QS 14-6 Straight-Line: Bond computations LO P2 Enviro Company issues 8%, 10-year bonds with a par value of $330,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87 12. The straight-line method is used to allocate interest expense. 1. Using the implied selling price of 87 72, what are the issuer's cash proceeds from issuance of these bonds? Cash proceeds $ 288,750 2. What total amount of bond interest expense will be recognized over the life of these bonds? Total Bond Interest Expense Over Life of Bonds: Amount repaid: 20 payments of $ 13,200 $ Par value at maturity Total repayments Less amount borrowed (from part 1) Total bond interest expense $ 264,000 41,250 305.250 15,263 289.987 3. What is the amount of bond interest expense recorded on the first interest payment date? Bond interest expense $ 28,463 Exercise 14-5 Straight-Line: Recording bond issuance and discount amortization LO P1, P2 Dobbs Company issues 6%, two-year bonds, on December 31, 2017, with a par value of $94.000 and semiannual interest payments. Semiannual Period-End (e) 12/31/2017 (1) 6/39/2018 (2) 12/31/2018 (3) 6/38/2019 (4) 12/31/2019 Un amortized Discount $5,880 4,410 2,940 1,470 Carrying Value $88,120 89,590 91,860 92,530 94, eee Use the above straight-line bond amortization table and prepare journal entries for the following. Required: (a) The issuance of bonds on December 31, 2017 (b) The first through fourth interest payments on each June 30 and December 31. (c) Record the maturity of the bonds on December 31, 2019. Complete this question by entering your answers in the tabs below. Required A Required B Required The issuance of bonds on December 31, 2017. View transaction list Journal entry worksheet Record the issue of bonds with a par value of $94,000 cash on December 31, 2017. Note: Enter debits before credits General Journal Debit Credit Date Dec 31, 2017 Record entry Clear entry View general journal Required A Required B > Exercise 14-6 Straight-Line: Recording bond issuance and premium amortization LO P1, P3 Woodwick Company issues 9%, five-year bonds, on December 31, 2016, with a par value of $96,000 and semiannual interest payments. Semiannual Period-End Unamortized Premium Carrying Value 12/31/2016 $8,031 $104,031 (1) 6/30/2017 7,228 103,228 (2) 12/31/2017 6,425 102,425 Use the above straight-line bond amortization table and prepare journal entries for the following. (a) The issuance of bonds on December 31, 2016. (b) The first interest payment on June 30, 2017 (c) The second interest payment on December 31, 2017 View transaction list Journal entry worksheet 1 2 3 Record the issue of bonds with a par value of $96,000 cash on December 31, 2016. Note: Enter debits before credits. General Journal Debit Credit Date Dec 31, 2016 Record entry Clear entry View general journal QS 14-11 Computing payments for an installment note LO C1 On January 1, 2017, MM Co. borrows $420,000 cash from a bank and in return signs an 8% installment note for five annual payments of $105,192 each, with the first payment due one year after the note is signed. (Table B.3) (Use PV factors from table provided.) 1. Prepare the journal entry to record issuance of the note. View transaction list Journal entry worksheet Eagle borrows $28,000 cash by signing a four-year, 5% installment note. Record the issuance of the note on January 1, 2017. Note: Enter debits before credits. General Journal Debit Credit Date Jan 01, 2017 Record entry Clear entry View general journal