On July 1, 2014, Ponasis Corporation issued $1 million of 10-year, 6% bonds at a price to

Question:

On July 1, 2014, Ponasis Corporation issued $1 million of 10-year, 6% bonds at a price to yield a market interest rate of 7%. The bonds pay semi-annual interest on July 1 and January 1. Ponasis has a December 31 year end.

Instructions

(a) Calculate the bonds' present value (issue price) on July 1.

(b) Prepare an amortization table through January 1, 2016 (three interest periods) for this bond issue. Round all amounts to the nearest dollar.

(d) Prepare the adjusting entry on December 31, 2015, to accrue the interest on the bonds.

(e) Show the statement of financial position presentation of the liabilities at December 31, 2015.

(f) Record the payment of interest on January 1, 2016.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...