Saverin Inc produces and sells outdoor equipment On July 1, 2016, Saverin Inc issued $73,900,000 of 10 year, 12 bonds at a market (effective) interest rate of 10 , receiving cash of $83,109,610 Interest on the bonds is payable semiannually on December 31 and June 30 The fiscal year of the company is the calendar year Required 1 Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 2016 2 Journalize the entries to record the following a The first semiannual interest payment on December 31, 2016, and the amortization of the bond premium, using the straight line method (Round to the nearest dollar ) b The interest payment on June 30, 2017, and the amortization of the bond premium, using the straight line method (Round to the nearest dollar ) 3 Determine the total interest expense for 2016 4 Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest 5 Compute the price of $83,109,610 received for the bonds by using the tables shown in Present Value Tables (Round to the nearest dollar ) Be sure to include the year in the date for the entries Refer to the Chart of Accounts for exact wording of account titles Two present value tables are provided Present Value of $1 at Compound Interest Due in n Periods and Present Value of Ordinary Annuity of $1 per Period Use them as directed in the problem requirements Present Value of $1 at Compound Interest Due in n Periods Periods 4 0 4 5 5 5 5 6 6 5 7 1 0 96154 0 95694 0 95238 0 94787 0 94340 0 93897 0 93458 2 0 92456 0 91573 0 90703 0 89845 0 89000 0 88166 0 87344 3 0 88900 0 87630 0 86384 0 85161 0 83962 0 82785 0 81630 4 0 85480 0 83856 0 82270 0 80722 0 79209 0 77732 0 76290 5 0 82193 0 80245 0 78353 0 76513 0 74726 0 72988 0 71299 6 0 79031 0 76790 0 74622 0 72525 0 70496 0 68533 0 66634 7 0 75992 0 73483 0 71068 0 68744 0 66506 0 64351 0 62275 8 0 73069 0 70319 0 67684 0 65160 0 62741 0 60423 0 58201 9 0 70259 0 67290 0 64461 0 61763 0 59190 0 56735 0 54393 10 0 67556 0 64393 0 61391 0 58543 0 55839 0 53273 0 50835 11 0 64958 0 61620 0 58468 0 55491 0 52679 0 50021 0 47509 12 0 62460 0 58966 0 55684 0 52598 0 49697 0 46968 0 44401 13 0 60057 0 56427 0 53032 0 49856 0 46884 0 44102 0 41496 14 0 57748 0 53997 0 50507 0 47257 0 44230 0 41410 0 38782 15 0 55526 0 51672 0 48102 0 44793 0 41727 0 38883 0 36245 16 0 53391 0 49447 0 45811 0 42458 0 39365 0 36510 0 33873 17 0 51337 0 47318 0 43630 0 40245 0 37136 0 34281 0 31657 18 0 49363 0 45280 0 41552 0 38147 0 35034 0 32189 0 29586 19 0 47464 0 43330 0 39573 0 36158 0 33051 0 30224 0 27651 20 0 45639 0 41464 0 37689 0 34273 0 31180 0 28380 0 25842 21 0 43883 0 39679 0 35894 0 32486 0 29416 0 26648 0 24151 22 0 42196 0 37970 0 34185 0 30793 0 27751 0 25021 0 22571 23 0 40573 0 36335 0 32557 0 29187 0 26180 0 23494 0 21095 24 0 39012 0 34770 0 31007 0 27666 0 24698 0 22060 0 19715 25 0 37512 0 33273 0 29530 0 26223 0 23300 0 20714 0 18425 26 0 36069 0 31840 0 28124 0 24856 0 21981 0 19450 0 17220 27 0 34682 0 30469 0 26785 0 23560 0 20737 0 18263 0 16093 28 0 33348 0 29157 0 25509 0 22332 0 19563 0 17148 0 15040 29 0 32065 0 27902 0 24295 0 21168 0 18456 0 16101 0 14056 30 0 30832 0 26700 0 23138 0 20064 0 17411 0 15119 0 13137 31 0 29646 0 25550 0 22036 0 19018 0 16425 0 14196 0 12277 32 0 28506 0 24450 0 20987 0 18027 0 15496 0 13329 0 11474 33 0 27409 0 23397 0 19987 0 17087 0 14619 0 12516 0 10723 34 0 26355 0 22390 0 19035 0 16196 0 13791 0 11752 0 10022 35 0 25342 0 21425 0 18129 0 15352 0 13011 0 11035 0 09366 40 0 20829 0 17193 0 14205 0 11746 0 09722 0 08054 0 06678 45 0 17120 0 13796 0 11130 0 08988 0 07265 0 05879 0 04761 50 0 14071 0 11071 0 08720 0 06877 0 05429 0 04291 0 03395 Present Value of Ordinary Annuity of $1 per Period Periods 4 0 4 5 5 5 5 6 6 5 7 1 0 96154 0 95694 0 95238 0 94787 0 94340 0 93897 0 93458 2 1 88609 1 87267 1 85941 1 84632 1 83339 1 82063 1 80802 3 2 77509 2 74896 2 72325 2 69793 2 67301 2 64848 2 62432 4 3 62990 3 58753 3 54595 3 50515 3 46511 3 42580 3 38721 5 4 45182 4 38998 4 32948 4 27028 4 21236 4 15568 4 10020 6 5 24214 5 15787 5 07569 4 99553 4 91732 4 84101 4 76654 7 6 00205 5 89270 5 78637 5 68297 5 58238 5 48452 5 38929 8 6 73274 6 59589 6 46321 6 33457 6 20979 6 08875 5 97130 9 7 43533 7 26879 7 10782 6 95220 6 80169 6 65610 6 51523 10 8 11090 7 91272 7 72173 7 53763 7 36009 7 18883 7 02358 11 8 76048 8 52892 8 30641 8 09254 7 88687 7 68904 7 49867 12 9 38507 9 11858 8 86325 8 61852 8 38384 8 15873 7 94269 13 9 98565 9 68285 9 39357 9 11708 8 85268 8 59974 8 35765 14 10 56312 10 22283 9 89864 9 58965 9 29498 9 01384 8 74547 15 11 11839 10 73955 10 37966 10 03758 9 71225 9 40267 9 10791 16 11 65230 11 23402 10 83777 10 46216 10 10590 9 76776 9 44665 17 12 16567 11 70719 11 27407 10 86461 10 47726 10 11058 9 76322 18 12 65930 12 15999 11 68959 11 24607 10 82760 10 43247 10 05909 19 13 13394 12 59329 12 08532 11 60765 11 15812 10 73471 10 33560 20 13 59033 13 00794 12 46221 11 95038 11 46992 11 01851 10 59401 21 14 02916 13 40472 12 82115 12 27524 11 76408 11 28498 10 83553 22 14 45112 13 78442 13 16300 12 58317 12 04158 11 53520 11 06124 23 14 85684 14 14777 13 48857 12 87504 12 30338 11 77014 11 27219 24 15 24696 14 49548 13 79864 13 15170 12 55036 11 99074 11 46933 25 15 62208 14 82821 14 09394 13 41393 12 78336 12 19788 11 65358 26 15 98277 15 14661 14 37519 13 66250 13 00317 12 39237 11 82578 27 16 32959 15 45130 14 64303 13 89810 13 21053 12 57500 11 98671 28 16 66306 15 74287 14 89813 14 12142 13 40616 12 74648 12 13711 29 16 98371 16 02189 15 14107 14 33310 13 59072 12 90749 12 27767 30 17 29203 16 28889 15 37245 14 53375 13 76483 13 05868 12 40904 31 17 58849 16 54439 15 59281 14 72393 13 92909 13 20063 12 53181 32 17 87355 16 78889 15 80268 14 90420 14 08404 13 33393 12 64656 33 18 14765 17 02286 16 00255 15 07507 14 23023 13 45909 12 75379 34 18 41120 17 24676 16 19290 15 23703 14 36814 13 57661 12 85401 35 18 66461 17 46101 16 37419 15 39055 14 49825 13 68696 12 94767 40 19 79277 18 40158 17 15909 16 04612 15 04630 14 14553 13 33171 45 20 72004 19 15635 17 77407 16 54773 15 45583 14 48023 13 60552 50 21 48218 19 76201 18 25593 16 93152 15 76186 14 72452 13 80075 CHART OF ACCOUNTS Saverin Inc General Ledger ASSETS 110 Cash 111 Petty Cash 121 Accounts Receivable 122 Allowance for Doubtful Accounts 126 Interest Receivable 127 Notes Receivable 131 Merchandise Inventory 141 Office Supplies 142 Store Supplies 151 Prepaid Insurance 191 Land 192 Store Equipment 193 Accumulated Depreciation Store Equipment 194 Office Equipment 195 Accumulated Depreciation Office Equipment LIABILITIES 210 Accounts Payable 221 Salaries Payable 231 Sales Tax Payable 232 Interest Payable 241 Notes Payable 251 Bonds Payable 252 Discount on Bonds Payable 253 Premium on Bonds Payable EQUITY 311 Common Stock 312 Paid In Capital in Excess of Par Common Stock 315 Treasury Stock 321 Preferred Stock 322 Paid In Capital in Excess of Par Preferred Stock 331 Paid In Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends 352 Stock Dividends 390 Income Summary REVENUE 410 Sales 610 Interest Revenue 611 Gain on Redemption of Bonds EXPENSES 510 Cost of Merchandise Sold 515 Credit Card Expense 516 Cash Short and Over 521 Sales Salaries Expense 522 Office Salaries Expense 531 Advertising Expense 532 Delivery Expense 533 Repairs Expense 534 Selling Expenses 535 Rent Expense 536 Insurance Expense 537 Office Supplies Expense 538 Store Supplies Expense 541 Bad Debt Expense 561 Depreciation Expense Store Equipment 562 Depreciation Expense Office Equipment 590 Miscellaneous Expense 710 Interest Expense 711 Loss on Redemption of Bonds 1 and 2 Journalize the entries to record the transactions Be sure to include the year in the date for the entries Refer to the Chart of Accounts for exact wording of account titles PAGE 10 JOURNAL DATE DESCRIPTION POST REF DEBIT CREDIT 1 2 3 4 5 6 7 8 9 3 Determine the total interest expense for 2016 4 Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest Yes No 5 Compute the price of $83,109,610 received for the bonds by using the tables shown in Present Value Tables (Round to the nearest dollar ) Present value of the face amount Present value of the semiannual interest payments Price received for the bonds

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Saverin Inc. produces and sells outdoor equipment. On July 1, 2016, Saverin Inc. issued $73,900,000 of 10-year, 12% bonds at a market (effective) interest rate

Saverin Inc. produces and sells outdoor equipment. On July 1, 2016, Saverin Inc. issued $73,900,000 of 10-year, 12% bonds at a market (effective) interest rate of 10%, receiving cash of $83,109,610. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

Required:

Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 2016.*

Journalize the entries to record the following:*

a.	The first semiannual interest payment on December 31, 2016, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)
b.	The interest payment on June 30, 2017, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)

Determine the total interest expense for 2016.

Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest?

Compute the price of $83,109,610 received for the bonds by using the tables shown in Present Value Tables. (Round to the nearest dollar.)

*Be sure to include the year in the date for the entries. Refer to the Chart of Accounts for exact wording of account titles.

Two present value tables are provided: Present Value of $1 at Compound Interest Due in n Periods and Present Value of Ordinary Annuity of $1 per Period. Use them as directed in the problem requirements.

Present Value of $1 at Compound Interest Due in n Periods
Periods	4.0%	4.5%	5%	5.5%	6%	6.5%	7%
1	0.96154	0.95694	0.95238	0.94787	0.94340	0.93897	0.93458
2	0.92456	0.91573	0.90703	0.89845	0.89000	0.88166	0.87344
3	0.88900	0.87630	0.86384	0.85161	0.83962	0.82785	0.81630
4	0.85480	0.83856	0.82270	0.80722	0.79209	0.77732	0.76290
5	0.82193	0.80245	0.78353	0.76513	0.74726	0.72988	0.71299
6	0.79031	0.76790	0.74622	0.72525	0.70496	0.68533	0.66634
7	0.75992	0.73483	0.71068	0.68744	0.66506	0.64351	0.62275
8	0.73069	0.70319	0.67684	0.65160	0.62741	0.60423	0.58201
9	0.70259	0.67290	0.64461	0.61763	0.59190	0.56735	0.54393
10	0.67556	0.64393	0.61391	0.58543	0.55839	0.53273	0.50835
11	0.64958	0.61620	0.58468	0.55491	0.52679	0.50021	0.47509
12	0.62460	0.58966	0.55684	0.52598	0.49697	0.46968	0.44401
13	0.60057	0.56427	0.53032	0.49856	0.46884	0.44102	0.41496
14	0.57748	0.53997	0.50507	0.47257	0.44230	0.41410	0.38782
15	0.55526	0.51672	0.48102	0.44793	0.41727	0.38883	0.36245
16	0.53391	0.49447	0.45811	0.42458	0.39365	0.36510	0.33873
17	0.51337	0.47318	0.43630	0.40245	0.37136	0.34281	0.31657
18	0.49363	0.45280	0.41552	0.38147	0.35034	0.32189	0.29586
19	0.47464	0.43330	0.39573	0.36158	0.33051	0.30224	0.27651
20	0.45639	0.41464	0.37689	0.34273	0.31180	0.28380	0.25842
21	0.43883	0.39679	0.35894	0.32486	0.29416	0.26648	0.24151
22	0.42196	0.37970	0.34185	0.30793	0.27751	0.25021	0.22571
23	0.40573	0.36335	0.32557	0.29187	0.26180	0.23494	0.21095
24	0.39012	0.34770	0.31007	0.27666	0.24698	0.22060	0.19715
25	0.37512	0.33273	0.29530	0.26223	0.23300	0.20714	0.18425
26	0.36069	0.31840	0.28124	0.24856	0.21981	0.19450	0.17220
27	0.34682	0.30469	0.26785	0.23560	0.20737	0.18263	0.16093
28	0.33348	0.29157	0.25509	0.22332	0.19563	0.17148	0.15040
29	0.32065	0.27902	0.24295	0.21168	0.18456	0.16101	0.14056
30	0.30832	0.26700	0.23138	0.20064	0.17411	0.15119	0.13137
31	0.29646	0.25550	0.22036	0.19018	0.16425	0.14196	0.12277
32	0.28506	0.24450	0.20987	0.18027	0.15496	0.13329	0.11474
33	0.27409	0.23397	0.19987	0.17087	0.14619	0.12516	0.10723
34	0.26355	0.22390	0.19035	0.16196	0.13791	0.11752	0.10022
35	0.25342	0.21425	0.18129	0.15352	0.13011	0.11035	0.09366
40	0.20829	0.17193	0.14205	0.11746	0.09722	0.08054	0.06678
45	0.17120	0.13796	0.11130	0.08988	0.07265	0.05879	0.04761
50	0.14071	0.11071	0.08720	0.06877	0.05429	0.04291	0.03395

Present Value of Ordinary Annuity of $1 per Period
Periods	4.0%	4.5%	5%	5.5%	6%	6.5%	7%
1	0.96154	0.95694	0.95238	0.94787	0.94340	0.93897	0.93458
2	1.88609	1.87267	1.85941	1.84632	1.83339	1.82063	1.80802
3	2.77509	2.74896	2.72325	2.69793	2.67301	2.64848	2.62432
4	3.62990	3.58753	3.54595	3.50515	3.46511	3.42580	3.38721
5	4.45182	4.38998	4.32948	4.27028	4.21236	4.15568	4.10020
6	5.24214	5.15787	5.07569	4.99553	4.91732	4.84101	4.76654
7	6.00205	5.89270	5.78637	5.68297	5.58238	5.48452	5.38929
8	6.73274	6.59589	6.46321	6.33457	6.20979	6.08875	5.97130
9	7.43533	7.26879	7.10782	6.95220	6.80169	6.65610	6.51523
10	8.11090	7.91272	7.72173	7.53763	7.36009	7.18883	7.02358
11	8.76048	8.52892	8.30641	8.09254	7.88687	7.68904	7.49867
12	9.38507	9.11858	8.86325	8.61852	8.38384	8.15873	7.94269
13	9.98565	9.68285	9.39357	9.11708	8.85268	8.59974	8.35765
14	10.56312	10.22283	9.89864	9.58965	9.29498	9.01384	8.74547
15	11.11839	10.73955	10.37966	10.03758	9.71225	9.40267	9.10791
16	11.65230	11.23402	10.83777	10.46216	10.10590	9.76776	9.44665
17	12.16567	11.70719	11.27407	10.86461	10.47726	10.11058	9.76322
18	12.65930	12.15999	11.68959	11.24607	10.82760	10.43247	10.05909
19	13.13394	12.59329	12.08532	11.60765	11.15812	10.73471	10.33560
20	13.59033	13.00794	12.46221	11.95038	11.46992	11.01851	10.59401
21	14.02916	13.40472	12.82115	12.27524	11.76408	11.28498	10.83553
22	14.45112	13.78442	13.16300	12.58317	12.04158	11.53520	11.06124
23	14.85684	14.14777	13.48857	12.87504	12.30338	11.77014	11.27219
24	15.24696	14.49548	13.79864	13.15170	12.55036	11.99074	11.46933
25	15.62208	14.82821	14.09394	13.41393	12.78336	12.19788	11.65358
26	15.98277	15.14661	14.37519	13.66250	13.00317	12.39237	11.82578
27	16.32959	15.45130	14.64303	13.89810	13.21053	12.57500	11.98671
28	16.66306	15.74287	14.89813	14.12142	13.40616	12.74648	12.13711
29	16.98371	16.02189	15.14107	14.33310	13.59072	12.90749	12.27767
30	17.29203	16.28889	15.37245	14.53375	13.76483	13.05868	12.40904
31	17.58849	16.54439	15.59281	14.72393	13.92909	13.20063	12.53181
32	17.87355	16.78889	15.80268	14.90420	14.08404	13.33393	12.64656
33	18.14765	17.02286	16.00255	15.07507	14.23023	13.45909	12.75379
34	18.41120	17.24676	16.19290	15.23703	14.36814	13.57661	12.85401
35	18.66461	17.46101	16.37419	15.39055	14.49825	13.68696	12.94767
40	19.79277	18.40158	17.15909	16.04612	15.04630	14.14553	13.33171
45	20.72004	19.15635	17.77407	16.54773	15.45583	14.48023	13.60552
50	21.48218	19.76201	18.25593	16.93152	15.76186	14.72452	13.80075

CHART OF ACCOUNTS

Saverin Inc.

General Ledger

	ASSETS
110	Cash
111	Petty Cash
121	Accounts Receivable
122	Allowance for Doubtful Accounts
126	Interest Receivable
127	Notes Receivable
131	Merchandise Inventory
141	Office Supplies
142	Store Supplies
151	Prepaid Insurance
191	Land
192	Store Equipment
193	Accumulated Depreciation-Store Equipment
194	Office Equipment
195	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
221	Salaries Payable
231	Sales Tax Payable
232	Interest Payable
241	Notes Payable
251	Bonds Payable
252	Discount on Bonds Payable
253	Premium on Bonds Payable

	EQUITY
311	Common Stock
312	Paid-In Capital in Excess of Par-Common Stock
315	Treasury Stock
321	Preferred Stock
322	Paid-In Capital in Excess of Par-Preferred Stock
331	Paid-In Capital from Sale of Treasury Stock
340	Retained Earnings
351	Cash Dividends
352	Stock Dividends
390	Income Summary

	REVENUE
410	Sales
610	Interest Revenue
611	Gain on Redemption of Bonds

	EXPENSES
510	Cost of Merchandise Sold
515	Credit Card Expense
516	Cash Short and Over
521	Sales Salaries Expense
522	Office Salaries Expense
531	Advertising Expense
532	Delivery Expense
533	Repairs Expense
534	Selling Expenses
535	Rent Expense
536	Insurance Expense
537	Office Supplies Expense
538	Store Supplies Expense
541	Bad Debt Expense
561	Depreciation Expense-Store Equipment
562	Depreciation Expense-Office Equipment
590	Miscellaneous Expense
710	Interest Expense
711	Loss on Redemption of Bonds

1. and 2. Journalize the entries to record the transactions. Be sure to include the year in the date for the entries. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL