On July 1, Year 1, Danzer Industries Inc. issued $2,800,000 of 6-year, 10% bonds at a market (effective) interest rate of 12%, receiving cash of $2,565,254. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1. If an amount box does not require an entry, leave it blank. Cash 2,565,254 Discount on Bonds Payable Bonds Payable 2,800,000 Feedback Check My Work Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. The straight-line method of amortization provides equal amounts of amortization over the life of the bond. Learning Objective 2. 2. Journalize the entries to record the following: If an amount box does not require an entry, leave it blank. a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. (Round your answer to the nearest dollar.) Interest Expense Discount on Bonds Payable o 0 19,562 140,000 Cash b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. (Round your answer to the nearest dollar.) Interest Expense Discount on Bonds Payable 0 19,562 Cash 0 140,000 Feedback Check My Work Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. The straight-line method of amortization provides equal amounts of amortization over the life of the bond. Learning Objective 2. 3. Determine the total interest expense for Year 1. Round to the nearest dollar. 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? Yes 5. Compute the price of $2,565,254 received for the bonds by using Exhibit 5 and Exhibit 7. (Round you PV values to 5 decimal places and the final answers to the nearest dollar.) Your total may vary slightly from the price given due to rounding differences. Present value of the face amount Present value of the semi-annual interest payments Price received for the bonds 6% 6,5% 7% Present Value of $1 at Compound Interest Due Inn Periods Periods 4.0% 4,5% 5% 5,5% 0.96154 0.95694 0.95238 0.94787 0.92456 0.91573 0.90703 0.89845 0.88900 0.87630 0.86384 0.85161 0.85480 0.83856 0.82270 0.80722 0.82193 0.80245 0.78353 0.76513 0.94340 0.89000 0.83962 0.79209 0.74726 0.93397 0.88166 0.B2785 0.77732 0.72983 0.93458 0.87344 0.81630 0.76290 0,71299 0.79031 0,75992 0.73069 0.70259 0.67556 0.76790 073483 0,70319 0.67290 0.64393 0.74622 071068 0.67684 0.6446 0.61391 0.72525 068744 06560 0.61763 0.58543 0.70496 066506 0.62741 0.59190 0.55839 0.68533 0.64351 0.60423 0,56735 0.53273 0.56634 0.62275 0.53201 0,54393 0.50835 0.64958 0.62460 0.60057 0.57748 0.55526 0.61620 0.58966 0.56427 0.53997 0.51672 0.58468 0.55684 0.53032 0.50507 0.48102 0.55491 0.52598 0.49856 0.47257 0.44793 0.52679 0.49697 0.468844 0.44230 0.41727 0.50021 0.46968 0.44102 0.41410 0.39383 0.47509 0.44401 0.41496 0,38782 0.36245 0.53391 0.51337 0.49363 0.47464 0,45639 0,49447 0.47318 0.45280 0.43330 0,41464 0.45811 0.43630 0.41552 0.39573 0.37689 0,42458 0.40245 0.38147 0.36158 0.34273 0.39365 0.37136 0.35034 0.33051 0.31190 0.36510 0.34281 0.32189 0.30224 0.28380 0.33873 0.31657 0.29586 0.2765 0.25842 0,43883 0,42196 0.40573 0.39012 0.37512 0.39679 0,37970 0.36335 0.34770 0,33273 0.35894 0.34185 0.32557 0.31007 0.29530 0.32486 0.30793 0.29187 0.27666 0.26223 0.29416 0.2775 0.26180 0.24698 0.23300 0.26648 0.25021 0.23494 0.22060 0,20714 0.24151 0.22571 0.21095 0.19715 0.18425 - - - - * 811- 0.36069 0.34682 0.33348 0.32065 0,30832 0.31840 0.30469 0,29157 0.27902 0.26700 0.28124 0.26785 0.25509 0.24295 0.23138 0.24856 0.23560 0.22332 0.21168 0.20064 0.21981 0.20737 0.19563 0.18456 0.17411 0.19450 0.18263 0.17148 0.16101 0.15119 0.17220 0.16093 0.15040 0.14056 0.13137 0.29646 0.28506 0.27409 0.26355 0.25342 0.25550 0.24450 0.23397 0,22390 0.21425 0.22036 0.20987 0.19987 0.19035 0.18129 0,19018 0.18027 0.17087 0.16196 0.15352 0.16425 0.15496 0.14619 0.13791 0.13011 0.14196 0.13329 0.12516 0.11752 0.11035 0.12277 0.11474 0.10723 0.10022 0.09366 0.20829 0.17193 0.14205 0.11746 0.09722 0.08054 0.06678 0.17120 0.13796 0.11130 0.08988 0.07265 0.05873 0.04761 0.14071 0.11071 0.08720 0.06877 0.05429 0.04291 0.03395 Present Value of $1 at Compound Interest Due in n Periods Periods 8 % 9% 10% 11% 12% 13% 14% 0.92593 0.85734 0.79383 0.73503 0.68058 0.91743 0.84168 0.77218 0,70843 064993 090909 0.32645 0.75131 0.68301 0.62092 0.90090 0.8112 0.73119 0.65873 059345 0.B9286 0,79719 0,71178 0,63552 0,56743 03@496 0.735 0.69305 0.51332 0.54276 0.87719 0,76947 0.67497 0,5920 0,51937 0.63017 0.58349 0.54027 0.50025 0.46319 0.59627 0.54703 0.50187 0.46043 0.42241 0.56447 051316 0.46651 0.42410 0.38554 0.53454 0.48166 0.43393 0.39092 0.35218 0,50663 0.45235 0.40388 0.36061 0.32197 0.4032 0.42506 0.37616 0.33288 0.29459 0,4555? 0.39964 0,35056 0.30751 0,26974 0,42888 0.39711 0.36770 0.34046 0.31524 0.38753 0.35553 0.32618 0.29925 0.27454 0.35049 0.31863 028966 0.26333 023939 0.31728 0.28564 0.25751 0,23199 0.20900 0.2a748 0,25668 0.22917 0.20462 0.1a270 0.26070 023662 0.23071 0,20756 0.204160.14207 0.180680,15971 0.159g9 o,14010 0.23189 0.27027 0.25025 0.2317 0.21455 0.25187 0,23107 0.2119? 0.19449 0,17843 0.21763 0.19784 oj7966 0.16351 0.14864 0.18829 0.16963 015282 01376g 0.12403 0.16312 0,14564 013OO4 0.11611 0.10367 0.14150 0.12522 0.11081 0.09906 0.0868 0.12289 0,10780 0,09456 0.04295 0.07276 0.19866 0.1834 0.17032 0.15770 0.14602 0.16370 0.15018 0.13778 0.1260 0.11597 013513 0.12285 01 1168 0.10153 o.09230 0.11174 0.10O67 009069 0.08170 o.0736 0,03256 0.OB264 0,07379 0.06588 0.05882 0.07680 0.06796 006014 005323 0.04710 0,06383 005599 0,04911 0.04308 0,03779 0.13520 0.12519 0.11591 0.10733 0.09933 0.10639 0.03761 0.08955 0.08215 0.07537 0.08391 007628 006934 006304 0.05731 006631 005974 0.05382 004849 o.04368 0.05252 0,04689 0.04 187 0,03738 0.03336 0.04168 003689 0.03264 0.02889 0.02557 0.03315 0,029OB 0.0255 0,02237 o.01963 0.09202 0.08520 0-07889 007305 0.06763 0.06915 0.06344 0.05820 0.05339 0.04899 005210 0.04736 0-04306 0.03914 0.03558 003935 003545 0.03194 00287B 0.02592 0,02980 0.02661 0.02376 0.02121 0.01894 0.02262 0.0202 0.01772 0.01568 001388 001722 001510 0.01325 0.01162 0,01019 0.04603 0.03184 0.02209 001538 0.0075 0.00753 0,00529 0.03133 0.02069 0.01372 0.00913 0.00610 0.00409 000275 0.02132 0.01345 0.00852 0.00542 0.003460 .002220.00143 Present Value of Ordinary Annuity of $1 per Period Periods 4.0% 4.5% 596 5.5% 6% 6.5% 796 0.96154 1.88609 2.77509 3.62990 445182 0.95694 1.87267 2.74896 3.58753 4.38998 0.95238 1.85941 2.72325 3.54595 4.32948 0.94787 1.84632 2.69793 3.50515 4.27028 0.94340 1.83339 2.67301 3.46511 4.21236 0.93897 1.82063 2.64848 3.42580 4.15568 0.93458 1.80802 2.62432 3.38721 4.10020 5.24214 6,00205 6.73274 743533 8.11090 5.15787 5.89270 6.59589 7.26879 7.91272 5.07569 5.78637 6.46321 7.10782 772173 4.99553 5.68297 6.33457 6.95220 7.53763 4.91732 5.58238 6.20979 6.80169 7.36009 4.84101 5.48452 6.08875 6.65610 7.18883 4.76654 5.38929 5.97130 6.51523 7.02358 8.76048 9.38507 9.98565 10.56312 11.11839 8.52892 9.11858 9.68285 10.22283 10.73955 8.30641 8.86325 9.39357 9.89864 10.37966 8.09254 8.61852 9.11708 9.58965 10.03758 788687 8.38384 8.85268 9.29498 9.71225 7.68904 8.15873 8.59974 9.01384 9.40267 7.49867 7.94269 8.35765 8.74547 9.10791 11.65230 12.16567 12.65930 13.13394 13.59033 11.23402 11.70719 12.15999 12.59329 13.00794 10.83777 11.27407 11.68959 12.08532 1246221 1046216 10.86461 11.24607 11.60765 11.95038 10.10590 10.47726 10.82760 11.15812 11.46992 9.76776 10.11058 10.43247 10.73471 11.01851 9.44665 9.76322 10.05909 10.33560 10.59401 14.02916 14.45112 14.85684 15.24696 15.62208 13.40472 13.78442 14.14777 14.49548 14.82821 12.82115 13.16300 13.48857 13.79864 14.09394 12.27524 12.58317 12.87504 13.15170 1341393 11.76408 12.04158 12.30338 12.55036 12.78336 11.28498 11.53520 11.77014 11.99074 12.19788 10.83553 11.06124 11.27219 11.46933 11.65358 15.98277 1632959 16,66306 16.98371 1729203 15.14661 15.45130 15.74287 16.02189 16.28889 1437519 14.64303 14.89813 15.14107 15.37245 13.66250 13.89810 14.12142 14.33310 14.53375 13.00317 13.21053 13.40616 13.59072 13.76483 12.39237 12.57500 12.74648 12.90749 13.05868 11.82578 11.98671 12.13711 12.27767 12.40904 1758849 17.87355 18.14765 18.41120 18.66461 16.54439 16.78889 17.02286 17.24676 17.46101 15.59281 15.80268 16.00255 16.19290 16.37419 14.72393 14.90420 15.07507 15.23703 15.39055 13.92909 14.08404 14.23023 14.36814 1449825 13.20063 13.33393 13.45909 13.57661 13.68696 12.53181 12.64656 12.75379 12.85401 12.94767 19.79277 18.40158 17.15909 16.04612 15.04630 14.14553 13.33171 20.72004 19.15635 17.77407 16.54773 1545583 14.48023 13.60552 21.48218 19.76201 18.25593 16.93152 15.76186 14.72452 1 3.80075 Present Value of Ordinary Annuity of $1 per Period Periods 8% 9% 10% 11% 12% 13% 14% 0.92593 1.78326 2.57710 3.31213 3.99271 0.91743 1.75911 2.53129 3.23972 3.88965 0.90909 1.73554 248685 3.16987 3.79079 0.90090 1.71252 244371 3.10245 3.69590 0.89286 1.69005 240183 3.03735 3.60478 0.88496 1.66810 2.36115 2.97447 3.51723 0.87719 1.64666 2.32163 2.91371 343308 4.62288 5.20637 5.74664 6.24689 6.7 1008 4.48592 5.03295 5.53482 5.99525 6.41766 4.35526 4.86842 5.33493 5.75902 6.14457 4.23054 4.71220 5.14612 5.53705 5.88923 4.11141 4.56376 4.96764 5.32825 5.65022 3.99755 4.42261 4.79677 5.13166 5.42624 3.88867 4.28830 4.63886 4.94637 5.21612 7.13896 7.53608 7.90378 8.22424 8.55948 6.80519 7.16073 7.48690 7.78615 8.06069 6.49506 6.81369 7.10336 7.36669 7.60608 6.20652 6.49236 6.74987 6.96187 7.19087 5.93770 6.19437 6.42355 6.62817 6.81086 5.68694 5.91765 6.12181 6.30249 6.46238 5.45273 5.66029 5.84236 6.00207 6.14217 8.85137 9.12164 9.37189 9.60360 9.81815 8.31256 8.54363 8.75563 8.95011 9.12855 7.82371 8.02155 8.20141 8.36492 8.51356 7.37916 7.54879 7.70162 7.83929 7.96333 6.97399 7.11963 7.24967 7.36578 7.46944 6.60388 6.72909 6.83991 6.93797 7.02475 6.26506 6.37286 6.46742 6.55037 6.62313 10.01680 10.20074 10.37106 10.52876 10.67478 9.29224 9.44243 9.58021 9.70661 9.82258 8.64869 8.77154 8.88322 8.98474 9.07704 8.07507 8.17574 8.26643 8.34814 8.42174 7.56200 7.64465 7.71843 7.78432 7.84314 7.10155 7.16951 7.22966 7.28288 7.32998 6.68696 6.74294 6.79206 6.83514 6.87293 10.80998 10.93516 11.05108 11.15841 11.25778 9.92897 10.02658 10.11613 10.19828 10.27365 9.16095 9.23722 9.30657 9.36961 9.42691 8.48806 8.54780 8.60162 8.65011 8.69379 7.89566 7.94255 7.98442 8.02181 8.05518 7.37167 740856 744120 7.47009 7.49565 6.90608 6.93515 6.96066 6.98304 7.00266 11.34980 11.43500 11.51389 11.58693 11.65457 10.34280 10.40624 10.46444 10.51784 10.56682 9.47901 9.52638 9.56943 9.60857 9.64416 8.73315 8.76860 8.80054 8.82932 8.85524 8.08499 8.11159 8.13535 8.15656 8.17550 7.51828 7.53830 7.55602 7.57170 7.58557 7.01988 7.03498 7.04823 7.05985 7.07005 11.92461 10.75736 9.77905 8.95105 8.24378 7.63438 7.10504 12.10840 10.88120 9.86281 9.00791 8.28252 7.66086 7.12322 12.23348 10.96168 9.91481 9.04165 8.30450 7.67524 7.13266