80.2K

Verified Solution

Link Copied!

Hartford Research issues bonds dated January 1, 2016, that payinterest semiannually on June 30 and December 31. The bonds have a$22,000 par value and an annual contract rate of 12%, and theymature in 10 years. (Table B.1, Table B.2, Table B.3, and TableB.4) (Use appropriate factor(s) from the tablesprovided.)

  

Required:

Consider each of the following three separate situations.

  

1. The market rate at the date of issuance is10%.

(a) Complete the below table to determine the bonds'issue price on January 1, 2016.

	Table values are based on: n = i = Cash Flow Table Value Amount Present Value Par (maturity) value Interest (annuity) Price of bonds

(b) Prepare the journal entry to record theirissuance.

• Record the issue of bonds with a par value of $22,000 cash onJanuary 1, 2016. Assume that the market rate of interest at thedate of issue is 10%.

• 2. The market rate at the date of issuance is12%.

  (a) Complete the below table to determine the bonds'issue price on January 1, 2016.

• 	Table values are based on: n = i = Cash Flow Table Value Amount Present Value Par (maturity) value Interest (annuity) Price of bonds

• (b) Prepare the journal entry to record theirissuance.

• Journal entry worksheet

• Record the issue of bonds with a par value of $22,000 cash onJanuary 1, 2016. Assume that the market rate of interest at thedate of issue is 12%.

3. The market rate at the date of issuance is14%.

(a) Complete the below table to determine the bonds'issue price on January 1, 2016.

	Table values are based on: n = i = Cash Flow Table Value Amount Present Value Par (maturity) value Interest (annuity) Price of bonds

• Record the issue of bonds with a par value of $22,000 cash onJanuary 1, 2016. Assume that the market rate of interest at thedate of issue is 14%.