File Edit View History Bookmarks Window Help MHE Reader A company issued 6%, 20-

Question

File Edit View History Bookmarks Window Help MHE Reader A company issued 6%, 20-year bonds with a face an. Connect ndicat Check my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not i 6 appropriate factor(s) from the tables provided.) Required: 1. Determine the price of the bonds at January 1, 2018. 2. Prepare the journal entry to record their issuance by National on January 1,2018. 3. Prepare an amortization schedule that determines interest at the effective rate each period. 4. Prepare the journal entry to record interest on June 30, 2018. 5. Prepare the appropriate journal entries at maturity on December 31, 2021 10 points Answer is not complete. Complete this question by entering your answers in the tabs below. Requireb Required 2 Required 3 Required 4 Required 5 Determine the price of the bonds at January 1, 2018. (Round final answers to the nearest whole dollar.) Table values are based on: 50% sh Flow Amount 24,000s 155,117 6000000 406.080 Interes Principal Price of bonds S 561.197 Required 2 >

Explanation / Answer

1)

Note:-  Present value of bond = face value / (1+ yield)number of payments + interest [1- (1+ yield)number of payments] / yield

   = $600000 / (1+ 10%*2)4*2 + ($600000 * 8%/2) [1- (1+ 10%/2)-4*2] / (10%/2)

= $600000 / (1+ 0.05)8 + 24000 [1- (1+ 0.05)-8] / 0.05

= $600000 / (1.05)8 + 24000 [1- (1.05)-8] / 0.05

= $600000 / (1.05)8 + 24000 [1- 1/(1.05)8] / 0.05

= $600000 / 1.477455 + 24000 [1- 1/1.477455] / 0.05

= 406104 + 155117

=561221

2)

3)

4.

5)

Amount Present value Interest 24000 155117 Face value 600000 406104

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