Protec Trust Inc. issued $100,000 5 year bond on January 1, 2018 paying 4% interest on semi-annual basis every January 1 and July 1. Using a financial calculator, or tables (photo) prepare the first year journal entries for the bond issue and interest expense assuming that the company uses the effective interest method, a market interest rate of 6% and has a year-end of December 31, 2018

" present value of the interest payments, use Table 2 (the present value of an annuity of $1) to determine the factor to use to calculate the present value of the bond interest. In Candlestick's case, $25,000 of interest ($1,000,000 X 2.5%) is to be paid every six months for the next two years, or four semi-annual periods. A series of payments like this is called an annuity. The present value factor to be used for the interest for n = 4 and i = 2.5% is 3.76197 the La 3. DG % TABLE 2: PRESENT VALUE OF AN ANNUITY OF $1 (1+7) PV (n) Periods 1% 1.5% 2% 2.5% 3% 3.5% 4% 4.5% 5% 6% 1 17% 8% 0.99010 0.98522 0.98039 0.97561 0.97087 0.96618 0.96154 0.95694 0.95238 0.94340 0.93458 0.92593 0.91743 0.90909 9% 10% 2 1.97040 1.95588 1.94156 1.92742 1.91347 1.89969 1.88609 1.87267 1.85941 1.83339 3 2.94099 2.91220 2.88388 2.85602 2.82861 2.80164 2.77509 2.74896 2.72325 2.67301 2.62432 2.57710 2.53129 2.48685 1.80802 1.78326 1.75911 1.73554 4 3.90197 3.85438 3.80773 3.76197 3.71710 3.67308 3.62990 3.58753 3.54595 3.46511 3.38721 3.31213 3.23972 3.16987 5 4.853434.78264 4.71346 4.64583 4.57971 4.51505 4.45182 4.38998 4.32948 4.21236 4.10020 3.99271 3.88965 3.79079 6 5.79548 5.69719 5.60143 5.50813 5.41719 5.32855 5.24214 5.157875.075694.91732 4.76654 4.62288 4.485924.35526 7 6.72819 6.598216.47199 6.349396.23028 6.11454 6.00205 5.89270 5.78637 5.58238 5.38929 5.20637 5.03295 4.86842 8 7.651687.48593 7.32548 7.17014 7.01969 6.87396 6.73274 6.56589 6,46321 6.20979 5.97130 5.74664 5.53482 5.33493 9 8.56602 8.36052 8.16224 7.97087 7.78611 7.60769 7.435337.26879 7.10782 6.80169 6.51523 6.24689 5.99525 5.75902 10 9.47130 9.22218 8.982598.75206 8.530208.31661 8.11090 7.91272 7.72173 7.36009 7.02358 6.71008 6,41766 6.14457 11 10.36763 10.07112 9.786859.51421 9.252629.00155 8.76048 8.52892 8.30641 7.88687 7.49867 7.13896 6.80519 6.49506 12 11.25508 10.90751 10.57534 10.25776 9.95400 9.66333 9.385079.11858 8.86325 8.38384 7.94269 7.53608 7.16073 6.81369 13 12.13374 11.73153 11.34837 10.98318 10.63496 10.30274 9.98565 9.68285 9.39357 8.85268 8.35765 7.90378 748690 7.10336 14 13.00370 12.54338 12.10625 11.69091 11.29607 10.92052 10.56312 10.2283 9.89864 9.29498 8.74547 8.24424 7.78615 7.36669 15 13.86505 13.34323 12.84926 12.38138 11.93794 11.51741 11.11839 10.73955 10.37966 9.71225 9.10791 8.55948 8.06069 7.60608 16 14.71787 14.13126 13.57771 13.05500 12.56110 12.09412 11.65230 11.23402 10.83777 10.10590 9.44665 8.85137 8.31256 7.82371 17 15.56225 14.90765 14.29187 13.71220 13.16612 12.65132 12.16567 11.70719 11.27407 10.47726 9.76322 9.12164 8.54363 8.02155 18 16.39827 15.67256 14.99203 14,35336 13.75351 13.18968 12.65930 12.15999 11.68959 10.82760 10.05909 9.37189 8.75563 8.20141 19 17.22601 16.42617 15.67846 14.97889 14.32380 13.70984 13.13394 12,59329 12.08532 11.15812 10.33560 9.60360 8.95011 8.36492 20 18.04555 17.16864 16,35143 15.58916 14.87747 14.21240 13,59033 13.00794 12.46221 11.46992 10,59401 9.81815 9.12855 8.51356 Using the above factors, we can calculate the present values of the face value and the annuity finteractivemterfall payments promised by the bond. There are standardized present value tables available that give us factors that can be multiplied by the amount of each type of future cash flow (interest and maturity value) relating to a bond to determine the present value of each cash flow. When the present values of each cash flow are added together, the result is the bond price. These present value tables are reproduced below for your reference as we outline the procedures for calculating the present value of a bond. 1. To calculate the present value of the face value, take the applicable factor from Table 1 (the present value of $1) and multiply it by the principal or face value of the bond. In Candlestick's 5 nts TABLE 1: PRESENT VALUE OF SI PY (14) d Use ments ong he uses Periods 1 2 3 4 5 6 7 TS ers 1% 1.5% 2% 2.5% 3% 3.5% 4% 4.5% 5% 6% 8% 9% 10% 0.99010 0.98522 0.98039 0.97561 0.97087 0.96618 0.96154 0.95694 0.95238 0.94340 0.93458 0.92593 0.91743 0.90909 0.98030 0.97066 0.96117 0.95181 0.94260 0.93351 0.92456 0.91573 0.90703 0.89000 0.87344 0.85734 0.84168 0.82645 0.97059 0.95632 0.94232 0.92860 0.91514 0.90194 0.88900 0.87630 0.86384 0.83962 0.81630 0.79383 077218 0.75131 0.96098 0.94218 0.92385 0.90595 0.88849 0.87144 0.85480 0.83856 0.82270 0.79209 0.76290 0.73503 0.70843 0.68301 0.95147 0.92826 0.90573 0.88385 0.86261 0.84197 0.82193 0.80245 0.78353 0.74726 0.71299 0.58058 0.64993 0.62092 0.94205 0.91454 0.88797 0.86230 0.83748 0.81350 0.79031 0.76790 0.74622 0.70496 0.66634 0.63017 0.59627 0.56447 0.93272 0.90103 0.87056 0.84127 0.81309 0.78599 0.75992 0.73483 0.71068 0.665060.62275 0.58349 0.54703 0.51316 0.92348 0.88771 0.853490.82075 0.78941 0.75941 0.73069 0.70319 0.67684 0.62741 0.58201 0.54027 0.50187 0.46651 0.91434 0.87459 0.83676 0.80073 0.76642 0.73373 0.702590.67290 0.64461 0.59190 0.54393 0.50025 0.46043 0.42410 0.90529 0.86167 0.82035 0.78120 0.74409 0.70892 0.67556 0.64393 0.61391 0.55839 0.50835 0.46319 0.42241 0.38554 0.89632 0.84893 0.80426 0.76214 0.72242 0.68495 0.64958 0.61620 0.58468 0.52679 0.47509 0.42888 0.38753 0.35049 0.88745 0.83639 0.78849 0.74356 0.70138 0.66178 0.62460 0.58966 0.55684 0.49697 0.44401 0.39711 0.35553 0.31863 0.87866 0.82403 0.77303 0.72542 0.68095 0.63940 0.60057 0.56427 0.53032 0.46884 0.41496 0.36770 0.32618 0.28966 0.86996 0.81185 0.75788 0.70773 0.66112 0.61778 0.57748 0.53997 0.50507 0.44230 0.38782 0.34046 0.29925 0.26333 0.86135 0.79985 0.74301 0.69047 0.64186 0.59689 0.55526 0.51672 0.48102 0.41727 0.36245 0.31524 0.27454 0.23939 0.85282 0.78803 0.72845 0.67362 0.62317 0.57671 0.53391 0.49447 0.45811 0.39365 0.33873 0.29189 0.25187 0.21763 0.84438 0.77639 0.71416 0.65720 0.60502 0.55720 0.51337 0.47318 0.43630 0.37136 0.31657 0.27027 0.23107 0.19784 0.83602 0.76491 0.70016 0.64117 0.58739 0.53836 0.49363 0.45280 0.41552 0.35034 0.29586 0.25025 0.21199 0.17986 0.82774 0.75361 0.68643 0.62553 0.57029 0.52016 0.47464 0.433300.39573 0.33051 0.27651 0.23171 0.19449 0.16351 0.81954 0.74247 0.67297 0.61027 0.55368 0.50257 0.45639 0.41464 0.37689 0.31180 0.25842 0.21455 0.17843 0.14864 8 9 10 11 12 13 14 15 16 17 18 19 20 the of nips ms