On January 1, 2018, Watch Works Incorporated (WWI) issued $80,000 par value, 2%,...
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On January 1, 2018, Watch Works Incorporated (WWI) issued $80,000 par value, 2%, four-year bonds that mature on December 31, 2021. WWI will pay interest semiannually on June 30 and December 31. On the date WWI issued the bonds, the market rate of interest was 6%. The company's fiscal year ends on December 31. What is the issue price of this bond? Which of the following financial statement items is impacted in this transaction? Bonds Payable The problem is solving for: Present Value The calculation involves: Single Sum & Ordinary Annuity Step 1: Present Value of Interest Payment Step 2: Present Value of Par Value Amount Keystroke Amount Keystroke Step 1: 8 N Step 1: 8 N Step 2: 0.06 I/Y Step 2: 10000 PMT Step 3: +/ PMT Step 3: 80000 +/ FV Step 4: CPT PV Step 4: CPT PV Answer: Answer: Present Value of Interest Payment Present Value of Par Value Journalize the issuance of the bonds: January 1, 2018 Debit Accounts Credit
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