Calculations Marketing Inc. issued 11.0% bonds with a par value of $540,000 and a five-year life...

 

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Calculations Marketing Inc. issued 11.0% bonds with a par value of $540,000 and a five-year life on January 1, 2020, for $605,699. The bonds pay interest on June 30 and December 31. The market interest rate was 8% on the original issue date. Use TABLE 14A.1 and TABLE 14A.2. (Use appropriate factor(s) from the tables provided.) Required: 1. Calculate the total bond interest expense over the life of the bonds. 2. Prepare an amortization table using the effective interest method. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) > Answer is complete but not entirely correct. Period Ending Cash Interest Paid Period Interest Expense Premium Amort. Unamortized premium Carrying Value Jan. 1/20 $ 65,699 605,699 June 29,700 24,228 5,472 60,227 600,227 30/20 Dec. 29,700 24,009 5,691 54,536 594,536 31/20 June 29,700 23,781 5,919 48,617 588,617 30/21 Dec. 29,700 23,545 6,155 42,462 582,462 31/21 June 29,700 23,298 6,402 36,061 576,061 30/22 Dec. 29,700 23,042 6,658 29,403 569,403 31/22 June 29,700 22,776 6,924 22,479 562,479 30/23 Dec. 29,700 22,499 7,201 15,278 555,278 31/23 June 29,700 22,211 7,489 7,790 540,000 30/24 Dec. 29,700 21,910 7,790 0 532,210 31/24 Totals $297,000 $ 231,299 65,701 6 3. Show the journal entries that Calculations Marketing Inc. would make to record the first two interest payments assuming a December 31 year-end. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) Answer is complete and correct. No 1 Date June 30, 2020 General Journal Debit Credit Bond interest expense 24,228 Premium on bonds payable 5,472 Cash 29,700 2 December 31, 202 Bond interest expense Premium on bonds payable Cash 24,009 5,691 29,700 4. Use the original market interest rate to calculate the present value of the remaining cash flows for these bonds as of December 31, 2022. Compare your answer with the amount shown on the amortization table as the balance for that date. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) Answer is complete but not entirely correct. Present value of the remaining cash $ 5,945 x flows TABLE 14A.1 Present Value of 1 Due in n Periods Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 1 2 3 23 4 567 5 6 0.9901 0.9804 0.9709 0.9615 0.9803 0.9612 0.9426 0.9246 0.9706 0.9423 0.9151 0.8890 0.9610 0.9238 0.8885 0.8548 0.9515 0.9057 0.8626 0.8219 0.9420 0.8880 0.8375 0.7903 0.9327 0.8706 0.8131 0.7599 0.9524 0.9434 8 9 10 11 12 13 14 15 16 17 18 19 20 25 30 35 40 0.9346 0.9259 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.7972 0.7561 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 0.6575 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 0.5718 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 0.4972 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 0.4323 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 0.3759 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 0.3269 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 0.2843 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220 0.2472 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.2875 0.2149 0.8874 0.7885 0.7014 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2567 0.1869 0.8787 0.7730 0.6810 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2292 0.1625 0.8700 0.7579 0.6611 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2046 0.1413 0.8613 0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.1827 0.1229 0.8528 0.7284 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1631 0.1069 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1456 0.0929 0.8360 0.7002 0.5874 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1300 0.0808 0.8277 0.6864 0.5703 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1161 0.0703 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1037 0.0611 0.7798 0.6095 0.4776 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0588 0.0304 0.7419 0.5521 0.4120 0.3083 0.2314 0.1741 0.1314 0.0994 0.0754 0.0573 0.0334 0.0151 0.7059 0.5000 0.3554 0.2534 0.1813 0.1301 0.0937 0.0676 0.0490 0.0356 0.0189 0.0075 0.6717 0.9174 0.9091 0.8929 0.8696 0.4529 0.3066 0.2083 0.1420 0.0972 0.0668 0.0460 0.0318 0.0221 0.0107 0.0037 TABLE 14A.2 Present Value of an Annuity of 1 Period Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 1 2 3 4 LO 5 6 8 9 744 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 1.9704 1.9416 1.9135 1.8861 1.8594 1.8334 1.8080 1.7591 2.9410 2.8839 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 3.9020 3.8077 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 4.8534 4.7135 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 5.7955 5.6014 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 6.7282 6.4720 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 7.6517 7.3255 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 8.5660 8.1622 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 0.9259 1.7833 0.9174 0.9091 0.8929 0.8696 1.7355 1.6901 1.6257 2.4869 2.4018 2.2832 3.1699 3.0373 2.8550 3.7908 3.6048 3.3522 4.3553 4.1114 3.7845 4.8684 4.5638 4.1604 5.3349 4.9676 4.4873 5.7590 5.3282 4.7716 10 9.4713 8.9826 8.5302 8.1109 11 10.3676 9.7868 9.2526 8.7605 7.7217 7.3601 8.3064 7.8869 12 11.2551 10.5753 9.9540 9.3851 13 8.8633 8.3838 12.1337 11.3484 10.6350 9.9856 9.3936 8.8527 14 13.0037 12.1062 11.2961 10.5631 9.8986 15 16 17 18 19 20 25 30 35 7.0236 6.7101 6.4177 7.4987 7.1390 6.8052 7.9427 7.5361 7.1607 6.8137 6.1944 5.4206 8.3577 7.9038 7.4869 7.1034 6.4235 5.5831 9.2950 8.2442 7.7862 7.3667 6.6282 5.7245 13.8651 12.8493 11.9379 11.1184 10.3797 9.7122 9.1079 8.5595 8.0607 7.6061 6.8109 5.8474 14.7179 13.5777 12.5611 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 6.9740 5.9542 15.5623 14.2919 13.1661 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.1196 6.0472 16.3983 14.9920 13.7535 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8.2014 7.2497 6.1280 17.2260 15.6785 14.3238 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 8.3649 7.3658 6.1982 18.0456 16.3514 14.8775 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.4694 6.2593 22.0232 19.5235 17.4131 15.6221 14.0939 12.7834 11.6536 10.6748 9.8226 9.0770 7.8431 6.4641 25.8077 22.3965 19.6004 17.2920 15.3725 13.7648 12.4090 11.2578 10.2737 9.4269 8.0552 6.5660 29.4086 24.9986 21.4872 18.6646 16.3742 14.4982 12.9477 11.6546 10.5668 9.6442 8.1755 6.6166 6.1446 5.6502 5.0188 6.4951 5.9377 5.2337 8.7455 40 32.8347 27.3555 23.1148 19.7928 17.1591 15.0463 13.3317 11.9246 10.7574 9.7791 8.2438 6.6418 Calculations Marketing Inc. issued 11.0% bonds with a par value of $540,000 and a five-year life on January 1, 2020, for $605,699. The bonds pay interest on June 30 and December 31. The market interest rate was 8% on the original issue date. Use TABLE 14A.1 and TABLE 14A.2. (Use appropriate factor(s) from the tables provided.) Required: 1. Calculate the total bond interest expense over the life of the bonds. 2. Prepare an amortization table using the effective interest method. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) > Answer is complete but not entirely correct. Period Ending Cash Interest Paid Period Interest Expense Premium Amort. Unamortized premium Carrying Value Jan. 1/20 $ 65,699 605,699 June 29,700 24,228 5,472 60,227 600,227 30/20 Dec. 29,700 24,009 5,691 54,536 594,536 31/20 June 29,700 23,781 5,919 48,617 588,617 30/21 Dec. 29,700 23,545 6,155 42,462 582,462 31/21 June 29,700 23,298 6,402 36,061 576,061 30/22 Dec. 29,700 23,042 6,658 29,403 569,403 31/22 June 29,700 22,776 6,924 22,479 562,479 30/23 Dec. 29,700 22,499 7,201 15,278 555,278 31/23 June 29,700 22,211 7,489 7,790 540,000 30/24 Dec. 29,700 21,910 7,790 0 532,210 31/24 Totals $297,000 $ 231,299 65,701 6 3. Show the journal entries that Calculations Marketing Inc. would make to record the first two interest payments assuming a December 31 year-end. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) Answer is complete and correct. No 1 Date June 30, 2020 General Journal Debit Credit Bond interest expense 24,228 Premium on bonds payable 5,472 Cash 29,700 2 December 31, 202 Bond interest expense Premium on bonds payable Cash 24,009 5,691 29,700 4. Use the original market interest rate to calculate the present value of the remaining cash flows for these bonds as of December 31, 2022. Compare your answer with the amount shown on the amortization table as the balance for that date. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) Answer is complete but not entirely correct. Present value of the remaining cash $ 5,945 x flows TABLE 14A.1 Present Value of 1 Due in n Periods Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 1 2 3 23 4 567 5 6 0.9901 0.9804 0.9709 0.9615 0.9803 0.9612 0.9426 0.9246 0.9706 0.9423 0.9151 0.8890 0.9610 0.9238 0.8885 0.8548 0.9515 0.9057 0.8626 0.8219 0.9420 0.8880 0.8375 0.7903 0.9327 0.8706 0.8131 0.7599 0.9524 0.9434 8 9 10 11 12 13 14 15 16 17 18 19 20 25 30 35 40 0.9346 0.9259 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.7972 0.7561 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 0.6575 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 0.5718 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 0.4972 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 0.4323 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 0.3759 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 0.3269 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 0.2843 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220 0.2472 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.2875 0.2149 0.8874 0.7885 0.7014 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2567 0.1869 0.8787 0.7730 0.6810 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2292 0.1625 0.8700 0.7579 0.6611 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2046 0.1413 0.8613 0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.1827 0.1229 0.8528 0.7284 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1631 0.1069 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1456 0.0929 0.8360 0.7002 0.5874 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1300 0.0808 0.8277 0.6864 0.5703 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1161 0.0703 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1037 0.0611 0.7798 0.6095 0.4776 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0588 0.0304 0.7419 0.5521 0.4120 0.3083 0.2314 0.1741 0.1314 0.0994 0.0754 0.0573 0.0334 0.0151 0.7059 0.5000 0.3554 0.2534 0.1813 0.1301 0.0937 0.0676 0.0490 0.0356 0.0189 0.0075 0.6717 0.9174 0.9091 0.8929 0.8696 0.4529 0.3066 0.2083 0.1420 0.0972 0.0668 0.0460 0.0318 0.0221 0.0107 0.0037 TABLE 14A.2 Present Value of an Annuity of 1 Period Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 1 2 3 4 LO 5 6 8 9 744 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 1.9704 1.9416 1.9135 1.8861 1.8594 1.8334 1.8080 1.7591 2.9410 2.8839 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 3.9020 3.8077 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 4.8534 4.7135 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 5.7955 5.6014 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 6.7282 6.4720 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 7.6517 7.3255 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 8.5660 8.1622 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 0.9259 1.7833 0.9174 0.9091 0.8929 0.8696 1.7355 1.6901 1.6257 2.4869 2.4018 2.2832 3.1699 3.0373 2.8550 3.7908 3.6048 3.3522 4.3553 4.1114 3.7845 4.8684 4.5638 4.1604 5.3349 4.9676 4.4873 5.7590 5.3282 4.7716 10 9.4713 8.9826 8.5302 8.1109 11 10.3676 9.7868 9.2526 8.7605 7.7217 7.3601 8.3064 7.8869 12 11.2551 10.5753 9.9540 9.3851 13 8.8633 8.3838 12.1337 11.3484 10.6350 9.9856 9.3936 8.8527 14 13.0037 12.1062 11.2961 10.5631 9.8986 15 16 17 18 19 20 25 30 35 7.0236 6.7101 6.4177 7.4987 7.1390 6.8052 7.9427 7.5361 7.1607 6.8137 6.1944 5.4206 8.3577 7.9038 7.4869 7.1034 6.4235 5.5831 9.2950 8.2442 7.7862 7.3667 6.6282 5.7245 13.8651 12.8493 11.9379 11.1184 10.3797 9.7122 9.1079 8.5595 8.0607 7.6061 6.8109 5.8474 14.7179 13.5777 12.5611 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 6.9740 5.9542 15.5623 14.2919 13.1661 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.1196 6.0472 16.3983 14.9920 13.7535 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8.2014 7.2497 6.1280 17.2260 15.6785 14.3238 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 8.3649 7.3658 6.1982 18.0456 16.3514 14.8775 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.4694 6.2593 22.0232 19.5235 17.4131 15.6221 14.0939 12.7834 11.6536 10.6748 9.8226 9.0770 7.8431 6.4641 25.8077 22.3965 19.6004 17.2920 15.3725 13.7648 12.4090 11.2578 10.2737 9.4269 8.0552 6.5660 29.4086 24.9986 21.4872 18.6646 16.3742 14.4982 12.9477 11.6546 10.5668 9.6442 8.1755 6.6166 6.1446 5.6502 5.0188 6.4951 5.9377 5.2337 8.7455 40 32.8347 27.3555 23.1148 19.7928 17.1591 15.0463 13.3317 11.9246 10.7574 9.7791 8.2438 6.6418