When Patey Pontoons issued 4% bonds on January 1, 2021, with a face amount of $500,000, the market yield for bonds of similar risk and maturity was 5%. The bonds mature December 31, 2024 (4 years). Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price of the bonds at January 1, 2021. 2. Prepare the journal entry to record their issuance by Patey on January 1, 2021. 3. Prepare an amortization schedule that determines interest at the effective rate each period. 4. Prepare the journal entry to record interest on June 30, 2021. 5. What is the amount related to the bonds that Patey will report in its balance sheet at December 31, 2021? 6. What is the amount related to the bonds that Patey will report in its income statement for the year ended December 31, 2021? (Ignore income taxes.) 7. Prepare the appropriate journal entries at maturity on December 31, 2024.

Reg 1 Reg 2 Req3 Req 4 Reg 5 and 6 Req 7 Determine the price of the bonds at January 1, 2021. (Round final answers to the nearest whole dollar.) Table values are based on: n = 0 x 2.5 % Cash Flow Amount $ Interest $ 10,000 Principal $ 5,000,000 X Price of bonds Present Value 71,700 410,500 482,200 $ Req 1 Req 2 Reg 3 Req 4 Reg 5 and 6 Req 7 Prepare the journal entry to record their issuance by Patey on January 1, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round intermediate calculations and final answers to the nearest whole dollar.) No Date General Journal Debit Credit 1 January 01, 2021 Cash Discount on bonds payable Bonds payable OOO 482,200 17,800 x 5,000,000 X Req 1 Req 2 Req 3 Req 4 Req 5 and 6 Req 7 Prepare an amortization schedule that determines interest at the effective rate each period. (Round intermediate calculations and final answers to the nearest whole dollar.) Semiannual Interest Period-End Cash Interest Bond Interest Expense Discount Amortization Carrying Value 01/01/2021 $ 482,200 $ $ $ 06/30/2021 12/31/2021 06/30/2022 10,000 10,000 12,055 12,106 2,055 2,106 2,159 12, 159 12/31/2022 12,213 lololololololo 06/30/2023 282,455 X 284,561 286,720 288,933 291,201 293,526 295,909 500,000 10,000 10,000 10,000 10,000 10,000 10,000 80,000 12,268 2,213 2,268 2,325 12/31/2023 12,325 06/30/2024 12,383 2,383 12/31/2024 214,091 299,600 204,091 219,600 Total $ $ $ Req 1 Reg 2 Req 3 Req 4 Req 5 and 6 Req 7 Prepare the appropriate journal entries at maturity on December 31, 2024. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round intermediate calculations and final answers to the nearest whole dollar.) No Date General Journal Debit Credit 1 December 31, 202 Interest expense 12,290 X Cash 10,000 2,290 X Discount on bonds payable 2 December 31, 202 Bonds payable 5,000,000 Cash 5,000,000 X