Young Co. issues $800,000 of 10% bonds dated January 1 of year 1. Interest is paid semiannually on June 30 and December 31. The bonds mature in 5 years. The current market rate for similar bonds is 8%. The complete issue is sold on the issue date. The following values are given:

	Present Value of Ordinary Annuity	Present value of $1
No.=10; i=0.04	8.11090	0.67556
No.=10; i=0.05	7.72173	0.61391

Required

(i) How much of the proceeds from the bond sale must Young report?

(ii) Prepare the journal entry to issue the bonds

(iii) Prepare the journal entry to record the interest on the bonds paid for year 2 using the effective interest method.

Answer rating: 100% (QA)

i amount of proceeds on the sale of bonds should Young report 800000 5100 811090 800000 067556 ... View the full answer