Use the following information to answer the following three questions: On July 1, 2019, Jones Corp....

Use the following information to answer the following three questions:

On July 1, 2019, Jones Corp. issued $40,000 face value, 10-year, 8% coupon bonds paying interest semiannually on June 30^th and Dec 31^st. The market (yield) rate on the date of issuance was 10%. The present value factor for an annuity is 12.462 and the present value factor of a lump sum is 0.377

1. Record the journal entry made when the bonds were issued on July 1^st, 2019?

2. Record the journal entry made to record the first interest payment on December 31^st 2019?

3. Record the journal entry made to record the retirement of the bonds at maturity?

Expert Solution

Sl No	Particulars	Dr	Cr
1	Cash	$ 35,019.20
	Discount on Bond Issue (Working 1)	$ 4,980.80
	8% Bonds Payable		$ 40,000.00

2	Interest on Bond (Working 2)	$ 1,600.00
	Cash		$ 1,600.00

3	8% Bonds Payable	$ 40,000.00
	Cash		$ 40,000.00
	Workings:-
W1	Face Value of Bond (given)		$ 40,000.00
	PV of Semi annual Interest Payments	$ 19,939.20
	($ 1600 X 12.462)
	PV of Face Value of Bond ($40,000 X .377)	$ 15,080.00	$ (35,019.20)
	Discount on Bond Issue		$ 4,980.80

W2	Face Value of Bond X Coupon Rate / 2	$ 1,600.00

ekkarill92 answered 1 year ago

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