137. A company issues bonds with a par value of $800,000 on their issue date. The bonds mature in five years and pay 6% annual interest in two semiannual payments. On the issue date, the market rate of interest is 8%. Compute the price of the bonds on their issue date. The following information is taken from present value tables:
Present value of an annuity for 10 periods at 3%
|
8.5302
|
Present value of an annuity for 10 periods at 4%
|
8.1109
|
Present value of 1 due in 10 periods at 3%
|
0.7441
|
Present value of 1 due in 10 periods at 4%
|
0.6756
|
138. A company issued 9.2%, 10-year bonds with a par value of $100,000. Interest is paid semiannually. The market interest rate on the issue date was 10% and the issuer received $95,016 cash for the bonds. The issuer uses the effective interest method for amortization. On the first semiannual interest date, what amount of discount should issuer amortize?
139. A company issued 10%, 10-year bonds with a par value of $1,000,000 on January 1, 2013, at a selling price of $885,295, to yield the buyers a 12% return. The company uses the effective interest amortization method. Interest is paid semiannually each June 30 and December 31.
(1) Prepare an amortization table for the first two payment periods using the format shown below:
Semiannual Interest Period
|
Cash Interest Paid
|
Bond Interest Expense
|
Discount Amortization
|
Unamortized Discount
|
Carrying Value
|
(2) Prepare the journal entry to record the first semiannual interest payment.
140. A company issued 10-year, 9% bonds with a par value of $500,000 when the market rate was 9.5%. The company received $484,087 in cash proceeds. Using the effective interest method, prepare the issuer's general journal entry to record the first semiannual interest payment and the amortization of any bond discount or premium.
141. On January 1, 2013, a company issued 10%, 10-year bonds payable with a par value of $720,000. The bonds pay interest on July 1 and January 1. The bonds were issued for $817,860 cash, which provided the holders an annual yield of 8%. Prepare the general journal entry to record the first semiannual interest payment, assuming the company uses the straight-line method of amortization.