**Bond Issuance Exercise****Scenario:**On January 1, 2021, Darnell Window and Pane issued $18.8 million of 10-year, zero-coupon bonds for $6,621,068. The following present and future value factors are relevant for this scenario:- **FV of $1**- **PV of $1**- **FVAD of $1**- **PVAD of $1****Task Requirements:**1. Prepare the necessary journal entries.2. Determine the effective rate of interest.3. (Return to step 1 as needed) Prepare additional necessary journal entries.**Instructions:**To proceed with this exercise:- **Determine the effective rate of interest** by entering your calculation in the space provided.- Record this rate and use it to complete the journal entries.**Interactive Elements:**- **Interest Rate Tab**: Input the calculated interest rate in percentage form.- **General Journal Tab**: Access the section for preparing journal entries once the interest rate is calculated.By using these tools and factors, you'll effectively analyze and record the financial impact of the bond issuance.

2. Effective interest rate=$18,800,000$6,621,068110-1=1.1100-1=0.11 or 11%

On January 1, 2021, Darnell Window and Pane issued $18.8 million of 10-year, zero-coupon bonds for $6,621,068. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 2. Determine the effective rate of interest. 1. & 3. to 5. Prepare the necessary journal entries.

On January 1, 2021, Darnell Window and Pane issued $18.8 million of 10-year, zero-coupon bonds for $6,621,068. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 2. Determine the effective rate of interest. 1. & 3. to 5. Prepare the necessary journal entries.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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