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v2.cengagenow.com CengageNOWv2 | Online teaching and learning resource from Cengage Learning Chapter 11 Homework . BE.11-01 2. BE.11-01.ALGO 3. BE.11-02 4. BE.11-02.ALGO 5. BE.11-03 6. BE.11-03ALGO 7. BE.11-04 8. BE.11-04.ALGO 9. BE.11-05 10. BE.11-05.ALGO 11. EX.11-02 12. EX.11-02.ALGO 13. EX.11-03 14. EX.11-04 15. PR.11-01.ALGO Progress: 15/15 items eBook | Show Me How Calculator Bond Discount, Entries for Bonds Payable Transactions on July 1, Year 1, Danzer Industries Inc. issued $7,800,000 of 8-year, 11% bonds at a market (effective) interest rate of 12%, receiving cash of $7,405,901. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1. If an amount box does not require an entry, leave it blank. 2. Journalize the entries to record the following: If an amount box does not require an entry, leave it blank. a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. (Round your answer to the nearest dollar.) b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. (Round your answer to the nearest dollar.) Check My Work 3 more Check My Work uses remaining Previous Assignment Score: 70% All work saved Email Instructor Save and Exit Submit Assignment for Grading

Explanation / Answer

1) cash 7,405,901 discount on Bonds payable 394,099 Bonds payable 7,800,000 2-a) Interest expense 453,631 Discount on bonds payable 24,631 cash 429,000 (7,800,000*11%*1/2= 429000 Discount amortized 394,099/(16)= 24631 2-b) Interest expense 453,631 Discount on bonds payable 24,631 cash 429,000 3) Total interest expense 907262 4) yes 5) Present vaule of the face amount 3070470 present value of the semi-annual interest payments 4335431 price received for the bonds 7405901 for pv use pv of $1 table at 6% for 16 years for PV of ordinary annuity table at 6% for 16 years

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