Reporting Financial Statement Effects of Bond Transactions

On January 1, 2016, McKeown, Inc., issued $350,000 of 12%, 9-year bonds for $314,792, yielding a market (yield) rate of 14%. Semiannual interest is payable on June 30 and December 31 of each year.

Required a. Show computations to confirm the bond issue price. (Use a calculator or Excel for your calculations. Round your answers to the nearest dollar.)

Present value of principal repayment	$Answer
Present value of interest payments	$Answer
Selling price of bonds	$Answer

b. Record the bond issuance, semi-annual interest payment and discount amortization on June 30, 2016 and the semi-annual interest payment and bond amortization on December 31, 2016 in the financial statement effects template.

Balance Sheet
Transaction	Cash Asset	+	Noncash Assets	=	Liabilities	-	Contra-Liabilities	+	Contrib. Capital	+	Earned Capital
1/1/16 Issue bonds at a discount	$Answer	+	$Answer	=	$Answer	-	$Answer	+	$Answer	+	$Answer
6/30/16 Interest payment on bonds	Answer	+	Answer	=	Answer	-	$Answer	+	Answer	+	Answer
12/31/16 Interest payment on bonds	Answer	+	Answer	=	Answer	-	$Answer	+	Answer	+	Answer

Income Statement
	Revenue	-	Expenses	=	Net Income
	$Answer	-	$Answer	=	$Answer
	Answer	-	Answer	=	Answer
	Answer	-	Answer	=	Answer