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legs study Guided x Annotated Bib Englishx F Heron Preston CTNMD X Z Order processed-AX - Not Secure ezto.mheducation.com/hm.tpx?_=0.4760824197939335 1523836794106 E connect Financial Accounting: ACC 21(221) Spring 2018 ACCOUNTING Valandi Lemoniotis 10 Homework Assignment Instructions the e save & Exit Submit 8.00 points E10-22 Recording and Reporting a Bond Issued at a Premium (Straight-Line Amortization with Premium Account) LO10-5 On January 1 of this year, Victor Corporation sold bonds with a face value of $1,520,000 and a coupon rate of 10 percent. The bonds mature in four years and pay interest semiannually every June 30 and December 31. Victor uses the straight-line amortization method and also uses a premium account. Assume an annual market rate of interest of 8 percent. (FV of S1, PV of S1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your final answer to whole dollars.) Required: 1. Prepare the journal entry to record the issuance of the bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the issuance of the bonds. Note: Enter debits before credits. Date Debit Credit Jial Lary 01 General Journal Curi Premium on bonds payable Bonds payable | 1,520,000 JOPOL 31 - BAO WAO W 9 xlo

Explanation / Answer

Price of the Bond: Face value of bond = $1,520,000 Life = 4 years Interest periods = 8 interest to paid semiannually = 1,520,000*10%*(6/12 months) =$76000 present value annuity factor of one rupee at 8% for 4 years semiannually = 6.732745 present value factor of one rupee at 8% for 4 years = 0.73069 Therefor price of bond = ($76,000*6.732745)+($1,520,000*0.73069) =$1,622,338 Premium on bonds issued = $1,622,338-$1,520,000 = $120,338 Journal Entry Date General Journal Debit Credit Jan-01 cash $1,520,000 Premium on Bonds Payable $120,338 Bonds Payable $1,622,338 (to record the issuance of bonds)

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