On January 1, 2010, Discovered Inc., issued $13 million face amount of 20-year,

Question

On January 1, 2010, Discovered Inc., issued $13 million face amount of 20-year, 18% stated rate bonds when market interest rates were 20%. The bonds pay interest semiannually each June 30 and December 31 and mature on December 31, 2029.

a) Using the present value tables (Table 6-4 and Table 6-5), calculate the proceeds (issue price) of Discovered Inc.'s, bonds on January 1, 2010, assuming that the bonds were sold to provide a market rate of return to the investor. (Round pv factor to 4 decimal places and the final answer to the nearest dollar amount.

Proceeds $

c) Assume instead that the proceeds were $13,459,000. Record the journal entry to show the payment of semiannual interest and the related premium amortization on June 30, 2010, assuming that the premium of $459,000 is amortized on a straight-line basis.

General Journal...................................Debit..................Credit
Interest expense.................................$
Premium on bonds payable...................$
Discount of bonds payable...............................................$

Explanation / Answer

Please post Table 6-4 and Table 6-5 as that would be the only way to determine the answer, if you do I would be glad to help. Let me know.

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