Brief Exercise 141 Pina Corporation issues 470000 of 9 bonds

Brief Exercise 14-1

Pina Corporation issues $470,000 of 9% bonds, due in 9 years, with interest payable semiannually. At the time of issue, the market rate for such bonds is 10%.

Compute the issue price of the bonds. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.)

Brief Exercise 14-2

The Skysong Company issued $370,000 of 8% bonds on January 1, 2017. The bonds are due January 1, 2022, with interest payable each July 1 and January 1. The bonds are issued at face value.

Prepare Skysong’s journal entries for (a) the January issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. (If no entry is required, select \"No Entry\" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548.)

No.

Date

Account Titles and Explanation

Debit

Credit

Brief Exercise 14-9

On January 1, 2017, Carla Corporation redeemed $440,000 of bonds at 96. At the time of redemption, the unamortized premium was $13,200.

Prepare the corporation’s journal entry to record the reacquisition of the bonds. (If no entry is required, select \"No Entry\" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548.)

Account Titles and Explanation

Debit

Credit

Exercise 14-4

Sweet Company issued $624,000 of 10%, 20-year bonds on January 1, 2017, at 102. Interest is payable semiannually on July 1 and January 1. Sweet Company uses the straight-line method of amortization for bond premium or discount.

Prepare the journal entries to record the following. (If no entry is required, select \"No Entry\" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

Solution

Solution 14-1:

Interest rate of bond = 9%

Market rate = 10%

Therefore present value of bond considering 10% yield = ($21150 * cumulative PV factor at 5% for 18 periods) + (470000*PV factor at 5% for 18th period) = ($21,150 * 11.68958) + ($470,000 * 0.41552) = $442,529

Therefore issue price of bond should be $442,529.