To finance a new construction project RYAN INC. issued bonds with a face value of $1,000,000. The bonds have a stated rate of 6%, a maturity of 10 years and pay interest annually.
INSTRUCTIONS
Calculate the selling price of the bonds and prepare the journal entry for the issuance under each of the following scenarios:
- Bonds were sold to yield 8% (market rate).
- Bonds were sold to yield 5% (market rate).
Find the present value and future value tables below.
Table #1 Future Value of $1 Invested Today at the End of N Periods (FVIF) Period 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 1.00 1.0400 1.0500 1.0600 1.0700 1.0800 1.0900 1.1000 1.1100 2.00 1.0816 1.1025 1.1236 1.1449 1.1664 1.1881 1.2100 1.2321 3.00 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.3676 4.00 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5181 5.00 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.6851 6.00 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.8704 7.00 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.0762 8.00 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.3045 9.00 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.5580 10.00 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 2.8394 11.00 1.5395 1.7103 1.8983 2.1049 2.3316 2.5804 2.8531 3.1518 12.00 1.6010 1.7959 2.0122 2.2522 2.5182 2.8127 3.1384 3.4985 13.00 1.6651 1.8856 2.1329 2.4098 2.7196 3.0658 3.4523 3.8833 14.00 1.7317 1.9799 2.2609 2.5785 2.9372 3.3417 3.7975 4.3104 15.00 1.8009 2.0789 2.3966 2.7590 3.1722 3.6425 4.1772 4.7846 16.00 1.8730 2.1829 2.5404 2.9522 3.4259 3.9703 4.5950 5.3109 17.00 1.9479 2.2920 2.6928 3.1588 3.7000 4.3276 5.0545 5.8951 18.00 2.0258 2.4066 2.8543 3.3799 3.9960 4.7171 5.5599 6.5436 19.00 2.1068 2.5270 3.0256 3.6165 4.3157 5.1417 6.1159 7.2633 20.00 2.1911 2.6533 3.2071 3.8697 4.6610 5.6044 6.7275 8.0623 Table #2 Future Value of an Annuity of $1 per Period at the End of N Periods (FVIFA) Period 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 1.00 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 2.00 2.0500 2.0600 2.0700 2.0800 2.0900 2.1000 2.1100 3.00 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3421 4.00 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7097 5.00 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.2278 6.00 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 7.9129 7.00 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 9.7833 8.00 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 11.8594 9.00 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.1640 10.00 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 16.7220 11.00 14.2068 14.9716 15.7836 16.6455 17.5603 18.5312 19.5614 12.00 15.9171 16.8699 17.8885 18.9771 20.1407 21.3843 22.7132 13.00 17.7130 18.8821 20.1406 21.4953 22.9534 24.5227 26.2116 14.00 19.5986 21.0151 22.5505 24.2149 26.0192 27.9750 30.0949 15.00 21.5786 23.2760 25.1290 27.1521 29.3609 31.7725 34.4054 16.00 23.6575 25.6725 27.8881 30.3243 33.0034 35.9497 39.1899 17.00 25.8404 28.2129 30.8402 33.7502 36.9737 40.5447 44.5008 18.00 28.1324 30.9057 33.9990 37.4502 41.3013 45.5992 50.3959 19.00 30.5390 33.7600 37.3790 41.4463 46.0185 51.1591 56.9395 20.00 33.0660 36.7856 40.9955 45.7620 51.1601 57.2750 64.2028 Table #3 Present Value of $1 to be received at the End of N Periods (PVIF) Period 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 1.00 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 2.00 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.8116 3.00 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7312 4.00 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6587 5.000.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5935 6.00 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5346 7.00 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4817 8.00 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4339 9.00 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3909 10.00 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3522 11.00 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.3173 12.00 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2858 13.00 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2575 14.00 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2320 15.00 | 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.2090 16.00 | 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1883 17.00 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1696 18.00 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1528 19.00 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1377 20.00 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1240 Table #4 Present Value of an Annuity of $1 per Period for N Periods (PVIFA) Period 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 1.00 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 2.00 1.8861 1.8594 1.8334 1.8080 1.7833 1.7591 1.7355 1.7125 3.00 2.7751 2.7222 2.6730 2.6243 2.5771 2.5313 2.4869 2.4437 4.00 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.1024 5.00 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6959 6.00 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.2305 7.00 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.7122 8.00 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 5.1461 9.00 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7590 5.5370 10.00 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.8892 11.00 8.7605 8.3064 7.8869 7.4987 7.1390 6.8052 6.4951 6.2065 12.00 9.3851 8.8633 8.3838 7.9427 7.5361 7.1607 6.8137 6.4924 13.00 9.9856 9.3936 8.8527 8.3577 7.9038 7.4869 7.1034 6.7499 14.00 10.5631 9.8986 9.2950 8.7455 8.2442 7.7862 7.3667 6.9819 15.00 11.1184 10.3797 9.7122 9.1079 8.5595 8.0607 7.6061 7.1909 16.00 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 7.3792 17.00 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.5488 18.00 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8.2014 7.7016 19.00 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 8.3649 7.8393 20.00 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.9633 Page 16 Table #1 Future Value of $1 Invested Today at the End of N Periods (FVIF) Period 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 1.00 1.0400 1.0500 1.0600 1.0700 1.0800 1.0900 1.1000 1.1100 2.00 1.0816 1.1025 1.1236 1.1449 1.1664 1.1881 1.2100 1.2321 3.00 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.3676 4.00 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5181 5.00 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.6851 6.00 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.8704 7.00 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.0762 8.00 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.3045 9.00 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.5580 10.00 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 2.8394 11.00 1.5395 1.7103 1.8983 2.1049 2.3316 2.5804 2.8531 3.1518 12.00 1.6010 1.7959 2.0122 2.2522 2.5182 2.8127 3.1384 3.4985 13.00 1.6651 1.8856 2.1329 2.4098 2.7196 3.0658 3.4523 3.8833 14.00 1.7317 1.9799 2.2609 2.5785 2.9372 3.3417 3.7975 4.3104 15.00 1.8009 2.0789 2.3966 2.7590 3.1722 3.6425 4.1772 4.7846 16.00 1.8730 2.1829 2.5404 2.9522 3.4259 3.9703 4.5950 5.3109 17.00 1.9479 2.2920 2.6928 3.1588 3.7000 4.3276 5.0545 5.8951 18.00 2.0258 2.4066 2.8543 3.3799 3.9960 4.7171 5.5599 6.5436 19.00 2.1068 2.5270 3.0256 3.6165 4.3157 5.1417 6.1159 7.2633 20.00 2.1911 2.6533 3.2071 3.8697 4.6610 5.6044 6.7275 8.0623 Table #2 Future Value of an Annuity of $1 per Period at the End of N Periods (FVIFA) Period 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 1.00 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 2.00 2.0500 2.0600 2.0700 2.0800 2.0900 2.1000 2.1100 3.00 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3421 4.00 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7097 5.00 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.2278 6.00 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 7.9129 7.00 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 9.7833 8.00 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 11.8594 9.00 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.1640 10.00 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 16.7220 11.00 14.2068 14.9716 15.7836 16.6455 17.5603 18.5312 19.5614 12.00 15.9171 16.8699 17.8885 18.9771 20.1407 21.3843 22.7132 13.00 17.7130 18.8821 20.1406 21.4953 22.9534 24.5227 26.2116 14.00 19.5986 21.0151 22.5505 24.2149 26.0192 27.9750 30.0949 15.00 21.5786 23.2760 25.1290 27.1521 29.3609 31.7725 34.4054 16.00 23.6575 25.6725 27.8881 30.3243 33.0034 35.9497 39.1899 17.00 25.8404 28.2129 30.8402 33.7502 36.9737 40.5447 44.5008 18.00 28.1324 30.9057 33.9990 37.4502 41.3013 45.5992 50.3959 19.00 30.5390 33.7600 37.3790 41.4463 46.0185 51.1591 56.9395 20.00 33.0660 36.7856 40.9955 45.7620 51.1601 57.2750 64.2028 Table #3 Present Value of $1 to be received at the End of N Periods (PVIF) Period 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 1.00 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 2.00 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.8116 3.00 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7312 4.00 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6587 5.000.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5935 6.00 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5346 7.00 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4817 8.00 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4339 9.00 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3909 10.00 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3522 11.00 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.3173 12.00 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2858 13.00 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2575 14.00 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2320 15.00 | 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.2090 16.00 | 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1883 17.00 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1696 18.00 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1528 19.00 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1377 20.00 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1240 Table #4 Present Value of an Annuity of $1 per Period for N Periods (PVIFA) Period 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 1.00 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 2.00 1.8861 1.8594 1.8334 1.8080 1.7833 1.7591 1.7355 1.7125 3.00 2.7751 2.7222 2.6730 2.6243 2.5771 2.5313 2.4869 2.4437 4.00 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.1024 5.00 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6959 6.00 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.2305 7.00 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.7122 8.00 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 5.1461 9.00 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7590 5.5370 10.00 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.8892 11.00 8.7605 8.3064 7.8869 7.4987 7.1390 6.8052 6.4951 6.2065 12.00 9.3851 8.8633 8.3838 7.9427 7.5361 7.1607 6.8137 6.4924 13.00 9.9856 9.3936 8.8527 8.3577 7.9038 7.4869 7.1034 6.7499 14.00 10.5631 9.8986 9.2950 8.7455 8.2442 7.7862 7.3667 6.9819 15.00 11.1184 10.3797 9.7122 9.1079 8.5595 8.0607 7.6061 7.1909 16.00 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 7.3792 17.00 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.5488 18.00 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8.2014 7.7016 19.00 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 8.3649 7.8393 20.00 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.9633 Page 16
