Question
In: Accounting
When Patey Pontoons issued 10% bonds on January 1, 2018, with a face amount of $640,000,...
When Patey Pontoons issued 10% bonds on January 1, 2018, with a
face amount of $640,000, the market yield for bonds of similar risk
and maturity was 11%. The bonds mature December 31, 2021 (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,
2018.
2. Prepare the journal entry to record their
issuance by Patey on January 1, 2018.
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, 2018.
5. What is the amount related to the bonds that
Patey will report in its balance sheet at December 31, 2018?
6. What is the amount related to the bonds that
Patey will report in its income statement for the year ended
December 31, 2018? (Ignore income taxes.)
7. Prepare the appropriate journal entries at
maturity on December 31, 2021.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
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and maturity was 11%. The bonds mature December 31, 2021 (4 years).
Interest is paid semiannually on June 30 and December 31. (FV of
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appropriate factor(s) from the tables provided.) Required: 1.
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When Patey Pontoons issued 10% bonds on January 1, 2018, with a
face amount of $880,000, the market yield for bonds of similar risk
and maturity was 11%. The bonds mature December 31, 2021 (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.)
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