PLEASE ASSIST WITH INCORRECT ANSWERS MARKED RED AND INCLUDE FORMULAS TO EXPLAIN EACH SOLUTION.

Instructions On July 1, Year 1, Khatri Industries Inc. issued $18,000,000 of 10-year, 5% bonds at a market (effective) interest rate of 6%, receiving cash of $16,661,102. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.* 2. Journalize the entries to record the following:* a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 3. Determine the total interest expense for Year 1. 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? 5. Compute the price of $16,661,102 received for the bonds by using the tables shown in Present Value Tables. Round to the nearest dollar. *Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Present Value Tables Two present value tables are provided: Present Value of $1 at Compound Interest Due in n Periods and Present Value of Ordinary Annuity of S1 per Period. Use them as directed in the problem requirements Periods 3.0% 6.5% 7% 1 0.97087 Present Value of $1 at Compound Interest Due in n Periods 3.5% 4.0% 4.5% 5% 5.5% 6% 0.96618 0.96154 0.95694 0.95238 0.94787 0.94340 0.93351 0.92456 0.91573 0.90703 0.89845 0.89000 0.90194 0.88900 0.87630 0 86384 0.85161 083962 0.93897 0.93458 2 0.94260 0.88166 0.87344 3 0.91514 0.82785 0.81630 4 0.89849 0.87144 0.85480 0.83856 0.82270 0.80722 0.79209 0.77732 0.76290 5 0.86261 0.84197 0.82193 0 80245 0.78353 0.76513 0.74726 0.72988 0.71299 6 0.83748 0.81350 0.79031 0.76790 0.74622 0.72525 0.70496 0.68533 0.66634 7 0.81309 0.78599 0.75992 0.73483 0.71068 0.68744 0.66506 0.84351 0.62275 8 0.78941 0.75941 0.73069 0.70319 0.67684 0.65160 0.62741 0.60423 0.58201 9 9 0.76642 0.73373 0.70259 0.67290 0.64461 0.61763 0.59190 0.56735 0.54393 10 0.74409 0.70892 0.67556 0.64393 0.61391 0.58543 0.55839 0.53273 0.50835 11 0.72242 0.68495 0.64958 0.61620 0.58468 0.55491 0.52679 0.50021 0.47509 12 0.70138 0.66178 0.62460 0.58966 0.55684 0.52598 0.49697 0.46968 0.44401 13 0.68095 0.63940 0.60057 0.56427 0.53032 0.49856 0.46884 0.44102 0.41496 14 0.66112 0.61778 0.57748 0.53997 0.50507 0.47257 0.44230 0.41410 0.38782 15 0.64186 0.59689 0.55526 0.51672 0.48102 0.44793 0.41727 0.38883 0.36245 16 0.62317 0.57671 0.53391 0.49447 0.45811 0.42458 0.39365 0.36510 0.33873 17 0.60502 0.55720 0.51337 0.47318 0.43630 0.40245 037136 0.34281 0.31657 18 0.58739 0.53836 0.49363 0.45280 0.41552 0.38147 0.35034 0.32189 0.29586 19 0.57029 0.52016 0.47464 0.43330 0.39573 0.36158 0.33051 0.30224 0.27651 20 0.55368 0.50257 0.45639 0.41464 0.37689 0.34273 0.31180 0.28380 0.25842 21 0.53755 0.48557 0.43883 0.39679 0.35894 0.32486 0.29416 0.26648 0.24151 22 0.52189 0.46915 0.42196 0.37970 0.34185 0.30793 0.27751 0.25021 0.22571 23 0.50669 0.45329 0.40573 0.36335 0.32557 0.29187 0.26180 0.23494 0.21095 24 0.49193 0.43796 0.34770 0.31007 0.27666 0.24698 0.22060 0.19715 25 0.47761 0.42315 0.39012 0.37512 0.36069 0.33273 0.29530 0.26223 0.23300 0.20714 0.18425 26 0.46369 0.40884 0.31840 0.28124 0.24856 0.21981 0.19450 0.17220 27 0.45019 0.39501 0.34682 0.30469 0.26785 0.23560 0.20737 0.18263 0.16093 28 0.43708 0.38165 0.33348 0.29157 0.25509 0.22332 0.19563 0.17148 0.15040 29 0.42435 0.36875 0.32065 0.27902 0.24295 0.21168 0.18456 0.16101 0.14056 30 0.41199 0.35628 0.30832 0.26700 0.23138 0.20064 0.17411 0.15119 0.13137 31 0.39999 0.34423 0.29646 0.25550 0.22036 0.19018 0.16425 0.14196 0.12277 32 0.38834 0.33259 0.28506 0.24450 0.20987 0.18027 0.15496 0.13329 0.11474 33 0.37703 0.32134 0.27409 0.23397 0.19987 0.17087 0.14619 0.12516 0.10723 34 0.36604 0.31048 0.26355 0.22390 0.19035 0.16196 0.13791 0.11752 0.10022 35 0.35538 0.29998 0.25342 0.21425 0.18129 0.15352 0.13011 0.11035 0.09366 40 0.30656 0.25257 0.20829 0.17193 0.14205 0.11746 0.09722 0.08054 0.06678 45 0.26444 0.21266 0.17120 0.13796 0.11130 0.08988 0.07265 0.05879 0.04761 50 0.22811 0.17905 0.14071 0.11071 0.08720 0.06877 0.05429 0.04291 0.03395 Present Value of Ordinary Annuity of $1 per Period 4.0% 4.5% 5% 5.5% Periods 3.0% 3.5% 6% 6.5% 7% 1 0.97087 0.96618 0.96154 0.95694 0.95238 0.94787 0.94340 0.93897 0.93458 2 1.91347 1.89969 1.88609 1.87267 1.85941 1.84632 1.83339 1.82063 1.80802 3 2.82861 2.80164 2.77509 2.74896 2.72325 2.69793 2.67301 2.64848 2.62432 4 3.71710 3.67308 3.62990 3.58753 3.54595 3.50515 3.46511 3.42580 3.38721 5 4.57971 4.51505 4.45182 4.38998 4.32948 4.27028 4.21236 4.15568 4.10020 6 5.41719 5.32855 5.24214 5.15787 5.07569 4.99553 4.91732 4.84101 4.76654 7 6.23028 6.11454 6.00205 5.89270 5.78637 5.68297 5.58238 5.48452 5.38929 8 7.01969 6.87396 6.73274 6.59589 6.46321 6.33457 6.20979 6.08875 5.97130 9 7.78611 7.60769 7.43533 7.26879 7.10782 6.95220 6.80169 6.65610 6.51523 10 8.53020 8.31661 8.11090 7.91272 7.72173 7.53763 7.36009 7.18883 7.02358 11 9.25262 9.00155 8.76048 8.52892 8.30641 8.09254 7.88687 7.68904 7.49867 12 9.95400 9.66333 9.38507 9.11858 8.86325 8.61852 8.38384 8.15873 7.94269 13 10.63496 10.30274 9.98565 9.68285 9.39357 9. 11708 8.85268 8.59974 8.35765 14 11.29607 10.92052 10.56312 10.22283 9.89864 9.58965 9.29498 9.01384 8.74547 15 11.93794 11.51741 11.11839 10.73955 10.37966 10.03758 9.71225 9.40267 9.10791 16 12.56110 12.09412 11.65230 11.23402 10.83777 10.46216 10.10590 9.76776 9.44665 17 13.16612 12.65132 12.16567 11.70719 11.27407 10.86461 10.47726 10.11058 9.76322 18 13.75351 13.18968 12.65930 12.15999 11.68959 11.24607 10.82760 10.43247 10.05909 19 14.32380 13.70984 13.13394 12.59329 12.08532 11.60765 11.15812 10.73471 10.33560 20 14.87747 14.21240 13.59033 13.00794 12.46221 11.95038 11.46992 11.01851 10.59401 21 15.41502 14.69797 14.02916 13.40472 12.82115 12.27524 11.76408 11.28498 10.83553 22 15.93692 15.16712 14.45112 13.78442 13.16300 12.58317 12.04158 11.53520 11.06124 23 16.44361 15.62041 14.85684 14.14777 13.48857 12.87504 12.30338 11.77014 11.27219 24 16.93554 16.05837 15.24696 14.49548 13.79864 13.15170 12.55036 11.99074 11.46933 25 17.41315 16.48151 15.62208 14.82821 14.09394 13.41393 12.78336 12.19788 11.65358 26 17.87684 16.89035 15.98277 15.14661 14.37519 13.66250 13.00317 12.39237 11.82578 27 18.32703 17.28536 16.32959 15.45130 14.64303 13.89810 13.21053 12.57500 11.98671 28 18.76411 17.66702 16.66306 15.74287 14.89813 14.12142 13.40616 12.74648 12.13711 29 19.18845 18.03577 16.98371 16.02189 15.14107 14.33310 13.59072 12.90749 12.27767 30 19.60044 18.39205 17.29203 16.28889 15.37245 14.53375 13.76483 13.05868 12.40904 31 20.00043 18.73628 17.58849 16.54439 15.59281 14.72393 13.92909 13.20063 12.53181 32 20.38877 19.06887 17.87355 16.78889 15.80268 14.90420 14.08404 13.33393 12.64656 33 20.76579 19.39021 18.14765 17.02286 16.00255 15.07507 14.23023 13.45909 12.75379 34 21.13184 19.70068 18.41120 17.24676 16.19290 15.23703 14.36814 13.57661 12.85401 35 21.48722 20.00066 18.66461 17.46101 16.37419 15.39055 14.49825 13.68696 12.94767 40 23.11477 21.35507 19.79277 18.40158 17.15909 16.04612 15.04630 14.14553 13.33171 45 24.51871 22.49545 20.72004 19.15635 17.77407 16.54773 15.45583 14.48023 13.60552 50 25.72976 23.45562 21.48218 19.76201 18.25593 16.93152 15.76186 14.72452 13.80075 CHART OF ACCOUNTS Khatri Industries Inc. General Ledger ASSETS REVENUE 110 Cash 410 Sales 111 Petty Cash 610 Interest Revenue 121 Accounts Receivable 611 Gain on Redemption of Bonds 122 Allowance for Doubtful Accounts 126 Interest Receivable EXPENSES 127 Notes Receivable 510 Cost of Merchandise Sold 131 Merchandise Inventory 515 Credit Card Expense 141 Office Supplies 516 Cash Short and Over 142 Store Supplies 521 Sales Salaries Expense 151 Prepaid Insurance 522 Office Salaries Expense 191 Land 531 Advertising Expense 192 Store Equipment 532 Delivery Expense 193 Accumulated Depreciation-Store Equipment 533 Repairs Expense 534 Selling Expenses 194 Office Equipment 195 Accumulated Depreciation-Office Equipment 535 Rent Expense 536 Insurance Expense LIABILITIES 537 Office Supplies Expense 210 Accounts Payable 538 Store Supplies Expense 221 Salaries Payable 541 Bad Debt Expense 231 Sales Tax Payable 561 Depreciation Expense-Store Equipment 232 Interest Payable 562 Depreciation Expense-Office Equipment 241 Notes Payable 590 Miscellaneous Expense 251 Bonds Payable 710 Interest Expense 252 Discount on Bonds Payable 711 Loss on Redemption of Bonds 253 Premium on Bonds Payable EQUITY 311 Common Stock 312 Paid-In Capital in Excess of Par-Common Stock 315 Treasury Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends 352 Stock Dividends Journal Shaded cells have feedback 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries CNOW journals will automatically indenta credit entry when a credit amount is entered. How does grading work? PAGE 10 JOURNAL Score: 37/37 ACCOUNTING EQUATION DATE DESCRIPTION POST, REF . DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 Jul 1 Cash 16,661,102.00 1 2 Discount on Bonds Payable 1,338,898.00 3 Bonds Payable 18,000,000.00 1 Points 17/7 2a. Journalize the entry to record the first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a . . a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered How does grading work? PAGE 10 JOURNAL Score: 33/37 ACCOUNTING EQUATION POST. REF. . DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 DATE DESCRIPTION Dec. 31 Interest Expense Discount on Bonds Payable 499,833.00 + 2 49,833.00 1 3 Cash 450,000.00 Points 6.24/7 26. Journalize the entry to record the interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight line method. Round to the nearest dollar. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. . a . How does grading work? PAGE 10 JOURNAL Score: 33/37 ACCOUNTING EQUATION DATE DESCRIPTION POST. REF DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 Jun. 30 Interest Expense 501,328.00 2 Discount on Bonds Payable 51,328.00 f 3 Cash 450,000.00 + Final Questions Shaded cells have feedback. 3. Determine the total interest expense for Year 1. $499,833 X Points: 0/1 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? O Yes O No Points: 1/1 5. Compute the price of $16,661,102 received for the bonds by using the tables shown in Present Value Tables. Round to the nearest dollar. Present value of the face amount $11,050,380 X Present value of the semiannual interest payments 4,169,734 X Price received for the bonds $15,220,114 X Points: 0/3