ually on June 30 and December 31 FV of 1 PV of 1 FVA of 1 on

ually on June 30 and December 31. (FV of $1. PV of $1. FVA of $1. on June 30 No 01, 2018 on 2018 3,984,750 31, 2018

Solution

Par value of investment 75000000 Semi annual cash interest 3750000 (75000000*10%*6/12) Annuity factor for 20 period for 6% 11.4699 PV for 20th period 0.3118 Present value of Interest 43012125 Present value of Maturity amount 23385000 Issue price 66397125 Amort Schedule: Date Interest Interest Discount Unamortized Book value Received Revenue Amortized Discount 01.01.18 8602875 66397125 30.06.18 3750000 3983828 233828 8369047 66630953 31.12.18 3750000 3997857 247857 8121190 66878810 Journal entries: Date Accounts title and explanations Debit $ Credit $ 01.01.18 Investment in bonds Dr. 75000000     Cash account 66397125     Discount on bonds investment 8602875 30.06.18 Cash Account Dr. 3750000 Discount on bonds investment Account Dr. 233828      Interest revenue Account 3983828 31.12.18 Cash Account Dr. 3750000 Discount on bonds investment Account Dr. 247857      Interest revenue Account 3997857