on January 1, 2019, Firm X issued 7% bonds, face value $5,000,000 due at the end of 5 years with interest paid annually

Assume yield rate is 6%. Yield Rate 6%

Present value of 1 at 6% .74726

Present value of annuity (5 years 6%) 4.21236

1.How much was the Bond sold for? _____

2. Amount of Premium or Discount? ___

3. Present the computation of how I got to these quantities from questions 1 and 2

a. 3(a) computation of question 1

b. 3(b) computation of question 2

4. Present the Jornal entry for the company that issues the bond and for the investor who buys the bond, at the date of issue.

a. 4(a) Jornal entry for the company that issues the bond:

b. 4 (b) Jornal entry for the company that buys the bond.

5. Prepare the amortization table (in Excel) using the effective interest method:

Year

(1) Interest Expense (4) x 8%

(2) Interest Paid

(3) Discount Amort. (1) - (2)

(4) Carrying Value EOY (4) + (3)

(5) Interest Rate (1) (4)

6. Prepare the wages for the amortization of the bond for each of the 5 years for the company that issues the Bond and for the company that buys the Bond:

to.

6 (a) Daily entries for each of the 5 years - company that issues the bonus

i. Year 1 Dr. and Cr.

ii. Year 2 Dr.and Cr.

iii. Year 3 Dr. and Cr.

iv. Year 4 Dr. and Cr.

v. Year 5 Dr. and Cr.

b. 6 (b) Daily entries for each of the 5 years - company that bought the bonus.

i. Year 1 Dr. and Cr.

ii. Year 2 Dr. and Cr.

iii. Year 3 Dr. and Cr.

iv. Year 4 Dr.and Cr.

v. Year 5 Dr. and Cr.