Q 1 3

On January 1, 2021, Sol Co. issued $1,500,000 of 11%, 4-year bonds payable, when the market interest rate is 14%. The bonds pay interest semiannually. Use present value factor tables below for the calculations.

Present value of 1

	4%	5%	6%	7%	8%	10%	14%	16%
4	0.855	0.823	0.792	0.763	0.735	0.683	0.592	0.552
8	0.731	0.677	0.627	0.582	0.540	0.467	0.351	0.305

Present value of an ordinary annuity of 1

	4%	5%	6%	7%	8%	10%	14%	16%
4	3.630	3.546	3.465	3.387	3.312	3.170	2.914	2.798
8	6.733	6.463	6.210	5.971	5.747	5.335	4.639	4.344

1. What is the present value of the bonds at issuance? Round to the nearest dollars.

$1,365,608

$1,375,608

$1,385,608

$1,395,608

2. What is the interest expense recognized on June 30, 2021? Round to the nearest dollars.

		$91,593
		$93,593
		$95,593
		$97,593

3. What is the carrying amount of the bonds payable on Dec. 31, 2021? Round to the nearest dollars.

$1,382,709

$1,392,709

$1,402,709

$1,412,709