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Please do all. P10-10A On July 1, 2017, Global Satellites Corporation issued $1.5 million of 10-year,...

Please do all.

P10-10A On July 1, 2017, Global Satellites Corporation issued $1.5 million of 10-year, 7% bonds to yield a market interest rate of 6%. The bonds pay semi-annual interest on July 1 and January 1. Global has a December 31 year end. When the bonds were issued, Global received $1,611,587. Instructions

(a) Prepare an amortization table through January 1, 2019 (three interest periods) for this bond issue. Round all amounts to the nearest dollar.

(b) Record the issue of the bonds on July 1.

(c) Prepare the adjusting entry on December 31, 2018, to accrue the interest on the bonds.

(d) Show the statement of financial position presentation of the liabilities at December 31, 2018.

(e) Record the payment of interest on January 1, 2019.

(f) Prove the issue proceeds of the bonds on July 1, 2017, by calculating the present value of the bonds at that time.

Solutions

Expert Solution

Semi interest interest premium unamortized Bond
annual to be expense to amortization premium Carrying
interest paid b recorded value
periods
july1/17 111,587 1,611,587
jan1/18 52500 48348 4152 107435 1,607,435
july1/18 52500 48223 4277 103158 1,603,158
jan 1/19 52500 48095 4405 98752 1,598,752
july 1/19 52500 47963 4537 94215 1,594,215
Date Account titles & Explanations Debit Credit
7/1/2017 cash 1,611,587
premium on bonds payable 111,587
Bonds payable 1,500,000
Date Account titles & Explanations Debit Credit
12/31/2018 interest expense 48095
premium on bonds payable 4405
interest payable 52500
Statement of financial position
Current liabilities
interest payable 52500
Non -current liabilities
Bonds payable 1,603,158
Date Account titles & Explanations Debit Credit
1/1/2019 interest payable 52500
cash 52500

ekkarill92 answered 1 year ago
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