Question
On Jan 1 st 2021, Tinning Co. sold 100,000 tins. Each tin cost Tinning Co. $0.02 to produce. Tinning Co. received a 3 year bond
On Jan 1st 2021, Tinning Co. sold 100,000 tins. Each tin cost Tinning Co. $0.02 to produce. Tinning Co. received a 3 year bond with the face amount of $10,000 with a stated rate of 5% compounded annually. The market rate for similar bonds is 6%. Tinning Co. prepares financial statements once every year. Tinning uses perpetual inventory.
For partial credit considerations, show the calculations you utilized to derive your answer.
What is the present value of the bond received? (3 points)
Provide the transactional journal entries associated with this transaction on Jan 1st 2021. (5 points)
Provide the transactional journal entries dated December 31st 2021 when the first interest payment is received. (4 points)
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