%3Cp%20id%3D%22marker-14_57-431%22%20class%3D%22c3%22%3E%3Cspan%20class%3D%0A%22

Question

%3Cp%20id%3D%22marker-14_57-431%22%20class%3D%22c3%22%3E%3Cspan%20class%3D%0A%22hitHighlite%20c1%22%3EP14%3C%2Fspan%3E%20%3Ca%20name%3D%22highlight_1%22%20id%3D%22highlight_1%22%0Aclass%3D%22c2%22%3E%3C%2Fa%3E-%3Cspan%20class%3D%22hitHighlite%20c1%22%3E1%3C%2Fspan%3E%3Ca%20name%3D%0A%22highlight_2%22%20id%3D%22highlight_2%22%20class%3D%0A%22c2%22%3E%20%3C%2Fa%3E%26nbsp%3BComputation%20of%20Selling%20Price%20and%20Bond%20Issue%0ACosts%3C%2Fp%3E%0A%3Cp%20id%3D%22marker-14_57-433%22%20class%3D%22c4%22%3EBarnett%20Industries%2C%20Inc.%20issued%0A%24600%2C000%20of%208%25%20bonds%20on%20January%201%2C%202013.%20The%20bonds%20pay%20interest%0Asemiannually%20on%20July%201%20and%20January%201.%20The%20maturity%20date%20on%20these%0Abonds%20is%20December%2031%2C%202022.%20The%20firm%20uses%20the%20effective%20interest%0Amethod%20of%20amortizing%20discounts%20and%20premiums.%20The%20bonds%20were%20sold%20to%0Ayield%20an%20effective%20interest%20rate%20of%209%25.%20Barnett%20incurred%20legal%20and%0Ainvestment%20banking%20fees%20of%20%2422%2C000%20in%20issuing%20the%20bonds%20and%0Aamortizes%20these%20costs%20annually%20on%20a%20straight-line%20basis.%3C%2Fp%3E%0A%3Cp%20id%3D%22marker-14_57-434%22%20class%3D%22c3%22%3ERequired%3A%3C%2Fp%3E%0A%3Col%20id%3D%22marker-14_57-435%22%20class%3D%22c6%22%3E%0A%3Cli%20id%3D%22marker-14_57-436%22%20class%3D%22c5%22%3ECalculate%20the%20selling%20price%20of%0Athe%20bonds.%3C%2Fli%3E%0A%3Cli%20id%3D%22marker-14_57-437%22%20class%3D%22c5%22%3EPrepare%20journal%20entry%20for%20the%0Aissuance%20of%20the%20bonds%20and%20bond%20issue%20costs%3C%2Fli%3E%0A%3Cli%20id%3D%22marker-14_57-437%22%20class%3D%22c5%22%3EAssume%20that%20Barnett%20uses%20IFRS.%0APrepare%20the%20journal%20entry%20for%20the%20issuance%20of%20the%20bonds.%3C%2Fli%3E%0A%3C%2Fol%3E%0A

Explanation / Answer

SP = 24000*PVIFA(4.5,20)+600000/1.04^10 = 24000*13.0079+(600000/1.04^10) = $717528.10

Debit Credit Jan,1,2013 22,000 717,528 june,31,2013 24,000 Dec,31,2013 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 Dec,31,2022 624,000

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