On July 31, 2013, Cooks Castle Resorts issues a $2,500,000, 10 year, 6.5% Bond with interest payable semiannually on January 31 and July 31 of each of the next ten years. The market interest rate on the date of issuance is 3%. Cooks Castle Resorts uses the effective interest method to amortize bonds (Note: you will need to utilize the present value tables attached).

1) calculate the issuance price of the bond using the appropriate present value table (Using a Present Value of $1 Table and a Present Value of an Ordinary Annuity of $1 Table *Unable to upload tables. Using all decimals values. Links: 

https://www.accountingtools.com/articles/present-value-of-1-table#:~:text=What%20is%20a%20Present%20Value,arrive%20at%20its%20present%20value. 

 

https://www.accountingtools.com/articles/present-value-of-an-ordinary-annuity-table

 

2)prepare the entry account for Bond issuance on July 31, 2013

Answer rating: 100% (QA)

1 To calculate the issuance price of the bond we need to use the present value tables The Present Value of 1 Table will be used to calculate the present value of the principal amount and the Present V... View the full answer