Question
On January 1, 2016, Drennen, Inc., issued $2.1 million face amount of 12-year, 14% stated rate bonds when market interest rates were 12%. The bonds
On January 1, 2016, Drennen, Inc., issued $2.1 million face amount of 12-year, 14% stated rate bonds when market interest rates were 12%. The bonds pay semiannual interest each June 30 and December 31 and mature on December 31, 2027. Table 6-4, Table 6-5 (Use appropriate factor from the table provided.)
a. Calculate the proceeds (issue price) of Drennen, Inc.'s, bonds on January 1, 2016, assuming that the bonds were sold to provide a market rate of return to the investor. (Round PV factor to 4 decimal places.)
b-1. Assume instead that the proceeds were $2,067,000. Use the horizontal model to record the payment of semiannual interest and the related discount amortization on June 30, 2016, assuming that the discount of $33,000 is amortized on a straight-line basis. (Use amounts with + for increases and amounts with for decreases.)
b-2. Assume instead that the proceeds were $2,067,000. Record the journal entry to show the payment of semiannual interest and the related discount amortization on June 30, 2016, assuming that the discount of $33,000 is amortized on a straight-line basis. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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