Question

# On January 1, 2021, a company issues \$750,000 of 8% bonds, due in twelve years, with...

On January 1, 2021, a company issues \$750,000 of 8% bonds, due in twelve years, with interest payable semiannually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 9%, the bonds will issue at \$695,641.

Required:
1. Fill in the blanks in the amortization schedule below: (Round your answers to the nearest dollar amount. Enter all amounts as positive values.)

2. Record the bond issue on January 1, 2021, and the first two semi-annual interest payments on June 30, 2021, and December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Round your answers to the nearest dollar amount.)

 1) Use the PV function in Excel to calculate the issue price of the bonds Face Value \$                   750,000.00 Semiannual Coupon Rate = 8%/2 4% Semiannual Coupon payment \$                     30,000.00 Period 24 Rate = 9%/2 4.50% Current Price = PV(4.5%,24,-30000,-750000) \$                        695,642 Amortization Table A B C D E Semiannual interest Rate Interest Payment Interest Expense = 4.5% x prev. year carrying Amt Discount Amortization (C - B) Discount Account Balance E -D Bond Carrying Amount 750000-E 1/1/21 \$            54,358 \$             695,642 6/30/21 \$                          30,000 \$                    31,304 \$            1,304 \$            53,054 \$             696,946 12/31/21 \$                          30,000 \$                    31,363 \$            1,363 \$            51,692 \$             698,308 6/30/22 \$                          30,000 \$                    31,424 \$            1,424 \$            50,268 \$             699,732 12/31/22 \$                          30,000 \$                    31,488 \$            1,488 \$            48,780 \$             701,220 6/30/23 \$                          30,000 \$                    31,555 \$            1,555 \$            47,225 \$             702,775 12/31/23 \$                          30,000 \$                    31,625 \$            1,625 \$            45,600 \$             704,400 6/30/24 \$                          30,000 \$                    31,698 \$            1,698 \$            43,902 \$             706,098 12/31/24 \$                          30,000 \$                    31,774 \$            1,774 \$            42,128 \$             707,872 6/30/25 \$                          30,000 \$                    31,854 \$            1,854 \$            40,273 \$             709,727 12/31/25 \$                          30,000 \$                    31,938 \$            1,938 \$            38,336 \$             711,664 6/30/26 \$                          30,000 \$                    32,025 \$            2,025 \$            36,311 \$             713,689 12/31/26 \$                          30,000 \$                    32,116 \$            2,116 \$            34,195 \$             715,805 6/30/27 \$                          30,000 \$                    32,211 \$            2,211 \$            31,983 \$             718,017 12/31/27 \$                          30,000 \$                    32,311 \$            2,311 \$            29,673 \$             720,327 6/30/28 \$                          30,000 \$                    32,415 \$            2,415 \$            27,258 \$             722,742 12/31/28 \$                          30,000 \$                    32,523 \$            2,523 \$            24,735 \$             725,265 6/30/29 \$                          30,000 \$                    32,637 \$            2,637 \$            22,098 \$             727,902 12/31/29 \$                          30,000 \$                    32,756 \$            2,756 \$            19,342 \$             730,658 6/30/30 \$                          30,000 \$                    32,880 \$            2,880 \$            16,462 \$             733,538 12/31/30 \$                          30,000 \$                    33,009 \$            3,009 \$            13,453 \$             736,547 6/30/31 \$                          30,000 \$                    33,145 \$            3,145 \$            10,309 \$             739,691 12/31/31 \$                          30,000 \$                    33,286 \$            3,286 \$              7,023 \$             742,977 6/30/32 \$                          30,000 \$                    33,434 \$            3,434 \$              3,589 \$             746,411 12/31/32 \$                          30,000 \$                    33,589 \$            3,589 \$                     0 \$             750,000 2) Accounts & Titles Debit Credit a) on Jan1, 2021 Cash \$                        695,642 Discount on Bonds Payable \$                          54,358 Bonds Payable \$                  750,000 b) on June 30, 2021 Interest Expense \$                          31,304 Discount on Bonds Payable \$                      1,304 Cash \$                    30,000 c) on Dec 31, 2021 Interest Expense \$                          31,363 Discount on Bonds Payable \$                      1,363 Cash \$                    30,000

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