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Prepare entry for bonds issued at a premium.

(LO 3) AP

Price Company issues $400,000 of 20-year, 7% bonds at 101. Prepare the journal entry to record the sale of these bonds on June 1, 2017.

Prepare entry for bonds issued.

(LO 3) AP

Frankum Company has issued three different bonds during 2017. Interest is payable annually on each of these bonds. Calculate the price of the bonds and prepare the journal entry to record each bond transaction at the date of issue.(a)On January 1, 2017, Frankum issued 1,000, 8%, 5-year, $1,000 bonds dated January 1, 2017, at face value.

(b)On July 1, Frankum issued $900,000 of 9%, 5-year bonds dated July 1, 2017, at 102.

(c)On September 1, Frankum issued $400,000 of 7%, 5-year bonds dated September 1, 2017, at 98.

Make amortization schedule.

(LO 3) AP

Elsworth Ltd. issued $1 million of 5-year, 4% bonds dated May 1, 2017, for $1,046,110 when the market interest rate was 3%. Interest is paid semi-annually on May 1 and November 1. Make an amortization schedule for the first three interest payments.

Record bond interest using amortization schedule.

(LO 3) AP

Villa Corporation issued $3 million of 7-year, 4% bonds dated January 1, 2017, for $2,661,118. The market interest rate when the bonds were issued was 6%. Interest is payable semi-annually on January 1 and July 1. Villa has a December 31 year end.(a)Make an amortization schedule for the first three interest payments.

(b)Prepare the journal entry to record the first interest payment on July 1, 2017.

(c)Prepare the adjusting journal entry on December 31, 2017, to accrue the interest expense.

(d)Prepare the journal entry for the payment of interest on January 1, 2018.

Record note transaction; show balance sheet presentation.

(LO 5) AP

Elbow Lake Corp. issues a $600,000, 4-year, 4% note payable on March 31, 2017. The terms provide for fixed principal payments annually of $150,000.(a)Prepare the journal entries to record the note on March 31, 2017, and the first payment on March 31, 2018.

(b)Show the balance sheet presentation of the current and non-current liability related to the note as at March 31, 2018.

Calculate present value of bonds.

(LO 2) AP

Central College is about to issue $1 million of 10-year bonds that pay a 6% annual interest rate, with interest payable semi-annually.

Instructions

Calculate the issue price of these bonds if the market interest rate is:

(a)5%.

(b)6%.

(c)7%.