Present value of a $1 single payment (Table 2) Present value of a $1 ordinary annuity (Table 4) 3.00% 3.50% 4.00% 4.50% 5.00% 3.00% 3.50% 4.00% 4.50% 5.00% 1 0.97087 0.96618 0.96154 0.95694 0.95238 0.97087 0.96618 0.96154 0.95694 0.95238 2 0.94260 0.93351 0.92456 0.91573 0.90703 1.91347 1.89969 1.88609 1.87267 1.85941 3 0.91514 0.90194 0.88900 0.87630 0.86384 2.82861 2.80164 2.77509 2.74896 2.72325 4 0.88849 0.87144 0.85480 0.83856 0.82270 3.71710 3.67308 3.62990 3.58753 3.54595 5 0.86261 0.84197 0.82193 0.80245 0.78353 4.57971 4.51505 4.45182 4.38998 4.32948 6 0.83748 0.81350 0.79031 0.76790 0.74622 5.41719 5.32855 5.24214 5.15787 5.07569 7 0.81309 0.78599 0.75992 0.73483 0.71068 6.23028 6.11454 6.00205 5.89270 5.78637 8 0.78941 0.75941 0.73069 0.70319 0.67684 7.01969 6.87396 6.73274 6.59589 6.46321 9 0.76642 0.73373 0.70259 0.67290 0.64461 7.78611 7.60769 7.43533 7.26879 7.10782 10 0.74409 0.70892 0.67556 0.64393 0.61391 8.53020 8.31661 8.11090 7.91272 7.72173 11 0.72242 0.68495 0.64958 0.61620 0.58468 9.25262 9.00155 8.76048 8.52892 8.30641 12 0.70138 0.66178 0.62460 0.58966 0.55684 9.95400 9.66333 9.38507 9.11858 8.86325 Mitchell Inc. issued 64, 10%, $1,000 bonds on January 1, 2020, for $70,006. The bonds pay cash interest semiannually each June 30, and December 31, and were issued to yield 8%. The bonds mature December 31, 2025, and the company uses the effective interest method to amortize bond discounts or premiums. On January 1, 2020, Mitchell Inc, elects to account for the bonds using the fair value option. At December 31, 2021, the market rate on the bonds is 9%. Required: 1. The carrying value of the bonds on December 31, 2021 is $ 2. The fair value of the bonds on December 31, 2021 is $ 3. The amount of unrealized holding gain or loss is $ there is an unrealized holding gain or "loss" if there is an unrealized holding loss) Note: Don't round until the final answer. Round the final answer to the nearest dollar. (Fill in the last blank with "gain" if (8 points) On July 1, 2020, Salem Corporation issued $1,400,000 of 7% bonds due in 10 years. The bonds pay cash interest semiannually. Each $1,000 bond includes a detachable stock purchase warrant. Each warrant gives the bondholder the right to purchase, for $30, one share of $1 par value common stock at any time during the next 10 years. The bonds were sold at 101. The value of the stock purchase rights at the time of issuance was $80,000. The bonds would sell without warrants at $1,200,000. Salem Corporation uses the proportional method to allocate the selling price between bonds and stock warrants. On December 31, 2020, the stock warrants are exercised. Required: Provide journal entries at each of the following dates: 1. July 1, 2020, issuance of bonds. 2. December 31, 2020, exercise of stock warrants. Edit Format Table 12pt Paragraph | B IU A 2v TV 11
