QUESTION 2.1 (10 marks) Fantastic Beasts Corporation issues $500,000 of 11% bonds that are due in 10 years. These bonds pay interest on a semi-annually basis. At the time of issue, the market rate for such bonds were 10%. Please calculate the bonds' issue price. Hint for students: you may calculate the bond issue price using the time value of money tables OR a financial calculator OR a computer spreadsheet function. y/UUVUSI5425/Resources/Unit%20Exercises/BUS13423_UnitExercise2.pdf QUESTION 2.2 (10 marks) On February 1, 2018, Jacob's Bakery redeemed bonds prior to their maturity date of February 1, 2019. The face value of the bonds was $800,000, and the redemption was performed at 97. As at the redemption date, the unamortized premium was $6,500. Prepare the corporation's journal entry to record the redemption of the bonds. QUESTION 2.3 (2 marks each x 10 = 20 marks) 1) A bank loans payable of a winery, due March 10, 2021 (wine requires aging for five years before it can be sold) 2) $12 million of serial bonds payable, of which $2 million is due each July 31 3) Amounts withheld from employees' wages for income tax purposes 4) Notes payable that are due February 20, 2020 5) Interest payable on a note payable (the note is due January 15, 2020 and the interest is due June 30, 2018) 6) Credit balance in a customer's account arising from returns and allowances after collection in full of the account 7) Bonds payable of $2 million maturing June 30, 2021 8) An overdraft of $1,000 in a bank account (no other balances are carried at this bank) 9) An overdraft of $1,000 in a bank account (other accounts are carried at this bank and have positive account balances) 10) Deposits made by customers who have ordered goods Required: Indicate whether each of the items above should be classified under IFRS on December 31 2017 as a current or long-term liability or under some other classification. Consider each item independently from all others; that is, do not assume that all of them relate to one particular business. If the classification of some of the items is doubtful, explain why in each case. ex YORKVILLE QUESTION 2.4 (60 marks) On June 1, 2017, Niffler Corporation approached Bowtruckle Corporation about buying a parcel of undeveloped land. Bowtruckle was asking $240,000 for the land and Niffler saw that there was some flexibility in the asking price. Niffier did not have enough money to make a cash offer to Bowtruckle and proposed to give, in return for the land, a $300,000, five-year promissory note that bears interest at the rate of 4%. The Interest is to be paid annually to Bowtruckle Corporation on June 1 of each of the next five years. Bowtruckle insisted that the note taken in return become a mortgage note. Bowtruckle accepted the amended offer, and Niffer signed a mortgage note for $300,000 due June 1, 2022. Niffler would have had to pay 10% at its local bank if it were to borrow the cash for the land purchase. Bowtruckle, on the other hand, could borrow the funds at 9%. Both Niffler and Bowtruckle have December 31" year ends Required: 1) What is the difference between a promissory note payable and a mortgage note payable? Why would Bowtruckle Corporation insist on obtaining a mortgage note payable from Niffler Corporation? 2) Calculate the purchase price of the land. 3) Prepare the journal entry for the purchase of the land, 4) Prepare any adjusting journal entry that is required at the end of the fiscal year and the first payment made on June 1, 2018, assuming no reversing entries are used 5) Assume that Bowtruckle had insisted on obtaining an instalment note from Niffler instead of a mortgage note. Then do the following: a. Calculate the amount of the instalment payments that would be required for a five-year instalment note Use the same cost of the land to Niffler Corporation that you determined for the mortgage note in part (a). b. Prepare the journal entry for the purchase of the land and the issuance of the instalment note C Prepare any adjusting journal entry that is required at the end of the fiscal year and the first payment made on June 1, 2018, assuming no reversing entries are used. d. Compare the balances of the two different notes payable and related accounts at December 31, 2017. Be specific about the classifications on the statement of financial position