On May 1, 2020, a $300,000, ten-year, 14% bond was sold to yield 12% plus accrued interest. The bond was dated January 1, 2020, and interest is paid each January 1 and July 1. Present value data follow: PV of $1 PV of an Annuity of $1 10 periods 20 periods 10 periods 20 periods 6% 0.558395 0.311805 7.360087 11.469921 7% 0.508349 0.258419 7.023582 10.594014 12% 0.321973 0.103667 5.650223 7.469444 14% 0.321973 0.072762 5.216116 6.623131 Required: a. Compute the amount of cash received from the sale of the bond. b. Prepare the journal entry to record the sale. c. Why is the amount of cash received from issuing the bond not equal to the face amount of the bond?

On May 1, 2020, a $300,000, ten-year, 14% bond was sold to yield 12% plus accrued interest. The bond was dated January 1, 2020, and interest is paid each January 1 and July 1. Present value data follow: PV of $1 PV of an Annuity of $1 10 periods 20 periods 10 periods 20 periods 6% 0.558395 0.311805 7.360087 11.469921 7% 0.508349 0.258419 7.023582 10.594014 12% 0.321973 0.103667 5.650223 7.469444 14% 0.321973 0.072762 5.216116 6.623131 Required: a. Compute the amount of cash received from the sale of the bond. b. Prepare the journal entry to record the sale. c. Why is the amount of cash received from issuing the bond not equal to the face amount of the bond?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 5PA: Volunteer Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July...

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