resulting from the fair value adjustment in require- ment d. E9-50. Recording and Assessing the Effects of Instalment Loans On December 31, 2014, Montmartre S.A., borrowed 500,000 on an 8%, 10-year mortgage note pay- able. The note is to be repaid in equal quarterly instalments of 18,278 (beginning March 31, 2015). a. Prepare journal entries to reflect (1) the issuance of the mortgage note payable, (2) the pay- ment of the first instalment on March 31, 2015, and (3) the payment of the second instalment on June 30, 2015. Round amounts to the nearest dollar. b. Post the journal entries from part a to their respective T-accounts. Record each of the transactions from part a in the financial statement effects template. Question #3 (35 marks) This question consists of 3 independent sub-questions 1.(15 marks) E9-48 (omit partc) 2.(10 marks) E9-50. Only part a. 3.(10 marks) DISTAFF & SPEAR, Inc., issued $250,000 of 8%, 15-year bonds at 104 on July 1, 2007. Interest is payable semi-annually on December 31 and June 30. Through June 30, 2014 DISTAFF & SPEAR amortized $3,186 of the bond premium. On July 1, 2014 DISTAFF & SPEAR retired the bonds at 99. (a) Prepare journal entries to record the (i) issue (3 marks) and (ii) retirement of these bonds. (Assume the June interest expense has already been recorded.) (7 marks) LO E9-48. Analysing and Reporting Financial Statement Effects of Bond Transactions On January 1, 2015, Lantau Corp. issued $600,000 of 20-year, 11% bonds for $554,860, yielding a market (yield) rate of 12%. Interest is payable semiannually on June 30 and December 31. a. Confirm the bond issue price. b. Prepare journal entries to record the bond issuance, semiannual interest payment and discount amortisation on June 30, 2015, and semiannual interest payment and discount amortisation on December 31, 2015. Use the effective interest rate. C. Post the journal entries from part 5 to their respective T-accounts. d. Lantau elected to report these bonds in its financial statements at fair value. On December 31, 2015, these bonds were listed in the bond market at a price of 101 (or 101% of par value). What entry is required to adjust the reported value of these bonds to fair value? e. Prepare a table summarising the effect of these bonds on earnings for 2015, including interest expense and any unrealised gain or loss resulting from the fair value adjustment in require- ment d. E9-50. Recording and Assessing the Effects of Instalment Loans On December 31, 2014, Montmartre S.A., borrowed 500,000 on an 8%, 10-year mortgage note pay- able. The note is to be repaid in equal quarterly instalments of 18,278 (beginning March 31, 2015). a. Prepare journal entries to reflect (1) the issuance of the mortgage note payable, (2) the pay- ment of the first instalment on March 31, 2015, and (3) the payment of the second instalment on June 30, 2015. Round amounts to the nearest dollar. b. Post the journal entries from part a to their respective T-accounts. Record each of the transactions from part a in the financial statement effects template. Question #3 (35 marks) This question consists of 3 independent sub-questions 1.(15 marks) E9-48 (omit partc) 2.(10 marks) E9-50. Only part a. 3.(10 marks) DISTAFF & SPEAR, Inc., issued $250,000 of 8%, 15-year bonds at 104 on July 1, 2007. Interest is payable semi-annually on December 31 and June 30. Through June 30, 2014 DISTAFF & SPEAR amortized $3,186 of the bond premium. On July 1, 2014 DISTAFF & SPEAR retired the bonds at 99. (a) Prepare journal entries to record the (i) issue (3 marks) and (ii) retirement of these bonds. (Assume the June interest expense has already been recorded.) (7 marks)