Part 6 - Bonds Payable - Effective Basis

Jiggy Jams Incorporated is financing the expansion of its music retail stores by issuing 5 year, $8,250,000(Face Value), 6% Bonds. The Bonds were issued on June 30, 2012, at the time of issuance the market rate of interest was only 8%, interest on the bonds is payable every 6 months beginning on December 31, 2012.

a.) Calculate the issue price of Jiggy Jams Inc's 10 year Bonds using the tables provided on the last two pages of your exam.

Balance PVF Calculated Balance

Semiannual Payment

Face Value Balance

Calculated Total Bond Issue Balance

b.) Based on the results of your calculation prepare the journal entry to account for the Bond issuance on June 30, 2012.

c.) Complete the first row of the following amortization table; specifically for payment period December 31, 2012.

Periods	Beginning Bonds Issue Balance	Interest Expense	Bond Interest Payments	Amortization of Bond Premium or Discount	Ending Bond Issue Balance
31-Dec-2012
30-Jun-2013
31-Dec-2013
30-Jun-2014
31-Dec-2014
30-Jun-2015
31-Dec-2015
30-Jun-2016
31-Dec-2016
30-Jun-2017

d.) Prepare the journal entry that Jiggy Jams would record on December 31, 2012.[Please make use of the amortization table to help determine the balances needed in these various journal entries]